Green Card Through Acquisitions Q&A
Q: What types of immigration programs are available through an acquisition of U.S. companies?
A: Through a direct acquisition of a U.S. company, the investor could potentially qualify for EB-1C (for multinational executives or managers) or EB-5 (investment immigration). EB-1C requires the applicant to hold an executive or managerial position in both the foreign entity and post-acquisition acquired company, while EB-5 requires proof that the investment will create ten full-time jobs. Most often, an individual investor can invest for both EB5 and EB-1C purposes but an company can invest for EB-1C purposes only.
Q: How can we ensure compliance with immigration requirements before such acquisition is conducted?
A: Conduct due diligence before the acquisition to ensure the target company meets the immigration requirements, such as business legality and particularly employee numbers are crucial. In addition, legal and financial due diligence regarding the business performance of the company must be thoroughly conducted. Post-acquisition, it is crucial to maintain the company’s operational and managerial structure to continue meeting immigration criteria.
Q: What legal and tax issues should be considered before the merger or acquisition?
A: Before the merger or acquisition, carefully review the target company’s legal and tax compliance, checking for potential legal disputes, unpaid taxes, or other liabilities. Engaging professional legal and financial advisors for comprehensive due diligence is highly recommended.
Q: Will the merger or acquisition affect the immigration status of existing employees?
A: Mergers or acquisitions can impact employees’ immigration applications, especially if they lead to significant changes in company structure, job responsibilities, or business focus. It’s essential to review the immigration status of employees and ensure that post-acquisition company structure and job assignments do not negatively affect ongoing immigration applications.
Q: Can I apply for immigration immediately after the merger or acquisition?
A: In most cases, immigration applications can begin immediately after the merger or acquisition, provided the company has made the necessary organizational adjustments and business operations in line with EB-1C or EB-5 requirements. The application materials should clearly explain the background and impact of the merger or acquisition.
Q: How should cross-border factors be handled in the merger or acquisition?
A: For cross-border mergers or acquisitions, consider the legal and regulatory requirements of both countries, including the legal form of the merged company, financial compliance, tax reporting, and the cross-border assignment of employees. Collaborating with a legal and financial team experienced in international M&A is crucial for ensuring compliance.
Q: What is the general procedure of acquiring a US company?
A: This process starts with identify of the target, examine the disclosure of financial and business information contained in any offering memorandum, present a letter of intent (LOI), conduct due diligence, negotiate the price, draft asset purchase or stock transfer agreement and closing.
Q: What is the difference between an asset sale and a stock sale?
A: In an asset sale, the buyer purchases specific assets and liabilities of a company, rather than buying the entire company itself. The assets can include equipment, inventory, real estate, contracts, and intellectual property, among others. The buyer can choose which assets to purchase and which liabilities to assume, allowing for more flexibility. Usually, the buyer chooses not to assume any liabilities. The advantages for the Buyer are the flexibility in choosing which assets and liabilities to acquire, potential tax benefits from asset depreciation, and generally lower risk of assuming undisclosed liabilities.
In a stock sale, the buyer purchases the stock or shares of the company directly from the shareholders. This means the buyer acquires ownership of the company in its entirety, including all assets, liabilities, and contracts. The company continues to exist as a legal entity, but under new ownership. The advantages for the Buyer are that the transaction is typically simpler because the ownership of the entire company changes hands without needing to reassign contracts or renegotiate agreements. The buyer also benefits from the continuity of the business operations. The disadvantage for the buyer is that the buyer assumes all liabilities, including any undisclosed or contingent liabilities, which can increase risk.
These questions and answers are intended to serve as information purposes and do not constitute legal advice. If you have further questions or need further assistance, please feel free to contact our professional advisory team.