Benefits of Making Business in Israel | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN ISRAEL WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN ISRAEL WWW.MERGERSCORP.COM

4. Country Overview Israel, a Middle Eastern densely-populated country on the Mediterranean Sea, is regarded by Jews, Christians and Muslims as the biblical Holy Land. Its most sacred sites are in Jerusalem. It is bounded to the north by Lebanon, to the northeast by Syria, to the east and southeast by Jordan, to the southwest by Egypt, and to the west by the Mediterranean Sea. Within its Old City, the Temple Mount complex includes the Dome of the Rock shrine, the historic Western Wall, Al-Aqsa Mosque and the Church of the Holy Sepulchre. Israel's financial hub, Tel Aviv, is known for its Bauhaus architecture and beaches.

5. Executive Summary Israel’s government has shown a mix of improvements and deteriorations in its performance. In some areas, such as executive capacity and executive accountability, it showed high improvements. In other areas, such as democratic performance, it showed a couple of deteriorations. In yet other domains, such as economic and social policies, it has demonstrated a range of advances and retreats. Economic policies have been successful over the last decade, as Israel has shown strength in key economic indicators. Its economic growth has increased, but the inflation rate, as well as the unemployment rate, remain one of the lowest in the western world.

6. Introduction – Doing business in Israel Israel ranked 54th out of 190 economies in The World Bank’s 2018 Ease of Doing Business Survey, performing especially well in the categories of protecting minority investors (16th) and resolving insolvency (29th). Business culture in Israel is diverse with surprising contrasts between warm hospitality, direct no-nonsense business approaches, aggressive negotiations and slow-paced meetings. Expats doing business in Israel should feel at ease in the casual culture, but should nevertheless prepare to be flexible and patient.

7. Conducting business in Israel The Principal types of business entities in Israel: •Private Limited Company •Foreign Company •Partnership •Sole Proprietorship •Cooperative All companies in Israel must register with The Registrar of Companies (Ministry of Justice) and the Tax Authorities (Ministry of Finance). While Hebrew and Arabic are the official languages of Israel, in practice, corporate documents in English will generally be accepted by the Registrar.

8. Taxation in Israel Taxation in Israel include income tax, capital gains tax, value- added tax and land appreciation tax. People who earn more than NIS 1 million a year would pay a surtax of 2% on their income and taxation of capital gains rate is 25%. As of January 2018, the corporate tax rate in Israel is 23%. Value-added tax (VAT) in Israel, is applied to most goods and services, including imported goods and services. As of 1 October 2015, the standard was lowered to 17%, from 18%.

9. Trade Israel is the 48th largest export economy in the world and the 17th most complex economy according to the Economic Complexity Index (ECI). In 2017, Israel exported $48.8B and imported $62.5B, resulting in a negative trade balance of $13.7B. In 2017 the GDP of Israel was $350B and its GDP per capita was $38.3k. The top exports of Israel are Diamonds ($10.7B), Packaged Medicaments ($4.72B), Integrated Circuits ($2.19B), Refined Petroleum ($1.58B) and Pesticides ($1.35B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Diamonds ($5.87B), Crude Petroleum ($3.98B), Cars ($3.79B), Photo Lab Equipment ($1.85B) and Broadcasting Equipment ($1.69B).

10. Banking in Israel Israel has a modern and sophisticated banking system. There are five major domestic commercial banks in Israel, with a number of smaller banks, some of which are subsidiaries of the larger banks. The two largest banks, with similar asset size are Bank Hapoalim and Bank Leumi, followed by Israel Discount Bank, Mizrahi Tefahot Bank and First International Bank of Israel, respectively. There are currently five foreign banks with commercial activities in Israel: Citibank NA, HSBC Bank plc., Barclays Bank plc., BNP Paribas Israel and State Bank of India.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com