Benefits of Making Business in Philippines | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN THE PHILIPPINES 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 THE PHILIPPINES WWW.MERGERSCORP.COM

4. Country Overview The Philippines is a tropical country in Pacific Ocean, blessed with beautiful natural landscapes - and active volcanoes and extreme weather patterns. The Philippines, consisting of some 7,107 islands, is located in the western Pacific Ocean. Taiwan lies to its north, and Vietnam to the west. It is the 73rd-largest country in the world by surface area, but with a population of some 98 million people, making it the seventh most populous country in Asia, and the 12th most populous in the world. Its capital, Manila, is the second largest city in the country after Quezon City (the former capital) - and home to most of the country's educational and political institutions. The country, once a Spanish colony, eventually gained its independence from US occupation in 1946.The Philippines is located close to the equator on the so-called Pacific Ring of Fire - or typhoon belt - a large Pacific region where many volcanic eruptions and earthquakes occur.

5. Executive Summary The Philippines is an archipelago in the South-East Asia Region, with a population of 104.9 million as of 2017. It is the thirteenth most populous country in the world. The majority of Filipinos are Christian Malays (92.2%), with Roman Catholics constituting 87.4% of the Christian population. Muslim minority groups, comprising 5.6%, are concentrated in Mindanao. The country has an adult literacy rate of 96.5%. The Philippines is currently one of Asia’s fastest growing economies with a gross domestic product growth of 6.7% at the end of 2017. Categorized as a newly industrialized country, it is transitioning from one based on agriculture to one based more on services and manufacturing. Filipinos tend to live longer now than in previous decades, with life expectancy at birth increasing from 62.2 years in 1980 to 69.1 years in 2016.In terms of physical infrastructure, the Philippine health sector has 1224 hospitals, 2587 city/rural health centres and 20 216 village health stations .

6. Introduction – Doing business in The Philippines Doing Business in the Philippines focuses on the requirements needed when setting up a business in the Philippines. With the government’s development plans and initiatives, the firm is optimistic that it will create a more conducive business environment, foster inclusive economic growth and further enhance our country’s competitiveness. In recent years, the country has grown into one of the strongest economies in Asia. The World Bank has identified the Philippine economy as one of the top growth performers in East Asia, driven by strong exports, robust domestic consumption, and infrastructure expenditures. Furthermore, according to the World Bank, the government’s commitment to further increase public infrastructure investment is expected to sustain the country’s growth momentum, thereby reinforcing business and consumer confidence. The Philippines has been one of the better performers in the Asian region despite global uncertainty. In fact, the country is expected to be the second fastest growing emerging market in the world in the next 10 years.

7. Conducting business in The Philippines In Philippines the most common types of businesses are sole proprietorships, partnerships and corporation. Sole Proprietorship Sole Proprietorship is a business structure owned by an individual who has full control/authority of its business and owns all the assets, personally owes answers to all liabilities or suffers all losses but enjoys all the profits to the exclusion of others. A sole proprietorship must apply for a business name and be registered with the Department of Trade and Industry (DTI) - National Capital Region (NCR). In the provinces, application may be filed with the DTI regional/provincial offices. Partnership Under the Civil Code of the Philippines, a partnership is treated as juridical person, having a separate legal personality from that of its members. Partnerships may either be general partnerships, where the partners have unlimited liability for the debts and obligation of the partnership, or limited partnerships, where one or more general partners have unlimited liability and the limited partners have liability only up to the amount of their capital contributions. It consists of two or more partners

8. Taxation in The Philippines Income of residents in Philippines is taxed progressively up to 32%. Resident citizens are taxed on all their net income derived from sources within and without the Philippines. For nonresident, whether an individual or not of the Philippines, is taxable only on income derived from sources within the Philippines. The corporate income tax rate both for domestic and resident foreign corporations is 30% based on net taxable income. Excluded from the income tax are dividends received from domestic corporations; interest on Philippine currency bank deposit and yield from trust funds. It is important to note that foreign corporations, whether resident or nonresident, are taxable only on income derived from sources within the Philippines. A 12% value added tax (VAT) of the gross selling price is imposed to all importation, sale, barter, exchange or lease of goods or properties and sale of services. The term 'Gross selling price' means the total amount of money or its equivalent that the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods or properties, excluding the value added tax.

9. Trade The Philippines is currently our 31st largest goods trading partner with $21.3 billion in total (two way) goods trade during 2018. Goods exports totaled $8.7 billion; goods imports totaled $12.6 billion. The U.S. goods trade deficit with the Philippines was $3.9 billion in 2018. U.S. total exports of agricultural products to the Philippines totaled $3.0 billion in 2018, our 11th largest agricultural export market. Leading domestic export categories include: soybean meal ($888 million), wheat ($628 million), dairy products ($248 million), pork & pork products ($116 million), and poultry meat & prods. (ex. eggs) ($110 million). The U.S. goods trade deficit with the Philippines was $3.9 billion in 2018, a 22.5% increase ($716 million) over 2017.The United States has a services trade deficit of an estimated $3.5 billion with the Philippines in 2017 (latest data available), up 0.5% from 2016. Philippines FDI in the United States (stock) was $750 million in 2017, up 1.4% from 2016.

10. Banking in The Philippines The BSP monitors and compiles various indicators on the Philippine banking system. The Philippine banking system is composed of universal and commercial banks, thrift banks, rural and cooperative banks. Universal and commercial banks represent the largest single group, resource-wise, of financial institutions in the country. They offer the widest variety of banking services among financial institutions. In addition to the function of an ordinary commercial bank, universal banks are also authorized to engage in underwriting and other functions of investment houses, and to invest in equities of non-allied undertakings. The thrift banking system is composed of savings and mortgage banks, private development banks, stock savings and loan associations and microfinance thrift banks. Thrift banks are engaged in accumulating savings of depositors and investing them. They also provide short-term working capital and medium- and long-term financing to businesses engaged in agriculture, services, industry and housing, and diversified financial and allied services, and to their chosen markets and constituencies, especially small- and medium- enterprises and individuals.

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