If you are searching for a business to acquire with an E2 visa, and you come across advertisements for businesses for sale in the United States, you may notice that some of them are marked “Absentee owner.” This means that the business is being run without the owner being present. In most cases, I have found that these businesses do not live up to the promises made in the advertising.
In the United States, as in other countries, it is rare to find a business that can operate without the owner being present. Investing in a company requires time and hard work, and it is not a passive investment like real estate. I generally classify business acquisitions into two categories:
- the purchase of a job
- the purchase of a system company
The distinction often lies in the price of the acquisition. In my opinion, acquisitions under $500,000 are typically job purchases.
Difference between buying a company and buying a “job”
The purchase of a job involves the buyer working full-time in the business. In these cases, the owner’s role is not just management, but rather a “hands-on” job. The size of these businesses does not allow for the hiring of a manager who would only handle the business’s management. For example, small restaurants (those with a turnover of up to $600,000) often require the owner to be in the kitchen, dining room, or other operational roles, rather than just in a management position.
$1,000,000 franchised business may involve less day-to-day involvement for the owner
The purchase of a system company involves a business in which all the production, sales, and management processes are in place, formalized, and able to operate independently to generate profit. Franchises that have a highly formalized business concept and multiple established locations that have validated the system often fall into this category. In these cases, the owner’s management may be limited because the system is well-oiled and runs almost by itself. However, these types of acquisitions tend to have a budget of at least $1 million.
The lower the budget, the more time the owner operator will work.
Requests for a business that makes money, runs itself, and requires minimal management for a budget of $150,000 or less are generally not feasible. The lower the budget, the more time the owner/manager will need to commit. Additionally, management in the United States can be challenging due to the need to constantly recruit and train staff. Many of my clients in the restaurant industry regularly report that finding and retaining staff is their top challenge.
In a E2 business, the owner must be highly involved.
The concept of an absentee owner is attractive, but it is important to be prepared to work hard if there is any doubt. This is especially true when acquiring a business with an E2 visa, as the owner must demonstrate that they personally develop and direct the enterprise. It is important to carefully consider the amount of work and commitment that will be required before making a decision to purchase a business.