Is buying a running business considered as Investment

Quote:
You may ask the applicant to demonstrate that the funds they have used to apply under this
category are still available to them beyond the date of their application. The funds must continue
to be available to them until they are spent for the purposes of their business or businesses.

‘Available’ means that the funds must be in one of the following:

 the applicant’s own possession
 the financial accounts of a UK incorporated business of which the applicant is the
director, or
 available from the third party or parties named in their application (if applicable).

Spent by the applicant’s business excludes spending on all of the following:

 their own remuneration
 buying the business from a previous owner, where the money goes to that previous
owner rather than into the business

Unquote:

Reference
https://www.gov.uk/government/uploads/s ... reneur.pdf

Need advice whether buying an existing business is accepted as an investment of extension purpose? if some one buys a running business and pays to the owner then will it be acceptable as an investment?

In m opinion the above quoted text is for initial entry clearance and not for extension, will appreciate if seniors can comment on this.

@ MTZ510, my advice is that you should avoid HO complicated requirement. Better invest your 50k in a fresh business which you have control over rather than in an old business were HO dictate how former owner get paid.

Olasunkanmi wrote:@ MTZ510, my advice is that you should avoid HO complicated requirement. Better invest your 50k in a fresh business which you have control over rather than in an old business were HO dictate how former owner get paid.

Thanks for replying, i am on 200K and am planning to buy existing food franchise as one of the business. The problem is that in my business model even if i get a shop on lease from existing lease holder i will be paying him some money to leave the lease which is called Good Will i don't know whether there will be any issue at the time of extension.

On a separate note can you recommend a good accountant who can sort these things for me, i believe with some paperwork we can manage to show this takeover of existing franchise as a new business.

if you have received your visa after 4 april 2014 then you cannot count good will as investment( rest of money paid e.g for stock, etc is fine). if u got ur visa before then its fine.

MTZ510 wrote:

Olasunkanmi wrote:@ MTZ510, my advice is that you should avoid HO complicated requirement. Better invest your 50k in a fresh business which you have control over rather than in an old business were HO dictate how former owner get paid.

Thanks for replying, i am on 200K and am planning to buy existing food franchise as one of the business. The problem is that in my business model even if i get a shop on lease from existing lease holder i will be paying him some money to leave the lease which is called Good Will i don't know whether there will be any issue at the time of extension.

On a separate note can you recommend a good accountant who can sort these things for me, i believe with some paperwork we can manage to show this takeover of existing franchise as a new business.

entrepreneur123 wrote:if you have received your visa after 4 april 2014 then you cannot count good will as investment( rest of money paid e.g for stock, etc is fine). if u got ur visa before then its fine.

Thanks for replying, i got visa in 2013 so the changes in April 2014 will not apply but i am confused about the wording mentioned in guide as quoted in first post, it says money sent in business will be counted as investment but money spent in buying a business is not considered as investment.

What you say?

Can anyone please answer this post?

HI,
We have Entrepreneur Visa, Tire 1, 200k Investment in UK since 11/2013.
We plan to buy a running franchise business in London with price of 120K.
1. Whether the amount of 120K which we pay to the seller of business will be considered as part of our 200K investment?
2. I am looking for an immigration and business lawyer to guide me in this process. Do you know any?
Kind regards,
Sedi

sedisari wrote:HI,
We have Entrepreneur Visa, Tire 1, 200k Investment in UK since 11/2013.
We plan to buy a running franchise business in London with price of 120K.
1. Whether the amount of 120K which we pay to the seller of business will be considered as part of our 200K investment?
2. I am looking for an immigration and business lawyer to guide me in this process. Do you know any?
Kind regards,
Sedi

Page 12 in Immigration Rules: Part 6A provides the definition of "Spent".

(ii) 'Spent' excludes spending on:
(1) the applicant’s own remuneration,
(2) buying the business from a previous owner, where the money goes to that previous owner rather than into the business,
(3) investing in other businesses, and
(4) any spending which is not directly for the

From this, I understand that if the money is TRANSFERRED directly to the previous owner then that expenditure is not counted as investment. However, if you enter into a partnership into his existing business and invest money in that account, and then the previous owner systematically recovers his share of money and leaves business, this could be counted as investment.

Remember, after you take over the business, there should be a NET increase in the number of full-time employees. If there were ,say, 7 employees before, then you must show 9 or more employees (equivalent) when you apply for extension.

