Should You Buy a Business Abroad? Best Practices for Buyers
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 6 min
The short answer: Buying a business abroad can work, but it carries risks that don’t exist in a domestic deal: foreign ownership restrictions, unfamiliar tax and labor law, currency swings, and due diligence you can’t easily verify from the US. One World Bank-cited estimate attributes 30–40% of unexpected financial risk in international transactions to currency volatility alone. Best practices are the same everywhere — verified financials, local legal and tax advisors, and a clear plan for who runs the business — but abroad, each one is harder and more expensive to get right.
Every year a few buyers tell me some version of the same plan. They want to buy a business overseas — sometimes for growth, sometimes for a lifestyle change, sometimes because a deal found them through family or a former colleague. Buying a business abroad is a real option, and some buyers do very well with it. But I’ve also watched buyers apply US assumptions to a foreign deal and pay for it.
This article covers the best practices that matter most in a cross-border purchase, and the honest comparison every buyer should run first: what the same money buys closer to home.
Know the Rules Before You Fall in Love With the Deal
The first surprise for most American buyers is that many countries restrict what foreigners can own. Some require a local citizen as a partner or majority owner. Others restrict specific sectors — banking, energy, media, telecom — or require government notification and approval before a foreign acquisition can close.
That’s not a detail to sort out later. Ownership structure determines what you actually control, how profits reach you, and what happens if the partnership sours. In a US deal, you buy the business and you own it. In some foreign markets, what you can legally own is a minority position wrapped in a local structure.
Before you spend money on due diligence, get a plain answer to three questions. Can a foreigner own this business outright in this country? What approvals or licenses does the transfer require? And how do profits legally get back to the US, and at what tax cost?
Due Diligence Is Harder When You Can’t Verify Anything Yourself
In the US, due diligence runs on verifiable documents: tax returns, bank statements, payroll records. Lenders re-check everything. We walk buyers through this in how to evaluate a business before you buy it, and the process works because the paper trail is trustworthy.
Abroad, that trail may be thinner. In some markets, the books shown to the tax authority and the books shown to a buyer are two different documents — and everyone locally knows it. Customer contracts may be informal. Employment obligations may be larger than they appear, because labor law in much of Europe and Latin America makes workforce changes far more expensive than in Indiana.
The fix isn’t paranoia. It’s local expertise. Hire an attorney and an accountant in the target country who work for you, not for the seller, and who have done acquisitions — not just filings. Expect diligence to take longer and cost more than a comparable US deal. If a seller pushes you to skip steps because “that’s not how it works here,” that’s information.
Currency and Distance Are Silent Deal Costs
Two costs rarely show up in the seller’s numbers. The first is currency. You’ll buy in one currency and live in another. A 10% swing in exchange rates can erase a year of profit distributions, and currency volatility drives an estimated 30–40% of unexpected financial risk in international transactions.
The second is distance — and it forces the biggest decision in any overseas purchase: relocate or manage remotely. Owners who relocate control the business firsthand but take on a full lifestyle change, visas included. Owners who stay home need a local manager they trust completely, which costs real money and adds real risk. In our experience with owner-operated Main Street businesses, the owner’s presence is a large share of what makes the business work. Remove it by an ocean, and you need a plan for what replaces it.
Run the Comparison: What Does the Same Money Buy at Home?
Here’s the step most buyers skip. Before wiring money overseas, price the alternative. In Indiana, established Main Street businesses typically sell for 2.5–3.5x seller’s discretionary earnings, with SBA financing available for qualified buyers — often with 10–15% down. The legal system is familiar. The books are verifiable. Your broker, banker, and attorney all work in your language and your time zone.
That doesn’t make a foreign purchase wrong. It gives you a baseline. If the overseas deal still wins after you’ve priced in local advisors, currency risk, travel, and a manager’s salary, you’re buying with open eyes. If you’ve never run the domestic numbers, start with how to buy a business in Indiana or browse current Indiana businesses for sale to see what’s available.
Cross-border deals also run the other direction — foreign buyers regularly acquire American companies. We’ve written about that side of the table in selling your business to international buyers.
Frequently Asked Questions
Can an American buy a business in another country?
In most countries, yes — but many restrict foreign ownership in specific sectors or require a local partner, government approval, or a special visa. Check the target country’s foreign investment rules before spending money on due diligence.
What are the biggest risks of buying a business abroad?
Unverifiable financials, foreign ownership and licensing restrictions, unfamiliar labor and tax law, and currency risk — which one World Bank-cited estimate ties to 30–40% of unexpected financial risk in international deals. Distance is the multiplier: every problem is harder to see and slower to fix from overseas.
Do I need to move abroad to run a business I buy there?
No, but you need a plan for who runs it. Relocating gives you direct control at the cost of a major life change and visa requirements. Staying home means hiring a trusted local manager with industry experience — a real expense that belongs in your deal math from day one.
Is it easier to buy a business in the US than abroad?
Generally, yes. US deals run on verifiable tax returns and bank records, SBA financing is available for qualified buyers, and the legal framework is consistent. Indiana Main Street businesses typically sell for 2.5–3.5x SDE, and the whole process usually runs 60–90 days from accepted offer to closing.
What professionals do I need for an international business purchase?
At minimum: an attorney in the target country experienced in acquisitions, an accountant who understands both local and US tax treatment, and an advisor who can vet the opportunity and the process. Do not rely on the seller’s advisors.
The Bottom Line: Preparation Travels Well
The fundamentals of a good acquisition don’t change at the border — verified numbers, clear terms, the right advisors, and a realistic plan for who operates the business. What changes abroad is the cost of getting each one right, and the price of getting one wrong.
If you’re weighing an acquisition — overseas or here at home — it’s worth knowing what your money buys in Indiana before you decide. Indiana Equity Brokers has closed more than 879 transactions worth over $807M, and a conversation about what’s on the market costs nothing. Reach me at troy@indianaequitybrokers.com or visit indianaequitybrokers.com.
