Sunbelt Business Advisors business broker Clayton Wendt and Webber Law Firm discuss strategies for working with foreign investors to acquire an existing business for sale.
Foreign investors seeking to obtain a US green card often consider the EB-5 Investor Visa program, which provides a green card to foreign nationals who meet certain job creation and capital investment criteria.
While the EB-5 program is increasingly popular, it has notable concerns. There have been some high profile scams and fraud specifically targeted towards EB-5 investors. In February 2013, the Securities and Exchange Commission (SEC) brought a complaint against an EB-5 program in Chicago which allegedly defrauded more than 250 investors through a $150+ million investment scam.
In addition, the US government maintains a quota (limit) on the number of EB-5 visas available for approval each year. This quota remains particularly important for Chinese investors who may soon see a backlog of EB-5 visas. What this means is that investors from mainland China may face long wait times for a green card.
As an alternative to the EB-5 program, foreign investors should consider their eligibility to file under the EB-1(3) category. The EB-1(3) option has no foreseeable backlog and because the option often involves a business owned and controlled by the investor, there is not likely to be a scam or fraud involved. There are simply less “players” in the transaction. Moreover, the economic metrics for filing under EB-1(3) are often far less stringent than EB-5, which allows for more customization and control of the investment. The EB-1(3) option requires a qualifying relationship between a business abroad and a business in the United States. One possibility for pursuing the EB-1(3) option is to acquire an existing business in the United States that is consistent with a business abroad. Sunbelt Business Brokers can be a valuable partner in pursuing the EB-1(3) option through such a business purchase, which has many advantages over trying to grow organically.
By Stefan Johansson and Robert P. Webber of Webber Law Firm, LLC
Resources
Sunbelt Business Advisors buying a US business
EB-5 Immigrant Investor www.uscis.gov
Securities and Exchange Commission www.sec.gov
Working with foreign investors www.webberlaw.com
