As savvy investors, it is crucial to know which industry sectors make sense when buying a small U.S. business in the price range of $350,000-$1 million going forward into 2021. These acquisitions can also be used to obtain E1/E2 or other investment visas for you and your family if you are a foreign national looking to move to the U.S.
Regardless of the choice of industry or the size of the deal, three important points remain: be flexible, be knowledgeable, and align yourself with a professional. To these, I would add the importance of being able to PIVOT if plans change. Finally, consider buying a 50% stake in a business, giving the owner incentives to stay on and fully integrate yourself into their operations and the market, with a provision for buying full control in 1-3 years. This is particularly important if you have not done business in the USA before or are unfamiliar with the business or the industry. Sellers typically offer help with refinancing, otherwise, federal Small Business Administration (“SBA”) loans can be a viable alternative. For foreign buyers, it may be possible to borrow against foreign assets for use in making a U.S. acquisition.
The market for deals under $1 million continues to grow in sectors that are doing well in weathering the limitations of COVID-19. However, some of the growth may not continue at the same pace as the economy begins to recover. What investors need to consider are the changes in the ways that companies and individuals will do business, for example, relying more and more on virtual shopping and technologies that best adapt to business changes.
Here are the 10 sectors that should be considered when deciding on smaller M&A deals in the U.S. market in 2020-2021: