Foreign Buyers look for in Business Listings
Gain insights into foreign buyers in the U.S. business market—who they are, what they seek, and how to attract them. Discover strategic tips for successful transactions.
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Understanding who foreign buyers are, what they look for, and how to attract and vet them can be critical in facilitating smooth business transactions. Patrick Findaro, co-founder of Vetted Biz and Visa Franchise, shares insights on these points, drawing from his experience helping foreign investors navigate U.S. business purchases.
About Vetted Biz and Visa Franchise
Vetted Biz and Visa Franchise were founded by Patrick Findaro and his brother, Jack, to support foreign investors in the U.S. Visa Franchise specifically assists foreign nationals in securing E-2 Investor Visas by investing in franchises. Over time, the Findaros noticed a significant number of foreign investors were interested in purchasing existing businesses, leading to the creation of Vetted Biz, a platform designed to serve both American and foreign buyers.
“Our mission is to increase transparency for potential business owners and provide brokers and franchisors with vetted buyer leads.”
Types of Foreign Buyers
1. Strategic Buyers
Strategic buyers often pursue the L-1 or EB-1C Visa, enabling foreign corporations to transfer executives to the U.S. These buyers may invest to enter new markets, expand product offerings, or introduce new verticals. Typical investments range from $300,000 to over $1 million. For EB-1C qualification, the business must support a managerial hierarchy, often employing 15+ Americans.
Key Characteristics:
- Initial investment: $300,000 – $1 million+
- Managerial hierarchy with 15+ U.S. employees
- Active involvement in the business
Countries of Origin: Non-E-2 countries such as Brazil, Russia, India, China, and Vietnam.
2. Lifestyle and Financial Buyers
These buyers often seek the E-2 Investor Visa and may prioritize quality of life over high earnings. They typically invest between $100,000 and $400,000, with $250,000 being average. The E-2 Visa enables one spouse to invest in a U.S. business while the other can work elsewhere.
Key Characteristics:
- Investment range: $100,000 – $400,000 (average $250,000)
- Must employ 2-3 Americans (either W-2 employees or contractors)
- Profitability may not be essential if there is a clear growth plan
E-2 Visa Requirement: The buyer must hold a passport from one of approximately 80 countries with a U.S. treaty, which includes most of Western Europe and parts of South America and Asia.
Note: Business brokers may see these clients return after a few years if their visa status changes, providing an opportunity to represent them again.
Tips for Working with Foreign Buyers
- Transparency and Communication Providing accurate information and setting clear expectations can help prevent buyer disillusionment.
- Vetting Ensure that foreign buyers work with immigration attorneys. Avoid buyers handling visa matters without professional guidance, as this could lead to issues later.
- Follow-Up Lifestyle and financial buyers may eventually sell their businesses as they adapt to life in the U.S., allowing brokers to establish long-term relationships and potential repeat business.
Understanding the EB-5 and E-2 Visas
EB-5 Visa
The EB-5 Visa requires a minimum $900,000 investment, typically in real estate projects. This visa also mandates the creation of 10 new full-time jobs, making it less suitable for small businesses and franchises.
E-2 Visa
With no cap on the number of E-2 Visas issued, this visa saw over 43,000 issuances in 2019 with an 89% approval rate. E-2 investors must invest in and operate a U.S. business, aligning with the “Buy American, Hire American” policy.
“The E-2 Visa is a robust option with no cap and a high approval rate, making it popular for small business investments.”
Key Takeaways
Foreign buyers contribute significant capital to the U.S. business market, and understanding their unique needs can be instrumental in securing successful deals. By providing clear information, partnering with immigration attorneys, and maintaining follow-up communication, brokers can build trust and create long-lasting professional relationships.