Buying an operating business as a basis for residence

Several countries grant residence to a foreigner running a genuine business, and buying an existing one rather than starting from nothing is an established route. It shortens the immigration timeline and introduces a set of commercial risks that the immigration adviser will not assess.

Why it works for the permit

• Substance already exists — revenue, employees, premises, a trading history. That is exactly what a business residence permit is assessed on, and it is what a newly formed company cannot show.
• Employment is already created, satisfying the job requirements several systems attach.
• Accounts exist to file with the application, rather than projections.

What has to be checked, and by someone other than the seller

• Why it is for sale. The single most informative question, and the one where the answer is most often incomplete.
• Whether the revenue survives the owner. A business whose customers are the seller's relationships is a business that shrinks the month you take over.
• Liabilities. Tax arrears, employment claims, supplier disputes, and in an asset purchase versus a share purchase these transfer very differently.
• Employment law. In most of Europe, employees transfer with the business on their existing terms, and reducing headcount afterwards is expensive and slow.
• Licences. Whether the operating licence transfers, and whether it survives a change of control.
• Whether the numbers are the numbers. A business marketed to immigration buyers is priced for an immigration buyer, and the multiple frequently reflects the permit rather than the earnings.

The specific trap

An industry exists selling small businesses to residence applicants — cafés, shops, service companies — at prices unrelated to their earnings, on the argument that the permit is what is being bought. The permit is genuine. The business is the part that loses money for years, and it must keep operating for the permit to renew.

The disciplined version

Assess the business as if there were no permit, with your own accountant and lawyer, at a price you would pay purely for the earnings. Then check that it also satisfies the immigration criteria. Anyone who reverses that order pays for a permit annually, in operating losses, for as long as they need the status.