Structuring M&A and Private Equity Deals: The CFIUS Challenge in Getting Deals Done
Recent CFIUS legislation has had significant effects on the range of transactions and investments that are potentially subject to regulatory review. Advance planning and deal structuring is critical to limit the risk that CFIUS becomes an obstacle to getting the deal done. Understanding the investor or acquirer’s risk profile in terms of source of funds, home country of investor, industry of the target are all important considerations at the early stages of deal structuring. Whether certain structures or industries may trigger a mandatory versus a voluntary CFIUS review is also a key component of the deal process.
The CFIUS process itself requires close strategic consideration in getting to deal certainty. Navigating the review process can be a daunting task, and it appears that CFIUS is moving quickly and proactively to stop risky deals from closing. Although CFIUS is largely a voluntary process, recent mandatory filing requirements have modified the criteria that triggers a mandatory filing. Should companies be concerned about CFIUS stepping up their investigations into non-notified transactions, or deals that were closed without a filing? What types of transactions are subject to a mandatory review? What sectors will be impacted under the new TID (technology, infrastructure, and data) rules?
Also, Presidential administration changes have historically brought uncertainty to the M&A market. How will the Biden administration’s approach shift the United States’ openness to foreign direct investment? What countries will attract more scrutiny? What key risk areas will dealmakers need to be aware of when evaluating investment structures and the timing needed to close a deal?
- Alex Darden, Partner, EQT Partners
- Patrick Hovakimian, Partner, Pillsbury
- Kevin Hutchins, SVP, Strategy and Corporate Development, Juniper Networks
- Sirisha Kadamalakalva, Chief Strategy Officer, DataRobot
- David Lam, General Partner, Atlantic Bridge Ventures