Benefits of Making Business in Chile | Buy & Sell Business

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

4. Country Overview Chile, country situated along the western seaboard of South America. It extends approximately 2,700 miles (4,300 km) from its boundary with Peru, at latitude 17°30′ S, to the tip of South America at Cape Horn, latitude 56° S, a point only about 400 miles north of Antarctica. A long, narrow country, it has an average width of only about 110 miles, with a maximum of 217 miles at the latitude of Antofagasta and a minimum of 9.6 miles near Puerto Natales. It is bounded on the north by Peru and Bolivia, on its long eastern border by Argentina, and on the west by the Pacific Ocean. Chile exercises sovereignty over Easter Island, the Juan Fernández Archipelago, and the volcanic islets of Sala y Gómez, San Félix, and San Ambrosio, all of which are located in the South Pacific. Chile also claims a 200-mile offshore limit. The capital is Santiago.

5. Executive Summary Much of northern Chile is desert; the central part of the country is a temperate region where the bulk of the population lives and where the larger cities, including Santiago, are located. South- central Chile, with a lake and forest region, is temperate, humid, and suitable for grain cultivation; and the southernmost third of the country, cut by deep fjords, is an inhospitable region—cold, wet, windy, and limited in resources. The economy of Chile is based on primary economic activities: agricultural production; copper, iron, and nitrate mining; and the exploitation of sea resources. Most of Chile’s rivers originate in the Andes and flow westward to the Pacific Ocean, draining the intermediate depression and the coastal ranges. They are therefore quite short. While their steep gradients and turbulent flow make them unsuitable for navigation.

6. Introduction – Doing business in Chile Economic success was founded on exportation of raw materials, notably copper, with mining as Chile’s largest economic sector, followed by agriculture and forestry. The liberalisation of European and Asian markets has also increased exports of vegetables, fruit, fishmeal and fish, on top of being a leading wine-producing country. The Government actively encourages foreign investment in the market-orientated economy with practically all forms of business permitted. Chile remains a tax-friendly, low corruption and therefore low-risk area for business ventures. Successful business relationships in Chile will predominantly be formed on a human level rather than strictly corporate. Initiating a friendly and trusting rapport will be key in first meetings as personal relationships take precedent over business matters.

7. Conducting business in Chile Chile is a long, thin country at the tip of Latin America that is widely considered one of the best countries in the region to do business. Across several indicators in the World Bank’s Doing Business Report, Chile beats out the regional competition. In 2018, Chile ranked 55th in the world on the World Bank’s Doing Business report, coming in just after Mexico, which ranked 49th. However, in recent years, Chile’s business-friendly reputation has slid from 34th to 55th which has been subject to some controversy. Start-Up Chile is helping Chile transition to a knowledge and technology-based economy in order to decrease its reliance on minerals such as copper and lithium, which lose more value every year. As a result, Chile has one of the most mature entrepreneurial ecosystems in Latin America and has served as a model for the region.

8. Taxation in Chile A resident for Chilean tax purposes will be taxable with the residents Chilean income tax rates, and subject to Second Category Tax (employment income tax) on a monthly basis, which has progressive rates ranging from 0 to 35 percent. Taxes on goods and services within the borders are levied according to the general principle of territoriality of law contained in article 16 of the Civil Code. The Chilean tax system contemplates direct and indirect taxes, where income tax and value- added tax (VAT) are relevant to businesses as well as others that will be addressed below.

9. Trade Chile has a very open economy, highly dependent on international trade, which represented 55.7% of the country's GDP in 2017 (Banque mondiale). The country mainly exports copper (50% of its exports), fruits and fish products (which record the highest increase). Imports involve mainly fuels, minerals and oil, machinery, vehicles, electric equipment and electronics. Services account for 13% of exports and 17% of imports. Chile's top three exporting partners are China, the United States and Japan while its main importers are the United States, China and Brazil. Chile has signed Free Trade Agreements (FTAs) with several important economies, notably the European Union, the United States, China and South Korea and is a member of the Pacific Alliance since 2012 with Mexico, Germany and Peru.

10. Banking in Chile Chile’s banking system is composed of 24 banks and is quite concentrated, with the top 5 controlling 72% of the country’s bank assets. The main national bank and the one in charge of controlling inflation and creating money is the Banco Central de Chile. Other important banks are Santander Chile, Banco de Chile, BancoEstado, BCI, BBVA Chile, CorpBanca and Scotiabank Chile.

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