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Benefits of Making Business in Nicaragua | Buy & Sell Business

<br>At MergersCorp we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction.<br><br>Find more at: http://mergerscorp.com

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Benefits of Making Business in Nicaragua | Buy & Sell Business

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

  4. Country Overview Nicaragua, the largest country in Central America, is bordered by Honduras to the north, Costa Rica to the south, the Pacific Ocean to the west, and the Caribbean Sea to the east. It became an independent republic in 1838, and Managua is the capital city. The official language of Nicaragua is Spanish, and its currency is the Nicaraguan córdoba oro (NIO). The country has a variety of climates and terrains, its landscape offers extensive coastal plains at the Atlantic, lowlands at the Pacific and interior mountains in the central highlands. Highest point is the peak of Cerro Mogoton, the stated elevation might be incorrect – figures vary between 2,094 m, 2,107 m and 2,438 m above sea level, but anyway, Pico Mogoton the highest mountain in the country. Nicaragua is famous for a lot of lakes and volcanoes. The two largest fresh water lakes in Central America, Lake Managua and Lake Nicaragua, are located there. The country has a population of 6.2 million people . Capital and largest city is Managua, almost one quarter of the country's population lives in the city.

  5. Executive Summary The western half of Nicaragua is made up generally of valleys separated by low but rugged mountains and many volcanoes. The west is a region of lakes. There is no official religion in Nicaragua, but more than one-half of Nicaraguans adhere to Roman Catholicism. Spoken languages are Spanish (official), and several regional recognized languages like Miskito, Rama, Sumo, Miskito Coastal Creole, Garifuna, and Rama Cay Creole. Agriculture, forestry, and fishing engage as much as one-third of the labour force and produce about one-fifth of the total national income. The valleys of the western central mountains yield about one-fourth of the national agricultural production. Major crops for domestic consumption include corn (maize), beans, rice, sorghum, plantains, and cassava (manioc). Various fruits and vegetables also are produced for local consumption.

  6. Introduction – Doing business in Nicaragua Nicaragua is ranked 142 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Nicaragua deteriorated to 142 in 2019 from 132 in 2018. Entrepreneurs, foreigners and Nicaraguans alike, will find a wide array of investment possibilities in this country. The Nicaraguan market is characterized by favorable as well as unfavorable aspects, including high growth rates in certain sectors, increases in production and foreign investment. With its growing economy and membership in the Central American-Dominican Republic Free Trade Agreement (CAFTA- DR), Nicaragua offers many opportunities to the informed investor.

  7. Conducting business in Nicaragua Businesses Structures generally followed in Nicaragua are :: •General Partnership. • Ordinary Limited Partnership • Joint-stock Company • Stock company The General formation procedure is • Drafting of Public Deed of Incorporation. • Application for registration as a business person. • Registration of Corporate and Accounting Books. • Recording of Board of Directors minutes and appoint a Legal Representative of the Company. • Registration of the General Power of Administration at the Commerce Registry. • Registration of the company before tax, social security and municipality authorities

  8. Taxation in Nicaragua Tax on Corporate Income : The Nicaraguan corporate income tax rate is 30%. Income taxes are levied only on domestic-sourced income at whichever is higher of the following rates: • 30%, applied to net taxable income (gross taxable income less allowed deductions by law); • Definitive Income Tax payment based on 1% of gross income obtained during the fiscal year Tax on Dividend : Natural person, corporate and economic unit, resident or not in the country, will be subject to a withholding tax of 10%, which is applicable for tax residents and 15% for non-tax residents. Tax on Capital Gain : As general rule, capital gains are subject to a 10% definitive withholding tax rate. Also, in case of 23 PwC A Guide for Nicaragua the capital gain arising from the sale of property, which is subject to annotation before the public registry office, the withholding tax will be calculated as follows:

  9. Trade Nicaragua is the 106th largest export economy in the world and the 118th most complex economy according to the Economic Complexity Index (ECI). In 2017, Nicaragua exported $5.34B and imported $7.86B, resulting in a negative trade balance of $2.52B. In 2017 the GDP of Nicaragua was $13.8B and its GDP per capita was $5.84k. The top exports of Nicaragua are Insulated Wire($637M), Knit T- shirts ($588M), Coffee ($518M), Gold ($425M) and Frozen Bovine Meat ($302M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Light Rubberized Knitted Fabric ($417M), Packaged Medicaments ($359M), Refined Petroleum ($347M), Insulated Wire ($303M) and Knit T-shirts($296M).

  10. Banking in Nicaragua The banking system, nationalized in July 1979, is under the supervision of the comptroller general. The National Bank of Nicaragua, established in 1912, has been government-owned since 1940. In 1979, the bank was reorganized to become the National Development Bank. The Central Bank of Nicaragua (Banco Central de Nicaragua), established in 1961, is the bank of issue and also handles all foreign exchange transactions.

  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

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