Buying or investing in a U.S. business can involve financial and legal risks beyond the purchase price. It can also affect whether you can document the key elements of an E-2 visa application. Reviewing a business before you commit helps you identify problems, verify the investment, and build an application based on accurate information.
No business type guarantees E-2 approval. Eligibility depends on the facts of your investment, the business, your nationality, and your role. Before you sign a purchase agreement or transfer or commit funds, get legal guidance on the source of funds and how the transaction may affect your case.
What due diligence means for an E-2 investment
Business due diligence is the process of checking whether the company and transaction are what the seller says they are. For an E-2 case, that review should also assess whether the available evidence supports the visa requirements.
The business generally must be a real, active, operating enterprise that provides goods or services for profit and complies with applicable legal requirements. You must invest, or be actively in the process of investing, a substantial amount of capital that is at risk. You must also seek to develop and direct the enterprise. Review the E-2 visa requirements from USCIS, the Department of State’s E-2 investor visa information, and the Foreign Affairs Manual guidance on the E-2 classification before planning a transaction.
Due diligence for an acquisition often includes reviewing:
- Financial statements, tax returns, bank statements, sales records, and payroll.
- Assets, debts, liens, pending claims, and other liabilities.
- Customer, supplier, franchise, and other material contracts.
- Leases, licenses, permits, insurance, and regulatory requirements.
- Employees, wages, classification practices, and employment disputes.
- Ownership, business structure, and the investor’s management rights.
The scope depends on the business. A restaurant, franchise, professional service company, and technology business may each require different records and specialist review.
How skipping diligence can weaken a case
You may inherit problems that affect operations
Undisclosed tax liabilities, unresolved litigation, unpaid wages, expired permits, or an unassignable lease can create costs or prevent the business from operating as planned. These issues may affect the business’s revenue, your investment, or the credibility of your proposed operating plan. Identify them before deciding whether to proceed.
The business may not support the projections
Past revenue and current expenses help show whether a business is viable and what it may reasonably earn. If records are incomplete or projections rely on unsupported assumptions, it may be difficult to demonstrate that the business has capacity to generate more than a minimal living for you and your family. The E-2 rules allow a new enterprise to establish future capacity, but projections should be grounded in verified facts and a credible plan.
Your capital may not meet the investment standards
There is no universal minimum E-2 visa investment amount. The E-2 investor visa standards leave room for case-by-case assessment. Substantiality is assessed in relation to the cost of purchasing or establishing the enterprise, among other factors. The funds also need to be at risk in the commercial sense. A large transfer alone does not establish that the investment meets these standards.
A review of the purchase price, asset allocation, committed expenses, and source and movement of funds can help you assess what the evidence actually shows. Do not assume that money sitting in an account, a refundable deposit, or a planned investment will be treated as a completed qualifying investment.
The transaction may not give you the required role
You need to show that you will develop and direct the enterprise. USCIS explains that this may be demonstrated through at least 50% ownership or operational control through a managerial position or another corporate mechanism. Review the operating agreement, purchase documents, voting rights, and management responsibilities. A passive investment or limited authority may not support the required role.
Early commitments can create avoidable risk
Signing a purchase agreement or transferring money before reviewing the source and path of funds can create problems. For example, you may later discover that key records are unavailable, the proposed ownership structure is not suitable, or the business cannot support the planned role. Discuss the source of funds and the transaction structure with an immigration lawyer before committing capital. Legal, tax, and business professionals may each need to review different aspects.
How diligence evidence can strengthen your application
A well-documented review can create a clear evidentiary connection between your funds, the acquisition, and the business’s future operations. Financial records can support revenue and cost assumptions. Contracts and invoices can document obligations and spending. Licenses and permits can help establish that the business can operate lawfully.
The diligence findings should inform your E-2 visa business plan, which should reflect the verified facts rather than assumptions. Use verified sales, expenses, staffing needs, lease terms, and market information to support projections. Explain how you will manage and grow the enterprise, what your role will be, and how the business is expected to develop. A plan should reflect the actual transaction, not rely on figures supplied without verification. The Foreign Affairs Manual explains how adjudicators assess enterprise and investment evidence, so aligning your documentation with that guidance can help.
Treaty nationality and business structure
Check whether your nationality appears on the Department of State’s current E-2 visa treaty countries list. Doing this review early can also keep the E-2 visa process on schedule once you are ready to file. The business’s ownership may also matter. Review the company’s capitalization and ownership records to determine whether its nationality and structure support the E-2 case.
Do not assume that a business qualifies simply because it is formed in the United States or operates in a popular industry. Immigration eligibility depends on the specific facts, including qualifying nationality, investment, control, and business activity.
Practical due diligence checklist
Before making an offer or finalizing an acquisition, consider whether you have reviewed:
- Financial records: Obtain several years of financial statements, tax returns, bank statements, sales reports, accounts receivable, and payroll records. Reconcile reported revenue with supporting records.
- Assets and liabilities: Verify equipment, inventory, intellectual property, loans, liens, taxes owed, pending claims, and other obligations. Confirm what is included in the sale.
- Contracts and premises: Review customer and supplier agreements, franchise terms, lease assignment rights, renewal options, and change-of-control provisions.
- Licenses and compliance: Confirm required permits, professional or industry licenses, zoning, insurance, and regulatory compliance. Identify any approvals needed after a transfer.
- Employment and litigation: Review employee lists, wages, employment agreements, worker classification, disputes, lawsuits, and claims. Assess whether the staffing plan is realistic.
- Ownership and control: Verify the business’s ownership records, capitalization, voting rights, and governance documents. Confirm that your role will allow you to develop and direct the business.
- Immigration-related structure: Review the nationality of the investor and, where relevant, the ownership and nationality of the enterprise. Confirm that treaty eligibility and the proposed structure align.
- Funds and escrow: Document the lawful source and path of funds. Review the purchase agreement and escrow terms before transferring money. A properly drafted escrow arrangement conditioned on visa approval may reduce risk, but its terms and effect should be reviewed by counsel. Do not assume that any escrow structure will satisfy E-2 requirements.
Planning Checklist
- Confirm that your nationality is eligible under the current E-2 treaty country list.
- Collect and independently review the business’s financial, tax, ownership, contract, employment, and licensing records.
- Identify liabilities, missing documents, operating restrictions, and conditions that could affect the purchase or business plan.
- Trace the lawful source and movement of every proposed investment fund before transferring or committing funds.
- Review whether the investment amount, transaction structure, and evidence support substantiality and at-risk requirements.
- Confirm that your ownership or management rights support a credible develop-and-direct role.
- Prepare projections and an operating plan grounded in verified business information, including a reasoned assessment of marginality.
- Obtain immigration guidance before signing a purchase agreement or transferring funds. Ask whether conditional escrow is appropriate for your transaction.
Due diligence cannot guarantee approval. It can help you make an informed investment decision and prepare a case supported by records that match the facts. To discuss your proposed transaction with an E-2 visa lawyer or an experienced E-2 immigration attorney, contact the firm before committing funds. You can also learn more about our E-2 visa attorney team and what to look for in the best E-2 visa lawyer for your case.
Please Note: This blog is intended solely for informational purposes and should not be regarded as legal advice. As always, it is advisable to consult with an experienced immigration attorney for personalized guidance based on your specific circumstances.