10 Aug What You Need to Know About Foreign Buyers
There is a potentially lucrative group of buyers that many business brokers are overlooking. We are talking about foreign buyers. Recently, we talked with Patrick Findaro about how to attract foreign buyers to your listings.
Findaro is Co-Founder of Vetted Biz, the leading platform for entrepreneurs seeking accessible and analytical data on franchises and small businesses in the United States. While there are some hurdles to working with foreign buyers, it is important to note that there are many huge advantages as well.
How Are Foreign Buyers Different?
First, it is critical for business brokers to realize that, in general, foreign buyers differ in a several ways from the U.S. buyers they typically serve. At the top of the list of ways in which foreign buyers are different is that they are often seeking a visa. Another commonality among foreign buyers, one that will surprise many, is that they may want access to the U.S. educational system.
It is common for foreign buyers to want a buy a business so that they can get their children into a particular U.S. school district or college. Sometimes the desire to be eligible for state tuition also plays a role in the selection of a business and the decision-making process.
In this sense, business location takes on a level of importance that it might not have for domestic buyers. Business brokers will want to keep this factor in mind when working with foreign buyers. You should have a working knowledge of the school systems and colleges near the business they are trying to sell. As Findaro points out, if there are top schools nearby, you should be quick to point this fact out.
It is important to keep in mind that there be cultural and business differences that play a role with foreign buyers. Everything from a different use of business terminology to expectations can play a role. This could impact negotiations.
What About Visas and Immigration?
One of the most important things for you and your sellers to remember is that foreign buyers are often navigating the complex world of visas and immigration. Whether or not a visa is issued can dramatically impact whether or not a deal ultimately takes place. This fact is often built into agreements. For example, a purchase condition may be conditional upon visa approval. Nonrefundable deposits may play a role in the process.
What Do Foreign Buyers Really Want?
Foreign buyers have been impacted by the pandemic too. Yet, some factors remain unchanged. Not too surprisingly, they will want to see that a business is profitable. In this regard, it is business as usual in that a business should be able to showcase its profitability in a clear fashion. You can expect foreign buyers to want to see tax returns and all the typical documentation that you’d provide any buyer.
A second factor that foreign buyers are interested in is longevity. If a business has successfully operated for decades, then business brokers will want to highlight this fact.
Ultimately, most of what domestic buyers are looking for in a business will translate over to what foreign buyers are seeking as well. With that stated, however, there are factors that are often unique. As stated above, navigating the often-complex visa process can add a wrinkle to the entire process.
Business brokers and M&A Advisors will have to approach foreign buyers will different information and a different approach. But for those who can adeptly navigate the waters, an entirely new revenue stream will emerge.