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What does it mean to perform due diligence during the EB-5 process?

I keep reading that I have to perform due diligence before I decide on where to make my EB-5 investment. However, I am not exactly sure what due diligence means. What does it mean to perform due diligence during the EB-5 process? When should I perform due diligence?

Answers

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    Ed Beshara

    Immigration Attorney
    Answered on

    As an EB-5 investor it is strongly recommended you perform due diligence on the EB-5 project. An experienced EB-5 attorney can perform due diligence on the USCIS compliance of the project from a U.S. immigration standpoint. There are credible companies that can perform due diligence on the business and financial viability and risks, and SEC compliance of the project. This will allow you to make an independent business decision to invest in the project.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    Due diligence means investigating a particular project and a regional center within which it is located, or the direct investment business - which is like any other regular investment or business that you may consider for investment before you sign investment/offering documents and wiring funds. It is highly recommended that you hire an independent party that is qualified to conduct due diligence and who is not hired by the project or regional center, or a direct investment project. They may be an investment broker, attorney, etc., and they should not be recommended by the project in which you plan to invest. Due diligence involves background checks on the entity/regional center, principals, track records of prior I-526/I-829 approvals, feasibility of project business plan/financial projections, history of prior successful projects, what methodology is to be used for job creation purposes, etc.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    Due diligence is a term used to mean all of the investigation, double-checking and analysis made by or on behalf of a potential investor before he or she decides to participate in any investment project. It can include background checks on the principals of the regional center and on the developer and other key members of the management team for the investment project. It can include investigating and verifying the claims made in the offering materials or in the business plan. Basically, it means to double check all of the claims of the promoter or entity offering the investment opportunity to see if they are true or likely to become true. Due diligence can help an investor steer clear of bad projects or avoid those that present an unnecessarily high amount of financial risk. Due diligence should be performed by a third party that does not have an interest in (and is not tied to in any way) the investment project, but rather works for the investor and is compensated by the investor. To be effective, due diligence should be completed BEFORE the investor signs any agreements and invests into any project.

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    John J Downey

    Immigration Attorney
    Answered on

    Find out all you can about the company, history, finances, personnel etc; best to hire an attorney or other specialist before you invest.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    The EB-5 process is an investment immigration program. As such, you should be doing your due diligence when choosing an appropriate investment for you, i.e., checking whether the business in which you are considering to invest is a sound business, etc. In addition, because investing in an EB-5 business is for the purpose of obtaining the immigration benefits, you should also make sure that the business is EB-5 compliant, i.e., the business has a solid business plan that includes a job creation component, which is the most important factor for immigration purposes. If you are considering the EB-5 process through a regional center program, you should check on the following: Whether the regional center has had successful track record on I-526 and I-829 approvals on multiple projects and their success rate; What is their job creation methodology and projection; Do they have cushion in that job creation forecast to cover all the investors - a job creation requirement in case their projection falls short; What is the exit strategy so that the investor could get their principal investment back after I-829 has been approved; Have they paid back any investors from their earlier projects; You should also check on the financial relationship of the agents with the regional center to see why they are recommending a particular regional center over another. Finally, you need an experienced EB-5 attorney with a good track record who will represent your interests only.

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    Ying Lu

    Immigration Attorney
    Answered on

    Due diligence means that you need to do some homework about the commercial potential of the projects in which you are interested. You should ask questions about the project and verify the statements made in PPM, etc. You should conduct due diligence before you make the investment. Consult an experienced EB-5 attorney so that he/she can guide you through the entire immigration process.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    It means you should do whatever research and investigation necessary to determine that the investment you are making is a good one.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    For any investor, "Due Diligence" is a key element for any investment. Due diligence is the process of vetting the investment. This requires reviewing the PPM, business plan, economic report and the projections set forth, to ensure that the project is in fact viable. The due diligence should be conducted before one decides to invest in any project; generally it is recommended that you engage professionals to assist with the due diligence process.

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    Anthony Korda

    Immigration Attorney
    Answered on

    An investment in an EB-5 project is no different than any other investment. Although the returns may be modest, most investors would like a return on investment and a return of the investment at some future date. Although immigration success and financial success are not necessarily the same in EB-5 investments, if the project fails economically, this can led to the investor''s permanent resident status being revoked at the removal of conditions stage. For this and for many other reasons, it is important to choose a project that has a realistic prospect of success. Due diligence in such cases may include background checks on the project promoters / organizers, looking at the history of other projects both in terms of immigration benefit and repayment, and other issues. Does the business plan seem realistic? Are the promised returns viable? A prudent investor should be fully informed before investing or committing to the project. Immigration attorneys are not usually qualified to provide investment advice and investors should consult suitably qualified professionals where appropriate.

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    Stephen Berman

    Immigration Attorney
    Answered on

    It means investigating adequately to make sure you do not lose your investment.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    In this context, due diligence is the review of the potential investment from a business or financial perspective. Your immigration attorney should review the project from the perspective of compliance with USCIS rules, regulations, and procedures, but should not make recommendations on if the project is a "good" investment from the financial standpoint.

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