Benefits of Making Business in Mongolia | Buy & Sell Business

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

4. Country Overview Mongolia, a nation bordered by China and Russia, is known for vast, rugged expanses and nomadic culture. Its capital, Ulaanbaatar, centers around Chinggis Khaan (Genghis Khan) Square, named for the notorious founder of the 13th- and 14th- century Mongol Empire. Also in Ulaanbaatar are the National Museum of Mongolia, displaying historic and ethnographic artifacts, and the restored 1830 Gandantegchinlen Monastery. Landlocked Mongolia is located between Russia to the north and China to the south, deep within the interior of eastern Asia far from any ocean. The country has a marked continental climate, with long cold winters and short cool-to-hot summers.

5. Executive Summary Mongolia, historically Outer Mongolia, country located in north- central Asia. It is roughly oval in shape, measuring 1,486 miles (2,392 km) from west to east and, at its maximum, 782 miles (1,259 km) from north to south. Its remarkable variety of scenery consists largely of upland steppes, semi deserts, and deserts, although in the west and north forested high mountain ranges alternate with lake-dotted basins. Mongolia is largely a plateau, with an average elevation of about 5,180 feet (1,580 metres) above sea level. The highest peaks are in the Mongolian Altai Mountains (Mongol Altain Nuruu) in the southwest, a branch of the Altai Mountains system.

6. Introduction – Doing business in Mongolia Mongolia is ranked 81 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Mongolia deteriorated to 81 in 2019 from 74 in 2018. Mongolia is continuing to develop its systems of business law, taxation, banking, and external links to the international business community and, most importantly, a market economy. The Mongolia's economy has primarily been based on livestock and agriculture, but also on mineral reserves, such as coal, gold or copper which form a big part of the industrial production.

7. Conducting business in Mongolia In order to establish a company in Mongolia a foreign investor must firstly choose a legal structure. The main types of companies available in this country are: the limited liability company (LLC), the open or closed joint stock company (JSC), partnerships. The foreign entrepreneur can also decide on creating a representative office or a branch one for a parent-company overseas; these are structures that are not allowed to operate commercial activities.

8. Taxation in Mongolia A Non-resident economic entities carrying out business activities in Mongolia are taxable on the income earned in the territory of Mongolia and from Mongolian sources. Mongolian CIT is levied at the following rates, using a progressive-rate scale that ranges from 10% to 25%, as follows: 10% applies to the first 3 billion Mongolian tugrik (MNT) of annual taxable income. 25% applies to any excess of MNT 3 billion of annual taxable income. A non-resident taxpayer of Mongolia is subject to tax on the income earned in the territory of Mongolia during the tax year.

9. Trade Mongolia is the 96th largest export economy in the world and the 93rd most complex economy according to the Economic Complexity Index (ECI). In 2017, Mongolia exported $6.88B and imported $4.5B, resulting in a positive trade balance of $2.39B. In 2017 the GDP of Mongolia was $11.4B and its GDP per capita was $12.9k. The top exports of Mongolia are Coal Briquettes($2.27B), Copper Ore ($1.63B), Gold ($1.26B), Crude Petroleum ($369M) and Iron Ore ($299M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum($803M), Cars($263M), Delivery Trucks ($177M), Electricity ($136M) and Large Construction Vehicles($87.9M)

10. Banking in Mongolia Mongolia’s banking system has become more efficient and reliable, although supervision lags and some banks do not measure up to international standards. Prior to 1991, no western-style commercial or central banking system existed in Mongolia. The State Bank was the only bank in Mongolia. In October 1990, the Mongolian Government, in line with free market economic reforms, dissolved the State Bank. In 1991, Mongolia enacted a new banking law to create a western-style banking system. The law re-organized the banking system into a two-tier structure. The Bank of Mongolia, or Mongol Bank, acts as the central bank, implementing monetary policy. Other private and public banks provide commercial 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

12. Looking to Buy or Sell a Business? CONTACT US NOW FOR A FREE BUSINESS VALUATION WWW.MERGERSCORP.COM

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