Benefits of Making Business in Slovakia | Buy & Sell Business

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

4. Country Overview Slovakia, a mountainous landlocked country in Central Europe that is bordered by Austria and the Czech Republic in west, by Hungary in south, by Poland in north, and the Ukraine in east. Formerly part of Czechoslovakia, it was known as the Slovak Socialist Republic from 1969 until 1990. In 1993, the Slovak Republic became an independent sovereign state. The country covers an area of 49,035 km², making it somewhat larger than half the size of Portugal or about twice the size of the U.S. state New Hampshire. Slovakia has a population of 5.4 million people (in 2015), Slovakia's capital and largest city is Bratislava. Spoken languages are Slovak and Hungarian. The Slovak Republic (Slovakia) is a landlocked country in Central Europe. It is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east, and Hungary to the south. Its capital is Bratislava.

5. Executive Summary Right at the heart of Europe with a history closely intertwined with its neighbours, Slovakia has managed to preserve its own language and distinct culture. It was part of Czechoslovakia until the "velvet divorce" in January 1993. Independent Slovakia went through an initial period of political turbulence, but weathered the 2008 financial crisis to emerge as a prosperous and stable parliamentary democracy. The country joined the European Union in 2004, and the eurozone in 2009, and sent troops on peacekeeping missions to Afghanistan, Iraq, and Kosovo. Slovakia has a significant Romany population, which suffers disproportionately high levels of poverty and social deprivation. Slovakia is a country with a dynamic and efficient economy and a large industrial base. We know how to respect and protect our natural riches. Slovakia offers a complete and varied list of activities for tourists.

6. Introduction – Doing business in Slovakia Slovakia is generally recognised as an open market economy and has recently become known as a central European leader in economic development and rated by World Bank as one of the 20 most investor friendly countries in the world. It offers almost the whole EU within 2000 km radius as well as acts like the Gateway to Balkans and another 440 million inhabitants. It is politically stable EU Member State with 19% flat tax rate. Over 90% of more than 200 existing foreign investors in Slovakia have further expansion plans (in Slovakia). A joint stock company, Akciová Spolocnost (A.S) on the other hand is based on a minimum share capital of 25,000 Euro and can take two forms according to the share transferability: it can be private or public. A private joint stock company cannot freely trade its share, unlike the public joint stock company.

7. Conducting business in Slovakia The business start-up costs in Slovakia are influenced by several factors. One of the most important factors is the type of structure selected by the future business owner. For foreign investors, the limited liability company represents the most common business form because of the many advantages it offers from a fiscal point of view. No matter the type of structure selected, the steps to be completed when opening a business in Slovakia are enumerated below: • choosing and reserving the trade name for the business • preparing the company’s statutory documents in the case of limited and joint stock companies • opening the corporate bank account and depositing the share capital, as required by the law • filing the documents with the Trade Register in order to obtain the certificate of registration • registering for taxation, VAT and social security purposes with the local tax office in the city the company will operate • applying for the necessary licenses depending on the industry to operate in.

8. Taxation in Slovakia The tax rates applicable in Slovakia are as follows: -The tax base of up to 176.8 times the subsistence level (i.e. 36,256.38 euros is subject to a 19% tax rate. The exceeding part of the tax base is taxed at 25%. -Dividend income arising from profits before 2004 and after 1 January 2017 is included in a specific tax base taxable at a 7% rate and 7% withholding tax if paid by a Slovak company. -Income of constitutional authorities from dependent activity is, in addition to the tax calculated as listed above, subject to a special tax rate of 5%. - Income from capital gains is included in a specific tax base taxable at a 19% rate. There are no local taxes on personal income in Slovakia.

9. Trade Slovakia is the 39th largest export economy in the world and the 16th most complex economy according to the Economic Complexity Index (ECI). In 2017, Slovakia exported $77.5B and imported $78B, resulting in a negative trade balance of $527M. In 2017 the GDP of Slovakia was $95.8B and its GDP per capita was $31.6k. The top exports of Slovakia are Cars ($15.7B), Vehicle Parts ($5.51B), Video Displays ($4.99B), Broadcasting Equipment ($2.77B) and Refined Petroleum ($1.92B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($7.38B), Broadcasting Equipment ($4.77B), Cars($2.79B), Petroleum Gas ($2.27B) and Crude Petroleum ($2.06B). The top export destinations of Slovakia are Germany ($15.9B), the Czech Republic ($7.97B), France($5.15B), Italy ($5.04B) and the United Kingdom($4.92B). The top import origins are Germany($14.4B), the Czech Republic ($11.1B), China ($5.69B), Poland ($4.77B) and Vietnam ($4.45B).

10. Banking in Slovakia The National Bank of Slovakia, the country’s central bank, became part of the Euro system in 2009. The Slovak central bank works to keep prices stable, working with the European Central Bank and other central banks in the Eurozone. It also supervises financial institutions and banks in Slovakia. Slovakia’s banking sector comprises 27 financial institutions, with universal banks focused on retail and corporate banking making up the majority of banks. Three major banks – Slovenska Sporitelna, VUB Banka, and Tatra Banka dominate the sector, accounting for over 50% of its total assets. Headquartered in Bratislava, Slovenska Sporitelna is the biggest of the commercial banks in Slovakia, according to total assets, client deposits, retail loans, and the number of branches and ATMs. Established in 1825 as Slovakia’s first savings bank, it became a member of the Erste Bank Group (Austria) in 2001. The bank serves retail and corporate clients, offering a wide range of financial products and services. It currently serves over 2.2 million customers and manages 271 branches and eight regional centers, as well as 805 ATMs, throughout Slovakia.

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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