What Is Due Diligence and Why Is It Important for an E-2 Visa?

If you’re applying for an E-2 visa and planning to purchase a business in the United States, due diligence is a critical step in the process. While due diligence is not a requirement specific to the E-2 visa, it plays a crucial role in ensuring that the business you plan to purchase is a sound investment. Here’s what due diligence involves and why it’s essential when applying for an E-2 visa.

Due diligence refers to the thorough investigation and evaluation of a business before making a purchase. It’s the process of verifying that the business is as it has been represented by the seller and that all aspects of its operations, finances, and legal standing are in order. Essentially, due diligence helps ensure that there are no hidden surprises that could impact your investment.

When performing due diligence on a business for an E-2 visa, some of the key areas to examine include:

• Financial Records: Verifying that the business’s income, expenses, and profitability match what the seller has claimed. This can include reviewing tax returns, bank statements, and profit and loss statements.
• Legal Standing: Checking whether the business is involved in any lawsuits or legal disputes that could pose a risk to its operations or finances.
• Assets: Confirming that the business assets, such as equipment, inventory, and real estate, are real and accurately valued.
• Contracts and Agreements: Reviewing contracts with suppliers, customers, and employees to understand the business’s obligations and potential liabilities.

While due diligence is more related to the business purchase rather than a specific visa requirement, it is especially important when applying for an E-2 visa for several reasons:

1. Ensuring a Viable Investment
   The E-2 visa requires that your investment is substantial and that it supports a real, active business. If the business you plan to purchase is not financially sound or has hidden liabilities, it could affect your ability to meet the E-2 visa requirements. Proper due diligence ensures that the business is viable and capable of supporting your E-2 visa application.
2. Protecting Your Investment
   Buying a business is a significant investment, and without due diligence, you could end up paying more than the business is worth or inheriting problems that could undermine its profitability. By conducting a thorough investigation, you protect yourself from making a poor investment decision that could jeopardize your E-2 visa status.
3. Aligning with E-2 Visa Goals
   One of the goals of the E-2 visa is to create a positive economic impact in the U.S. through your investment. Due diligence helps you confirm that the business can achieve this goal, whether through job creation, revenue growth, or contributing to the local economy.

Due diligence is an essential step when purchasing a business for an E-2 visa. It helps you verify that the business is as described, protects your investment, and ensures that you meet the visa’s requirements for a real, active business. While not directly required by immigration regulations, conducting due diligence can make the difference between a successful investment and one that puts your E-2 visa at risk.

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.