If you are applying for an E-2 visa and plan to purchase an existing business, your focus is likely on the immigration requirements. However, one of the most critical steps in this journey is not an immigration rule at all, but a business necessity: E-2 visa due diligence. While USCIS does not have a specific “due diligence” requirement, failing to perform it can jeopardize your entire E-2 visa application.
What is E-2 Visa Due Diligence?
In short, due diligence is the process of doing your homework. It is a thorough investigation and evaluation of a business before you finalize the purchase. The goal is to verify that the business is exactly what the seller has represented it to be and that there are no hidden surprises that could destroy your investment and, along with it, your E-2 visa status.
Key Areas to Investigate in Your Business Purchase for E-2
A proper due diligence process goes far beyond a simple walkthrough of the business. It is a deep dive into the company’s financial and legal health.
Verifying Financial Records
This is the most critical component. You must verify that the business’s income, expenses, and profitability match what the seller has claimed. This involves a detailed review of several years’ worth of corporate tax returns, bank statements, and profit-and-loss statements. This step is essential for proving the E-2 requirement that the business is “non-marginal,” meaning it has the capacity to generate more than enough income to support your family.
Checking Legal Standing and Liabilities
A business that looks profitable on the surface could be hiding devastating legal issues. Due diligence involves checking for any pending lawsuits, legal disputes, or outstanding tax liabilities. Uncovering these hidden problems is crucial, as inheriting them could drain your capital and render the business unviable.
Confirming Business Assets
You must also confirm that all business assets listed in the sale, such as equipment, inventory, and real estate, are real, accurately valued, and free of liens. This is directly related to making a “substantial investment” in a real, active business.
How Due Diligence Protects Your E-2 Visa Application
This business-focused investigation is directly linked to your immigration success. The E-2 visa requires you to invest in a “real, active, and non-marginal” enterprise.
Ensuring a Viable E-2 Investment
Due diligence is your method for proving that the business is, in fact, a viable E-2 investment. If your investigation uncovers that the business is not financially sound, has hidden debts, or is not legally compliant, it may not meet the E-2 requirements. A consular officer can easily deny a case if the business is clearly a poor investment that is unlikely to succeed or create jobs.
Protecting Your E-2 Investment
Buying a business is a significant financial commitment. Without proper due diligence, you risk paying more than the business is worth or inheriting problems that could undermine its profitability. By conducting a thorough investigation, you protect yourself from a bad investment that could jeopardize your E-2 visa renewal in the future.
Your Path to a Secure E-2 Investment
While due diligence is technically a business purchase step, it is an essential part of a successful E-2 visa strategy. It helps you verify that the business is as described, protects your substantial investment, and ensures that you are acquiring a real, active enterprise that can meet the visa’s requirements for years to come.
If you’re planning to buy a business for an E-2 visa and want guidance on conducting due diligence, schedule a consultation with us today to ensure your investment is sound.
