Benefits of Making Business in Guatemala | Buy & Sell Business

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

4. Country Overview Guatemala, a Central American country south of Mexico, is home to volcanoes, rainforests and ancient Mayan sites. The capital, Guatemala City, features the stately National Palace of Culture and the National Museum of Archaeology and Ethnology. Antigua, west of the capital, contains preserved Spanish colonial buildings. It is a country of striking features and a strong indigenous culture. It is mountainous, forested and dotted with Mayan ruins, lakes, volcanoes and orchids Lake Atitlán, formed in a massive volcanic crater, is surrounded by coffee fields and villages.

5. Executive Summary Guatemala, country of Central America. The dominance of an Indian culture within its interior uplands distinguishes Guatemala from its Central American neighbors. Guatemala is bounded to the north and west by Mexico, to the northeast by Belize and (along a short coastline) by the Gulf of Honduras, to the east by Honduras, to the southeast by El Salvador, and to the south by the Pacific Ocean. Guatemala has a population of 17.2 million people, it is the most populous country in Central America. Spoken languages are Spanish (official) and about twenty Mayan languages especially in rural areas.

6. Introduction – Doing business in Guatemala Ease of Doing Business in Guatemala averaged 94.50 from 2008 until 2019, reaching an all time high of 117 in 2008 and a record low of 79 in 2013. One of the most important benefits of doing business in Guatemala is its advantageous geographical location. Additionally, doing business in Guatemala enables companies to establish themselves in what is a major regional logistics hub. Guatemala’s proximity to Mexico and to the rest of Central America makes the country a bridge to a market that has over 68 million inhabitants and a GDP of US $319 billion.

7. Conducting business in Guatemala The Guatemala Commercial code allows for the incorporation of different types of business companies in the jurisdiction namely: Guatemala General Partnerships, Limited Liability Companies, Limited Partnership and Stock corporations. Foreign companies are allowed by law to register company branches in Guatemala. Incorporating a company in Guatemala can be done with the assistance of an agent who is licensed to provide this service to nationals of foreign countries. Smartly using your Guatemala registered company as part of an integrated approach to asset protection a lot of financial benefits can be generated.

8. Taxation in Guatemala Trade or business income of individuals is taxed at corporate rates. Personal income from employment is taxed at progressive rates ranging from 5% to 7%. Nonresident individuals are taxed via withholding at a flat rate of 15% on Guatemala-source employment or professional services income. Companies are subject to income tax only on their Guatemala- source income. Dividends and other income payable abroad are taxed separately by way of withholding taxes (WHTs).

9. Trade Guatemala is the 82nd largest export economy in the world and the 82nd most complex economy according to the Economic Complexity Index (ECI). In 2017, Guatemala exported $10B and imported $13.5B, resulting in a negative trade balance of $3.5B. In 2017 the GDP of Guatemala was $75.6B and its GDP per capita was $8.15k. The top exports of Guatemala are Bananas ($1.32B), Coffee ($723M), Knit Sweaters ($621M), Raw Sugar ($534M) and Palm Oil ($414M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($2.5B), Cars ($342M), Light Rubberized Knitted Fabric ($229M), Packaged Medicaments ($204M) and Broadcasting Equipment ($191M).

10. Banking in Guatemala Overall, the banking system remains stable. According to information from the Superintendence of Banks (SIB), the Guatemalan banking system comprises 17 commercial banks, which held an estimated USD 43.75 billion in assets in 2018. The six largest banks control about 89 percent of total assets. In addition, there are 13 non-bank financial institutions specializing in investment operations, three licensed exchange houses, twenty-eight insurance companies, six credit card issuers, fourteen bonded warehouses, and four offshore banks which, by law, are affiliated with domestic financial groups. The Superintendence of Banks is responsible for regulating the financial services industry.

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