Skip to content
LANGFORD · E-2 FIELD GUIDE

Does a goodwill price guarantee that customers will remain?

Sources checked:

THE DIRECT ANSWER

No. A price allocation is not a guarantee of future business performance.

Review the actual enterprise

Identify the rights and operating evidence supporting the proposal. Do not present expected customer retention as established merely because the seller assigns it a value.

Other E-2 elements sit beside this one: treaty nationality based on citizenship rather than Canadian residence, at least fifty percent treaty ownership of the enterprise, genuine development and direction by the investor, substantial capital committed and at risk, and a real operating commercial enterprise. The principal investor must be in a position to develop and direct the business, which is usually shown by majority ownership or, in a 50/50 case, by the operating agreement or bylaws giving that person the deciding role in management. The enterprise must be real and operating, producing goods or services, and it must be more than marginal, meaning capable of generating more than a minimal living for the investor and family, judged over roughly five years. The investment must be substantial in relation to the total cost of the enterprise, so the relevant comparison is between what has been committed and what the business actually costs to establish or acquire, rather than an absolute figure. No blanket prohibition applies to financing, and the character of the debt is what matters, so an obligation secured by the assets of the enterprise being acquired is treated differently from one supported by the investor's own assets or guarantee.