IN THIS GUIDE · Buying a US service company with an earn-out
Identify what is committed at closing
Separate the cash payment, any seller financing, contingent earn-out and working capital. Review which funds are actually committed and at risk under the terms. A large maximum price that may never become payable should not be presented as cash already invested.
Confirm ownership and direction
Establish the enterprise’s relevant treaty nationality and the investor’s ability to develop and direct it. Examine voting rights and operational authority as well as share percentages. Canadian residence alone does not establish treaty nationality.
Test the operating business
Obtain records of revenue, staffing, customers and expenses. The enterprise must be real and operating or supported by a qualifying active investment, and not merely marginal under the applicable standard. E-2 has no universal dollar minimum or EB-5-style ten-job requirement.
Reconcile the source and path
Trace acquisition money from its lawful origin through any intermediary to the transaction. Loans, gifts and jointly held funds require analysis of their real terms and ownership. Do not invent a dividend or gift that did not occur merely to make the funding narrative simpler; accurately document any genuine distribution, gift or other arrangement.
Measure nationality through the completed purchase
For the earn-out acquisition, verify that at least 50% of the enterprise is owned by nationals of the relevant treaty country after the transaction. Seller-retained shares and staged transfers can affect that calculation. Keep it separate from whether the applicant has sufficient authority to develop and direct the business.
Sources reviewed 2026-09-07. This guide covers a preparation focus; it is not an individual eligibility assessment.
