OUR BLOG

23
Oct
Business acquisitions in the US

As corporation law expert, Mrs Gianese-Pittman advises and assists small French businesses. Part of these businesses wish to develop in the US market and choose to distribute their products first and eventually choose to manufacture locally these products later on.

Investing in Florida also allows foreign investors to obtain an “investor visa” to settle here. The acquisition of business or company is often a very good tool to benefit from an investor visa.

However be aware that there are numerous “Pittfall” to avoid when engaging in business acquisition:

  • Understand what is being purchased: assets and liabilities or assets only
  • Do not purchase by own name
  • What is the legal structure? : Partnership, C Corporation, LLC? Effects in terms of management and taxation will be important
  • The nature and duration of the project: what happens if one of the partners dies or wants to withdraw?
  • Exclusivity clause
  • Termination clause
  • Distribution of Capital
  • Management: avoid deadlock
  • Profit sharing: check the financial situation of partners
  • Provide with appropriate court and applicable law, choose between courts or arbitration.

Thus, the acquisition of a US company is an excellent way to develop sustainably while minimizing the risks in a highly competitive market. Indeed, the foreign investor will immediately become an American operator that will benefit from a local expertise, the reputation of a US company and its credibility especially to obtain loans that are difficult to get as a foreign entrepreneur.

Unfortunately, too many French companies under estimate the specific difficulties of the USA market and are not running a good diligence.

There are other forms of investment such as purchase of leasehold, distribution contract and franchises. But in all cases a good due diligence is necessary in order to avoid bad investment that will cost a lot of money to the French investor.

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