This is just my understanding, better confirm with a lawyer. But, I am sure he/she will advice something on similar lines.

After you figure this out officially, please do let us know by posting your experience here.

Regards,
Krishna.

Hi Sedi

if you leave your email address for me here or via a PM, I might be able to help you.

Hi krishna,

There are two ways of acquiring a business, 1- Buying the whole business, 2 - Buying Assets of the business.

If one is buying a limited company running the franchise then the money invested is paid to the share holder for selling the business, but if one only buys the assets of the franchise along with lease hold rights then the money is paid to the limited company running the franchise for purchase of assets of that company.
In other words i paid say 100K to buy the furniture, fixture, air conditioning and equipment to the company and also the to get the lease hold rights of the shop.
Will appreciate your thoughts on this mode of acquisition.

I am also looking for the answer to the question raised in the OP and have placed an offer to an existing franchise owner and if the deals goes thorough then i will opt for buying the assets of the business rather than buying the business itself.

[/quote]
From this, I understand that if the money is TRANSFERRED directly to the previous owner then that expenditure is not counted as investment. However, if you enter into a partnership into his existing business and invest money in that account, and then the previous owner systematically recovers his share of money and leaves business, this could be counted as investment.

Remember, after you take over the business, there should be a NET increase in the number of full-time employees. If there were ,say, 7 employees before, then you must show 9 or more employees (equivalent) when you apply for extension.

This is just my understanding, better confirm with a lawyer. But, I am sure he/she will advice something on similar lines.

After you figure this out officially, please do let us know by posting your experience here.

Regards,
Krishna.[/quote]

MTZ510 wrote:Hi krishna,

There are two ways of acquiring a business, 1- Buying the whole business, 2 - Buying Assets of the business.

If one is buying a limited company running the franchise then the money invested is paid to the share holder for selling the business, but if one only buys the assets of the franchise along with lease hold rights then the money is paid to the limited company running the franchise for purchase of assets of that company.
In other words i paid say 100K to buy the furniture, fixture, air conditioning and equipment to the company and also the to get the lease hold rights of the shop.
Will appreciate your thoughts on this mode of acquisition.

I am also looking for the answer to the question raised in the OP and have placed an offer to an existing franchise owner and if the deals goes thorough then i will opt for buying the assets of the business rather than buying the business itself.

From this, I understand that if the money is TRANSFERRED directly to the previous owner then that expenditure is not counted as investment. However, if you enter into a partnership into his existing business and invest money in that account, and then the previous owner systematically recovers his share of money and leaves business, this could be counted as investment.

Remember, after you take over the business, there should be a NET increase in the number of full-time employees. If there were ,say, 7 employees before, then you must show 9 or more employees (equivalent) when you apply for extension.

This is just my understanding, better confirm with a lawyer. But, I am sure he/she will advice something on similar lines.

After you figure this out officially, please do let us know by posting your experience here.

Regards,
Krishna.

Hi MTZ510, you and I are talking the same thing I guess. When you buy assets of a business, essentially you are paying the money TO the business and not to the owner. The transaction is happening between you and the business. Just another way of expenditure, but I still prefer entering the business first as a partner/director, invest money in the business account of that business and let the owner leave by taking his share of money (could be the total value of the assets and other related aspects). I believe, it would be simpler and easier on the paper work.

Is there no one on this forum who have entered into an existing business? Please provide your experienced insight.

By the way, did you get your visa by 200K route? Applied inside or outside UK?

Hi there,
Thanks for your reply,
my email is sedisari @ yahoo . com

ju_lia wrote:Hi Sedi

if you leave your email address for me here or via a PM, I might be able to help you.

Dear Attahaas,
Many thanks for your useful information. I think I got my answer clearly. I will definitely update you with my investment process.
I need another advise for choosing right company/person to do all requirements in regards of my Investment Procedure, to be eligible for Visa Extension. Should I choose Company Solicitor , accountant or immigration lawyer or all three are required? How should I find a good qualified and experienced one?
Many thanks,
SEdi

attahaas wrote:

sedisari wrote:HI,
We have Entrepreneur Visa, Tire 1, 200k Investment in UK since 11/2013.
We plan to buy a running franchise business in London with price of 120K.
1. Whether the amount of 120K which we pay to the seller of business will be considered as part of our 200K investment?
2. I am looking for an immigration and business lawyer to guide me in this process. Do you know any?
Kind regards,
Sedi

Page 12 in Immigration Rules: Part 6A provides the definition of "Spent".

