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Benefits of Making Business in Romania | Buy & Sell Business

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Benefits of Making Business in Romania | Buy & Sell Business

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

  4. Country Overview The largest of the Balkan countries, Romania has dramatic mountain scenery and a coastline on the Black Sea. It has seen numerous empires come and go from the Roman and Ottoman to the Austro-Hungarian. After World War II the country fell under Communist rule, although the leadership pursued a foreign policy independent of that of the Soviet Union. The legacy of Communist leader Nicolae Ceausescu lingered long after the uprising which brought about his downfall on Christmas Day 1989. A slower developer than other former communist countries of eastern Europe, Romania took a major step away from its past when it was one of seven countries to join Nato in late March 2004. In April 2005 Bucharest signed an EU accession treaty, paving the way for Romania eventually to join the union in January 2007.

  5. Executive Summary A virtual guide to Romania, a country in East Central Europe bordering on the Black Sea in south east, it borders Bulgaria, Hungary, Moldova, Serbia and Ukraine, and it shares a maritime border with Turkey. Romania covers an area of 238,391 km², compared it is somewhat smaller than the United Kingdom (242,900 km²), or slightly smaller than the U.S. state of Oregon. Romania has a population of 19.8 million people (2015), capital and largest city is Bucharest, with a population of 2 million people. Spoken language is Romanian (official). Romania’s economic freedom score is 68.6, making its economy the 42nd freest in the 2019 Index. Its overall score has decreased by 0.8 point, with declines in judicial effectiveness and investment freedom exceeding improvements in property rights, the tax burden, and government spending. Romania is ranked 21st among 44 countries in the Europe region, and its overall score exactly matches the regional average and is above the world average.

  6. Introduction – Doing business in Romania Romania's business laws are not exactly the most friendly on earth, but if you force yourself to go through the red tape, you can be the 'Administrator' of your own business sooner than you think. Just make sure you sign every single page of every single document, back and front, even on the blank sides. Basically once you do that, you're in good shape. You can choose to open your business as a PFA (Persoana Fizica Autorizata), Romania's equivalent of a Sole Proprietorship, or a SRL (Societate cu Raspundere Limitata) or S.A (Societate cu Actiuni). Unless you're planning to hire a bunch of people in short order, don't worry about SRL or SA. Your accountant and lawyer will give you that advice based on your business model anyway.

  7. Conducting business in Romania It represents the most common way to start a business in Romania and it is also the preferred legal entity of foreign investors registering a Romanian company. It is incorporated with a capital of RON 200. It can be founded by a single shareholder. The main feature of a limited company is obviously that the liabilities of social debts is limited to contributions to subscribed and paid shares. As we presented above, the minimum share capital for a Romanian limited liability company is of RON 200, which has to be divided into shares that have a value of minimum RON 10. The maximum number of partners that can associate in a limited liability company is 50. These shareholders or associates can be legal entities or natural persons. A Romanian LLC can have one or more directors, who may have full or limited powers; they can be Romanian or foreign citizens. The term of a Romanian director may be limited or unlimited.

  8. Taxation in Romania A flat personal income tax (PIT) rate of 10% is generally in place. However, there are certain exceptions from this rule (e.g. the tax rate for dividends, the tax rate for income from the transfer of immovable property, the tax rate for income from gambling activities depends on the income level). There are no local taxes on personal income in Romania. Romanian citizens domiciled in Romania are considered Romanian tax residents and are taxed on their worldwide income (except for salary income received from abroad for work performed abroad, which is tax exempt). Romanian citizens domiciled in Romania that prove the tax residency status in a state that does not have in place a double tax treaty (DTT) with Romania continue to be taxable in Romania on their worldwide income for the calendar year in which the change of residence occurs, as well as for the next three calendar years.

  9. Trade Romania is the 41st largest export economy in the world and the 31st most complex economy according to the Economic Complexity Index (ECI). In 2017, Romania exported $70.5B and imported $81.4B, resulting in a negative trade balance of $10.9B. In 2017 the GDP of Romania was $211B and its GDP per capita was $26.7k. The top exports of Romania are Vehicle Parts ($7.09B), Insulated Wire ($4.55B), Cars ($4.04B), Refined Petroleum ($1.96B) and Rubber Tires ($1.79B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($3.4B), Packaged Medicaments ($2.74B), Crude. Petroleum($2.36B), Cars ($2.27B) and Insulated Wire ($2.03B). The top export destinations of Romania are Germany($16B), Italy ($7.31B), France ($4.44B), the United Kingdom ($2.75B) and Hungary ($2.69B). The top import origins are Germany ($16.3B), Italy ($8.02B), Hungary ($5.83B), France ($4.42B) and Poland($4.37B).

  10. Banking in Romania The National Bank of Romania acts as the central monetary authority in the country. The central bank sets monetary policy, licenses and supervises banks in Romania, and issues currency in the form of coins and banknotes. Established in 1990, Banca Comerciala Romana is the largest of the banks in Romania in terms of assets. BCR offers retail, treasury and capital markets, and corporate and investment banking services. Operating as a subsidiary of Erste Group (Austria), the bank oversees a network of 22 corporate business centers, 23 mobile offices, 551 retail units, more than 2,100 ATMs, and 13,500 POS terminals. BRD – Group Societe Generale started its operations in Romania in 1990 after purchasing the assets and liabilities of the former Banca de Investitii. BRD oversees 870 branches and serves 2.2 million customers through three business segments: retail land SMEs, investment banking, and large corporations. BRD is the largest of the banks in Romania in terms of number of branches.

  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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