Benefits of Making Business in Japan | Buy & Sell Business

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

4. Country Overview Japan is an island country located in East Asia. It is bordered by the Sea of Japan to the west and the Pacific Ocean to the east, and spans more than 3,000 kilometers along the coast of the continent from the Sea of Okhotsk in the north to the East China Sea and Philippine Sea in the south. Japan, island country lying off the east coast of Asia. It consists of a great string of islands in a northeast-southwest arc that stretches for approximately 1,500 miles (2,400 km) through the western North Pacific Ocean. Nearly the entire land area is taken up by the country’s four main islands; from north to south these are Hokkaido, Honshu, Shikoku, and Kyushu. Honshu is the largest of the four, followed in size by Hokkaido, Kyushu, and Shikoku.

5. Executive Summary Its rate of per capita economic growth is in line with that in the United States or the European Union. Japan provides a high standard of living and safe living conditions for more than 120 million people. Japan, a nation in East Asia, is an archipelago of 6,852 islands in the Pacific Ocean. It is a constitutional monarchy, with Tokyo as its capital. More than 99% of the population speaks Japanese. The economy of Japan is the third largest in the world after the United States and the People's Republic of China.

6. Introduction – Doing business in Japan Japan is ranked 29 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Japan improved to 29 in 2019 from 39 in 2018. Japan is the world’s third largest economy after the US and China and second largest computer and telecommunications market in the world. The Japanese market is characterized by consumers with high levels of disposable income who are drawn to premium, high- end goods and services. Japan is synonymous with quality and innovation and this goes hand-in-hand with Japanese companies’ commitment and loyalty to business partners.

7. Conducting business in Japan Under the Japanese Companies Act, there are four types of business vehicle: •Stock company (Kabushiki Kaisha). •Limited liability company (Godo Kaisha). •General partnership company (Gomei Kaisha). •Limited partnership company (Goshi Kaisha). The business license is the first permit issued to a company which was taken into the evidence of the Companies Registrar in Japan. This license is issued upon the completion of the incorporation of the business with the Trade Register, with the tax authorities and the social security authorities.

8. Taxation in Japan Japan has a progressive tax system. There's also a local inhabitants tax which is set by local governments but is usually a flat rate of 10%. Non-resident taxpayers are treated differently. Their Japan- sourced income is taxed at a flat rate of 20.42% with no deductions available. The current income tax rates for Japan are as follows: • For those earning under 1.95 million yen per year: 5% of your taxable income • For those earning 1.95-3.3 million yen per year: 10% of your taxable income above 97,500 yen • For those earning 3.3 to 6.95 million yen per year: 20% of your taxable income above 427,500 yen

9. Trade Japan is the 4th largest export economy in the world and the most complex economy according to the Economic Complexity Index (ECI). In 2017, Japan exported $694B and imported $632B, resulting in a positive trade balance of $62.4B. In 2017 the GDP of Japan was $4.87T and its GDP per capita was $43.3k. The top exports of Japan are Cars ($101B), Vehicle Parts ($34.9B), Integrated Circuits ($26.5B), Machinery Having Individual Functions ($22.6B) and Industrial Printers ($13.6B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($57.7B), Petroleum Gas ($37.1B), Broadcasting Equipment ($22.1B), Integrated Circuits ($21.8B) and Coal Briquettes ($19.5B).

10. Banking in Japan Banks in Japan operate similarly to banks in other countries. There are a variety of institutions, ranging from large international banks to smaller regional ones. The large domestic banks include Japan Post, Mizuho, Mitsubishi UFJ Bank, Mitsui Sumitomo and Resona. Furthermore, several online banks, most notably Seven Bank, have recently gained popularity and offer their customers banking via the internet and a network of ATMs. Banks provide their customers with services such as cash deposits, withdrawals, transfers, foreign exchange and investment services.

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