(ii) 'Spent' excludes spending on:
(1) the applicant’s own remuneration,
(2) buying the business from a previous owner, where the money goes to that previous owner rather than into the business,
(3) investing in other businesses, and
(4) any spending which is not directly for the

From this, I understand that if the money is TRANSFERRED directly to the previous owner then that expenditure is not counted as investment. However, if you enter into a partnership into his existing business and invest money in that account, and then the previous owner systematically recovers his share of money and leaves business, this could be counted as investment.

Remember, after you take over the business, there should be a NET increase in the number of full-time employees. If there were ,say, 7 employees before, then you must show 9 or more employees (equivalent) when you apply for extension.

This is just my understanding, better confirm with a lawyer. But, I am sure he/she will advice something on similar lines.

After you figure this out officially, please do let us know by posting your experience here.

Regards,
Krishna.

sedisari wrote:Dear Attahaas,
Many thanks for your useful information. I think I got my answer clearly. I will definitely update you with my investment process.
I need another advise for choosing right company/person to do all requirements in regards of my Investment Procedure, to be eligible for Visa Extension. Should I choose Company Solicitor , accountant or immigration lawyer or all three are required? How should I find a good qualified and experienced one?
Many thanks,
SEdi

Dear Sedi, you are welcome.

Now, I am not experienced enough to give you an advice on extension. I am still in the process of applying for my Entrepreneur Visa. However, I would suggest, since you are still in the first year of your visa, you need a good accountant more than anyone else. I am sure, if you explain him the conditions of an Ent. visa, he would know what to do with your workbook. You may or may not need an immigration lawyer yet, but you still have time for that. I would worry about that later.

Also, I would suggest you not to put your entire money in one business. Pick at least 2-3 different businesses (if you can handle) just to diversify your portfolio and improve your options of keeping your money from dwindling below 200K in the worst case. There are companies there which can show you investment opportunities while satisfying your Visa rules for extension.

Having said that, I need some advice on applying for the visa. If you don't mind, could you please share your experience with me. My email is krishna9780@hotmail.com

Regards,
Krishna.

Hi
What about the people who hAd the visa issued before March 2012

Hi
What if the visa granted was mid of 2012. Still these new investment rules apply . As we took over other businesses . And paid some goodwill as well
Thanks

hi guys

I am due for extension on 25th March 15, my initial visa granted on March 2012 through £200k investment, can someone let me know if this new rule which came from April 2014 about spent should be exclude buying business where money goes to last owner will apply to me or not ?
I bought running franchise for £150k ,however money transferred from my company to seller company through solicitor. I've searched all immigration rules and can see this section 245D(C)(ii) under part 6A just added since April 2014 .

can someone let me know that if that purchase will be eligible as part of investment

siavashes wrote:hi guys

I am due for extension on 25th March 15, my initial visa granted on March 2012 through £200k investment, can someone let me know if this new rule which came from April 2014 about spent should be exclude buying business where money goes to last owner will apply to me or not ?
I bought running franchise for £150k ,however money transferred from my company to seller company through solicitor. I've searched all immigration rules and can see this section 245D(C)(ii) under part 6A just added since April 2014 .

can someone let me know that if that purchase will be eligible as part of investment

In my opinion all new rules do not apply to you.
The rule that applies to you is the rule that was in force at the time you applied initially.

Does the business have to make a profit or a business which is making a loss acceptable.
As most businesses make a loss in the beginning at times they make a loss for first two or three years.

cappachino wrote:Does the business have to make a profit or a business which is making a loss acceptable.
As most businesses make a loss in the beginning at times they make a loss for first two or three years.

loss acceptable , as long as business is genuine and you can show where and when did u invest money.

siavashes wrote:

cappachino wrote:Does the business have to make a profit or a business which is making a loss acceptable.
As most businesses make a loss in the beginning at times they make a loss for first two or three years.

loss acceptable , as long as business is genuine and you can show where and when did u invest money.

I beg to differ
as per policy guidence the business has to be profitable

siavashes wrote:

cappachino wrote:Does the business have to make a profit or a business which is making a loss acceptable.
As most businesses make a loss in the beginning at times they make a loss for first two or three years.

loss acceptable , as long as business is genuine and you can show where and when did u invest money.

Just went through the guidence and it clearly states
Bunsiness should be profitable