Benefits of Making Business in madagascar | Buy & Sell Business

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

4. Country Overview Madagascar, the big red island. Madagascar is the largest African island situated in the Indian Ocean, about 450 km (280 mi) east of the coast of Mozambique. The fourth largest island in the world has been isolated for about 88 million years and many of its plants and animals are unique to the island. Although located some 250 miles (400 km) from the African continent, Madagascar’s population is primarily related not to African peoples but rather to those of Indonesia, more than 3,000 miles (4,800 km) to the east.

5. Executive Summary Madagascar, a country in southern Africa located in the Indian Ocean, east of Mozambique, with a land mass of 587,000 km2 and 25.6 million inhabitants. Madagascar have considerable natural resources. Madagascar consists of three parallel longitudinal zones—the central plateau, the coastal strip in the east, and the zone of low plateaus and plains in the west. The steep eastern face of the plateau is drained by numerous short, torrential rivers, such as the Mandrare, the Mananara, the Faraony, the Ivondro, and the Maningory, which discharge either into the coastal lagoons or directly into the sea over waterfalls and rapids.

6. Introduction – Doing business in Madagascar Madagascar is ranked 161 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Madagascar remained unchanged at 161 in 2019 from 161 in 2018. Madagascar is a francophone island that is rich in natural resources – from sulphur, nickel and gold, to oil and gas. This wealth holds a lot of potential for the economy.

7. Conducting business in Madagascar own and spend your daily time and focus there to see it through. There are several ways of doing business in Madagascar, the most common being the setting up of a limited liability company. Foreign entrepreneurs may also opt to set up a public limited company, a branch office or a representative office, Companies can obtain their statistical card, tax registration confirmation, commercial registration number, and professional card at the one-stop shop. shop Registering a business in Madagascar can take about a month and a few hundred dollars of total capital if you do it all on your

8. Taxation in Madagascar Value Added Tax (VAT) - 20% (standard rate). Company Tax : • Corporate tax (companies with an annual turnover below MGA 200 million): 5% of 70% of turnover, with a minimum tax of MGA 16,000. • A reduction of 2% of the amount of purchases of goods and equipment subject to regular invoices is applicable. In any case, tax due cannot be less than 3% of the turnover. • Corporate tax (companies with an annual turnover above MGA 200 million): 20% Withholding Taxes : Dividends: 0%; Interests: 0% (interest paid to banks and foreign financial institutions)/ 20% (financial loan interest); Royalties: 10%.

9. Trade Madagascar is the 116th largest export economy in the world and the 121st most complex economy according to the Economic Complexity Index (ECI). In 2017, Madagascar exported $3.42B and imported $3.66B, resulting in a negative trade balance of $236M. In 2017 the GDP of Madagascar was $11.5B and its GDP per capita was $1.56k. The top exports of Madagascar are Vanilla ($894M), Raw Nickel ($414M), Cloves ($288M), Knit Sweaters ($184M) and Cobalt ($143M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($445M), Rice ($237M), Delivery Trucks ($99M), Palm Oil ($85.7M) and Packaged Medicaments ($78.9M).

10. Banking in Madagascar The banking sector is highly concentrated: the four main banks hold 86% of loans. The banking penetration rate, i.e. access to a bank account, among Madagascar's population stood at 5.7% in 2014, making the country's financial sector one of the least developed in Sub-Saharan Africa. Domestic credit provided by financial sector (% of GDP) in Madagascar was 18.37 as of 2018. Its highest value over the past 56 years was 41.31 in 1981, while its lowest value was 6.62 in 1962.

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