Case Study Discussion: E-2 Approval for Purchase of Existing Accounting Business 

Posted on Aug 10, 2023 by Chris Prescott

The Patel Law Group immigration practice was retained to obtain first-time E-2 approval for a treaty investor and family.. The investor formed a new entity in the state of Texas, to purchase part of the assets of an already established business in the United States. The purchased assets, namely a client list of the accounting services, were to serve as the foundation for the newly established E-2 business. The primary objective of the Patel Law Group was to effectively demonstrate to the U.S. Citizenship and Immigration Services (USCIS) that the investor met the necessary qualifications for E-2 status and provide comprehensive details about the business venture’s expansion.

Situation Analysis

The aspiring treaty investor initially arrived in the United States in visitor status. During his stay, an opportunity arose for the investor to enter into an agreement with an established CPA firm to acquire certain assets.  To obtain approval for the E-2 status, it was imperative to demonstrate not only the investor’s qualifications, but also the legitimacy of the invested funds, the substantial amount invested relative to the overall business costs, and the viability of the newly established business, ensuring it would not be deemed marginal.

Patel Law Group’s Approach

Investor’s Qualifications for E-2 Status

Our approach involved clearly presenting the investor’s qualifications for E-2 status. Once it was determined that the investor’s country of nationality was eligible under the E-2 treaty, the focus was on providing enough evidence to establish that the investor was investing a substantial amount in a bona fide enterprise in the United States. After incorporating the U.S. enterprise, the investor along with an already established CPA firm, executed an agreement in which the CPA firm agreed to sell a client list to the new enterprise to continue to provide accounting services, subject to the approval of the E-2 petition. It was essential to establish that the CPA firm possessed ownership of all contractual obligations pertaining to the sold client list. Additionally, we had to establish that the client list had consented to transferring their current contracts with the CPA firm to the newly established E-2 enterprise. We assisted with the “Agreement to Buy and Sell” to ensure the requirements to successfully transfer clients from one entity to another were met. 

Substantial Investment

Secondly, our attention was directed to establish that the amount invested was substantial to the overall cost of the business. As obtaining a formal valuation of the business was not feasible at that time, we turned to the established and documented accounting industry standard to determine the market value of the assets sold. We presented these findings in a manner that highlighted how the investor’s investment amount accounted for 96.5% of the total business costs, firmly establishing it as a substantial investment.

Legitimacy of Invested Funds

Thirdly, our attention turned towards verifying the legitimacy of the invested funds.   We created a detailed pathway to source out the funds, which mostly derived from employment income dating several years back, and from the purchase and sale of property. Subsequently, we directed our efforts towards establishing that the investor’s primary purpose for remaining in the United States was to actively develop and oversee the newly established E-2 enterprise, assuming the role of CEO and obtaining 100% ownership.

Enterprise Viability

Lastly, we focused on establishing that the enterprise was not marginal and had the capacity to generate more than just a minimal income for the investor and his family.   To accomplish this, we concentrated on market projections for the new enterprise over the next five years, based on the business plan provided including the fact that the investor intended to hire two employees.

Results: 

The E-2 application packet was filed with the California Service Center and was approved less than five months later without the issuance of a Request for Evidence, granting the investor and his family E-2 status for two years. We firmly believe that our strategic approach, which involved meticulously addressing each requirement for a successful E-2 submission and substantiating our claims with compelling evidence, played a crucial role in the swift approval of the application. This approach significantly reduced the likelihood of receiving a request for additional documentation and contributed to the expeditious approval upon review.

Conclusion: 

The most challenging aspect of this case was to prove that purchasing a portion of an established business would be sufficient for E-2 purposes. Additionally, we had to ensure that the investment amount was substantial to the overall costs of the assets purchased. Our focus for E-2 applications, whether in the United States or a Consular post will continue to be the presentation of compelling evidence and the provision of guidance to our clients in obtaining the necessary documentation. Our objective is to establish that the investment amount exceeds the overall business costs, that the business is not marginal, and that it can generate sufficient revenue to sustain its operations.