Benefits of Making Business in Portugal | Buy & Sell Business

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

4. Country Overview Portugal, a country with a rich history of seafaring and discovery, looks out from the Iberian peninsula into the Atlantic Ocean. When it handed over its last overseas territory, Macau, to Chinese administration in 1999, it brought to an end a long and sometimes turbulent era as a colonial power. The roots of that era stretch back to the 15th century when Portuguese explorers such as Vasco da Gama put to sea in search of a passage to India. By the 16th century these sailors had helped build a huge empire embracing Brazil as well as swathes of Africa and Asia. There are still some 200 million Portuguese speakers around the world today. For almost half of the 20th century Portugal was a dictatorship in which for decades Antonio de Oliveira Salazar was the key figure. This period was brought to an end in 1974 in a bloodless coup, picturesquely known as the Revolution of the Carnations, which ushered in a new democracy. The Portuguese countryside is very varied. In the north the land is mountainous, with a rainy climate and is characterised by vineyards and small farms.

5. Executive Summary Portugal, a democratic republic located on the Iberian Peninsula in Southwestern Europe, is bordered by the Atlantic Ocean to the west and south and Spain to the east and north. Portugal lost much of its wealth and status with the destruction of Lisbon in a 1755 earthquake, occupation during the Napoleonic Wars, and the independence of Brazil, its wealthiest colony, in 1822. Portugal is a founding member of the North Atlantic Treaty Organization and entered the European Union in 1986. Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past two decades, successive governments have privatised many state-controlled firms and liberalised key areas of the economy, including the financial and telecommunications sectors. Part of the European Monetary Union (EMU) since 1998, Portugal began circulating the euro on 1 January 2002. For 2018, the projected gross domestic product is 2.1%; 1.8% projected in 2019.Portugal supports clients with the local knowledge and skills of its people and with access to a broad range of other professionals across the PwC global network of firms.

6. Introduction – Doing business in Portugal Portugal’s investment conditions remain stable. Portugal offers an easy process for setting up new businesses, reduced the time for obtaining administrative permits and improved its labor legislation. The World Bank's Doing Business report ranks Portugal in 15th place most attractive location to do business in the EU, ahead of many southern and eastern European countries competing with Portugal for international investment, and 34th place in the world’s 190 economies. According to a study published in the European Central Bank’s Bulletin, Portugal is one of the three countries in Europe with less restrictions to foreign direct investment. For international investors looking for a place to invest in Europe, Portugal offers several advantages. Portugal is an ideal location for near shoring industrial and services facilities because of its access to Europe’s 500 million consumers’ market. Portugal also offers access to the Portuguese-speaking countries in four continents: Europe, America, Africa and Asia.

7. Conducting business in Portugal Opening a company in Portugal and carrying on businesses can be done in a fast manner, as the authorities have encouraged the foreign investments with the help of several and important incentives. When deciding to relocate Portugal for small business purposes, it is advisable to analyze the market and the major industries you wish to start your activities in. A local or a foreign entrepreneur who wants to establish his presence on the Portuguese market can choose from several business entities like the limited liability company, sole proprietorship, limited partnership or a cooperative, it is best to seek advice and guidance from our experts in company formation in Portugal. You should consider the following steps when registering a company in Portugal with the Conservatories de Regis to Commercial: • choose a name for your small company; • draft the Articles of Association; • set up a bank account; • register for VAT and other social contributions; • apply for the proper business license.

8. Taxation in Portugal If you are classed as a tax resident, your worldwide income is subject to Portuguese income tax. This income could include salary, rental income and capital gains. Portugal has various tax treaties with other countries, including a tax treaty with the UK, which ensures that you should not have to pay tax more than once on any income in multiple jurisdictions.If you are a non- resident in Portugal, only income earned in Portugal will be liable for tax, typically at 20%. Failing to correctly submit your Portuguese tax return and payment on time can be costly. Penalties for late filing start at €200, but can rise to €2,500. Late payment penalties can range from 10% of the amount owed, to double the total amount – but is capped to €55,000. Any penalties may also attract interest. However, fines and penalties depend entirely on your personal circumstances. Inheritance tax in Portugal is incredibly favourable. Not only does it only apply to Portuguese assets, it’s also only 10% while passing your estate to a spouse or your children will mean your estate is exempt from inheritance tax.

9. Trade Portugal's economy is open to foreign trade, which represents 87% of its GDP . While the country has traditionally exported agricultural products, textiles and clothing, it has begun to export an increasing amount of technological equipment. In 2018, the main trading partners were Spain (25.4% of total exports), France (12.6%), Germany (11.5%) and the UK (6.3%), with the biggest trade surpluses being recorded with the US, the UK and France. Portugal’s main suppliers were Spain (32.2%), Germany (13.7%), France (7.6%), and Italy (5.3% - Comtrade). The EU accounts for three-quarters of overall imports and exports. The country has a structural trade balance deficit. In 2018, Portugal exported goods worth USD 68.5 billion (+10.2% year- on-year), with imports growing at a faster pace (+12.4), to reach USD 88.6 billion. However, Portugal is a net service exporter (USD 37.4 billion of exports against USD 18 billion of imports - data by WTO), thus the overall balance of trade was almost null.

10. Banking in Portugal The central monetary authority that oversees banks in Portugal is Banco de Portugal. It is a member of the European System of Central Banks (ESCB). Portugal, a member of the European Union, operates a modern banking system that offers advanced financial products. In fact, it oversees one of the world’s most advanced interbank networks. The rating agency predicts that asset quality and capital in the country’s banking system will post a stable but weak growth. However, with the increase in investments and exports that will propel GDP growth, Moody’s expects to see an improvement in banks in Portugal over the outlook period. Founded in 1876 in Lisbon, state-owned financial institution Caixa Geral de Depósitos (CGD) is the largest of the banks in Portugal in terms of total assets, and the country’s largest public- sector banking corporation. It also ranks 109th on the list of major banks in the world and is the 69th largest European bank. The bank operates through branches, representative offices, and direct equity interest in local financial institutions in 23 countries located on four continents.

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