The Unique Anatomy of a Business Sale for Foreign Nationals

Our office receives many enquiries each month from international clients who would like to move to the United States but do not know where to begin.  The following article hopes to answer many of your questions, and give you a better idea of the anatomy of a sale.

Please bear in mind that American Business Group, LLC is not licensed to practice law nor offer legal advice.  We would be happy to recommend several immigration attorneys for you to interview, and we encourage you to visit the American Immigration Lawyers Association (www.AILA.org) and your local Embassy’s website at www.usembassy.gov for further information.  All practices subject to change per Federal, State and local law revisions.

YOUR IMMIGRATION ATTORNEY

It is strongly suggested that you hire an immigration attorney to assist you.  He or she will work closely with your family to help evaluate each business of interest to you, and find the best match per Embassy specifications. Your attorney will also advise you on your application and items you need to complete.  Application fees and attorneys cost vary depending on the visa you are seeking, so enquire about their rates and government fees.

It is important to evaluate your attorney’s credentials prior to hiring them.  Look for immigration-specific designations, such as membership in the American Immigration Lawyers Association.

Should I Use a Visa Consultant or Immigration Attorney?

Not all immigration professionals are attorneys. “Visa consultants” are not licensed to practice law nor give legal advice.  Though a client may feel that he or she is saving money up front, the long-term consequences could be disastrous. There is little legal recourse to fall back on should you have problems with your consultant and wish to seek damages in the future.  Hiring an attorney helps to better protect your interests.

YOUR BUSINESS BROKER

Helps you to locate businesses on the market that specifically match your criteria, and mediates the negotiation and offer process of the sale. A good business broker will work with you through the entire process to close (completion) and beyond.

As with any industry, not all business brokers are created equal.  Look for a broker who is familiar with your unique immigration needs and has experience in working with clients who are pursuing visas to the US.

PRIOR TO VIEWING BUSINESSES

Once you have determined with your attorney the visa that you would like to pursue, it is important to establish your family’s timeline.  The first question to address is your ideal move time.  Is it the summer when kids are out of school? Is it the beginning of the year?

Prior to your move date, or as your attorney will otherwise instruct you, you will need to open up a local bank account.  The Embassy will ask you to demonstrate your commitment to your application, and will want proof that you have moved the funds necessary to close (or complete) on a business purchase to the US and have placed them in escrow.  This will also help you speed up the process, for when you are ready to move and begin to look at businesses, you will be in a position to make an offer and present a timely down payment, as your funds will be easily accessible Stateside.

BUSINESS INSPECTIONS

As you near your move date and have established the necessary accounts in order to make a purchase, it is time to come to the US and begin viewing business and meeting sellers.  Your business broker will work with you several weeks prior to your arrival and discuss different opportunities that may be suitable for both your family’s needs and the Embassy’s specifications (for instance, the business must have excellent financials and tax returns).

Just as it generally is at home, business sales are highly confidential.  As you decide which businesses are of serious interest to you, your broker will ask you to sign a confidentiality agreement for each business you would like to view.  Additionally, most sellers will ask that you submit a basic financial statement, where you attest that you have funds available to complete on a possible purchase.  Once you have completed these necessary documents, your broker will schedule showings with the seller and/or the seller’s broker for dates and times that are convenient to both parties.

A good business broker knows that your time is valuable, and should be able to help you identify ones that are substantial and of interest to you.  When you are in town, you will most likely view 4-6 businesses.  During your visits to each business, you will be meeting with the sellers initially to introduce yourself and ask questions, and learn more about how the business runs.  During these meetings, sellers will release general information about the business’s financial performance.

MAKING AN OFFER TO PURCHASE

Once you have identified the businesses of most interest to you, it is time to have your attorney review the business’s details to ensure the business is a strong candidate for your visa application.  Upon your attorney’s advice, it is time to draft an offer for purchase agreement.  Your business broker can assist you with this process and all negotiations.  Once the seller has accepted your offer, it is time to submit your down payment.

In the state of Florida, it is generally customary for a neutral third-party closing attorney to handle all funds and close the transaction.  Your down payment will go into the closing attorney’s non-interest-bearing escrow account.

During this stage, Due Diligence also begins. Just as an off-plan property purchase includes a final walk through or snagging list, this is where you take an in-depth look at the business. You and your accountant will have the opportunity to review the company’s financial records, including profit & loss statements, essentially to confirm what you are purchasing.  If, during due diligence, it is discovered that the business’s financial performance is not as initially purported, the transaction is cancelled and the closing attorney will return the down payment to the buyer.  If the business is proved to be financially sound, the transaction continues on toward close.  The next step is in negotiating any leases that may be involved – it is the seller’s responsibility to assist you in getting an assignment or new lease from the landlord.

COMPLETING THE TRANSACTION AND BEYOND

Once due diligence has been completed, and any new leases are drafted, it will be time to close the transaction.  Both parties and their broker (s) will meet at the closing attorney’s office to sign all necessary documents and complete all payments.  Typically, any brokers present to the transaction collect their fee from the seller’s side.  The closing attorney’s fee generally ranges from $1,500 and $2,000 and this fee is usually split equally between both parties.

After the closing, the transition period begins.  This is when the seller is contractually obligated to assist you during the initial transition and train you in the various responsibilities you will be taking on.  This period varies, ranging from 2 weeks to several months.

Your immigration attorney will also be assisting you with your application to the Embassy.  The wait time depends on the type of visa you are applying for and your citizenship, as the US Embassy has different wait times in each country.  You can also visit the Embassy’s website to get further details: www.usembassy.gov