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Do I Need a Valuation to Buy an E-2 Business?

By September 13, 2021E-2 Visa, Immigration
Charts, numbers, and valuation on a post it note

An E-2 visa can be obtained for either buying or starting a business.  For both options, the investment must be substantial, and one must normally spend or invest the substantial amount prior to applying for the visa.  You can find out more about the E-2 visa requirements by clicking here.

If you purchase a business that meets the other E-2 visa requirements (Eg. has employees, real and operating, 50% owned by Treaty national, etc.) then the substantial amount will normally be what you paid for the business. For example, if you buy a pizza shop for $100,000, this amount will represent the substantial investment for the E-2 visa.

One question that often comes up is whether a valuation or appraisal is needed for a business purchase.

Although some Consular website may have generic wording that references a tax valuation or market appraisal, a valuation is normally not evidence that is required by a Consular officer.  The reason for this is that the best indicator of the fair value of something you purchase is what you paid for it.  As such, a report from a third party that looks at revenue or profit multiples or other factors to assess the value will not be relevant.

This changes though if the buyer and seller are related in any way. This relationship can be friends, family or even a casual relationship.   If the transaction is not at arm’s length, you will need a valuation or proof of how you came up with the purchase price.  For example, if Helen were to sell 50% of her restaurant to her brother Jim for $100,000, a Consular officer would want proof (tax valuation, appraisal, etc.) that the business was worth $200,000.

If the business was worth for example, $500,000, an officer may conclude that the applicant did not invest a substantial amount even though Jim owns 50% of the company.  To qualify in this case, Jim would have to invest $250,000.  In contrast, if the transaction is one between two unrelated parties, then the best indication of fair market value is the purchase price and a valuation generally will not be required.

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