Last Updated on May 24, 2024 by Anda Malescu
The article discusses everything you need to know about buying a business for E2 visa. It is important to note that buying a business is just one of the several viable options you have for obtaining an E2 visa. But before discussing this topic further, let us explore important aspects about the E2 visa.
What is E2 Visa?
The E2 Visa is a nonimmigrant visa for individuals from treaty countries who make a substantial investment in a commercial enterprise in the United States. The E2 Investor Visa allows the investor to temporary live and work in the United States, together with their spouses and children, to develop the business.
To qualify for an E2 Visa, the investor must meet the minimum requirements listed below:
- The Investor must be a national of a country with which the United States maintains a Treaty of Commerce and Navigation.
- The Investor must invest or be in the process of investing a substantial amount of capital in a business in the United States.
- The capital invested must be placed at risk in the U.S. business and must be subject to loss if investment fails.
- The Investor must intent to develop and direct the US business in which he or she invests.
More on the requirements, eligibility and benefits of the E2 visa can be found here. For Canadian citizens, visit E2 visa for Canadians to learn more. If applying within the US, visit Applying for E2 visa while in US.
For information about E2 visa for family members, visit frequently asked questions about E2 visa spouse children and family members.
Investment options: Buy a Business for E2 visa
Generally, there are three options for an investor to invest a substantial amount of capital in a business the United States for E2 visa:
- Start and invest in a new US business to obtain E2 investor visa. This involves registering a new company and investing in the new business until it is ready to start operating. The investment could be in equipment, leasing an office, purchasing inventory, investing in marketing and branding, hiring staff and basically anything that is needed for a business to become operational. The new business route requires a 5-year business plan to show how the business will hire US workers and benefit the US economy.
- Invest in an existing business for E2 visa. An E2 visa applicant also has the option to make an investment in an existing business as a partner by purchasing shares. This can be done to accelerate growth and take the business to a new level. To obtain an E2 visa for an existing business, a business valuation is necessary to show the investment was substantial relative to the value of the business. The investor must purchase and own at least 50% of the existing business and/or have control of the business.
- Buy a business for E2 visa. This can be in the form of purchasing the shares of an existing business or buying substantially all the assets of a business. The second option is called asset sale and is popular with E2 investors because it removes certain risks related to litigation and pre-existing debt. When purchasing a business for E2 visa, consulates allow the investor to deposit the money for the purchase in an escrow account and have the money automatically released to the seller of the business only if the E2 visa is approved.
Buying A Business for E2 Visa
Here we will examine the option to buy a business for E2 visa in more detail.
Select the type of business
The first step is for the investor to decide what business they want to buy. In our experience, the most successful E2 visa purchases of business are when the investor buys a business they are familiar with. For example, a type of business the investor developed in the home country or a type of business the investor has experience as an employee.
If the investor is not familiar with any type of business or cannot invest in a type of business that they are familiar with, then the second-best option is to find a business that is simple to run and has an established market for its products or services. Such a business can be a restaurant, car wash, a gas station or a grocery store.
Select specific businesses to buy
Once the investor has decided on the type of business they want to purchase, it is now time to select potential acquisition targets. For this part of the process, the investor can use the services of a business broker.
Depending on the state, the business broker might have to be licensed. For example, Florida does not have a specific business broker license, but prospective business brokers must first obtain a Florida real estate license because the sale of a business is considered “real estate.” The targeted business must be operational and employing US workers.
Negotiate the terms and purchase price
If the investor has found a suitable business to buy, then the investor should contact the seller and start negotiating the price and the rest of the terms of the transaction. Important points to negotiate are any training or involvement on the part of the owner or manager after the purchase, ensuring disclosure of any hidden liabilities and any possible non-compete or non-solicitation clauses.
Conduct due diligence
After negotiations are over and investor signed a purchase-sale agreement the due diligence process starts. There are two types of due diligence that needs to be done when buying an existing US business:
- legal due diligence, and
- financial due diligence
The legal due diligence must be done by a lawyer and usually involves checking for any outstanding litigation, any non-disclosed liens or liabilities and the title of any properties if real estate is part of the deal.
Financial due diligence involves checking if the past financial performance of the acquired business was not materially misrepresented to the buyer. It involves examining financial statements, tax returns, back accounts and payroll records. It can be performed by an accountant or other financial professional.
Our team includes a Chartered Financial Analyst (CFA), one of the most respected designations in finance, with an extensive business valuation expertise, including E2 visa business valuations. This allows us to provide expert financial analysis directly to immigration officers, addressing any potential concerns about the business or investment value upfront and minimizing the risk of questions and requests for further evidence.
If there are some irregularities during the due diligence process the deal can be called off or renegotiated.
Closing
As part of the closing, the buyer transfers the whole amount necessary for the purchase of the business to the escrow account. Then the investor’s immigration attorney finalizes the E2 visa application and sends it either to USCIS or the US consulate in the investor’s country of residence.
If the E2 visa is approved, the investor will notify the escrow agent who will release the funds to the seller. The E2 investor then takes possession of the business, either immediately if applying for change of status from within the United States or upon arrival to the US if applying for a visa through a US consulate.
Pros and cons
Buying a business for E2 visa has certain advantages as compared to starting a new business or investing in an existing business as a partner.
The most important advantage of buying a business for E2 visa is that the closing can be made contingent upon approval of the E2 visa, unlike the other options which require the investor to have already spent large amounts of money before applying for E2 visa. This decreases the risk and minimizes losses for the investor if the consulate does not approve the E2 visa.
Another advantage of buying a business for E2 visa is that the investor is not starting from zero and many businesses for sale already have a positive cash flow.
The disadvantages include the higher upfront cost to acquire a running business and possible hidden problems with the business.
Malescu Law can assist
Our immigration lawyers have a proven track record of successfully securing E2 visas for investors buying an existing business for E2 visa.
For more information on the E2 visa or to consult with our best E2 visa lawyers in USA about buying a business for E2 visa contact us or book a consultation.
We serve companies and individuals across all 50 states, the District of Columbia and Puerto Rico.
Malescu Law P.A. – Business & Immigration Lawyers
