M&A Circle – CFIUS: The Gatekeeper on M&A and Investment by Foreign Buyers
Wednesday, February 06, 2019
Location: Baker McKenzie
660 Hansen Way
Palo Alto, CA 94304
The Committee on Foreign Investment in the United States (CFIUS) investigates mergers that could result in control of an American business by a foreign individual or company, judging whether deals could threaten national interests. In 2017, 240 deals were reviewed by CFIUS (up from 172 in 2016) with 20 deals reportedly blocked or abandoned compared to just five in 2016.
The Foreign Investment Risk Review Modernization Act (FIRRMA) expands CFIUS’s jurisdiction and mandates prior approvals for certain foreign investments in businesses handling critical technology, critical infrastructure and sensitive personal data. A “pilot program” imposing prior approval requirements on investments in certain U.S. businesses which produce, design or test “critical technologies” commenced November 10, 2018. Parties that fail to file a required declaration can be given a civil monetary penalty up to the value of the transaction. FIRRMA also makes a series of other changes that strengthens CFIUS’s authority and authorizes the sharing of information on transactions with allied governments. FIRRMA has caught many tech companies off guard, and could chill foreign buyers and investments, particularly from China. Companies are scrambling to figure out which foreign investments are most at risk.
In our new M&A Circle for 2019, we will examine:
- The state of M&A and market trends
- Which transactions are impacted by CFIUS, and how challenging it may be to get clearance for acquisitions or investments that raise national security concerns or involve “critical technologies” under the new law?
- What steps should companies take to comply with the regulations and address potential issues when considering foreign buyers or working with foreign investors?
- What are the lessons from the recent CFIUS decisions and other relevant developments?
- What are the procedural changes and fees?
Join our roundtable forum on February 6 to discuss these and related issues.
Our Distinguished Speaker
C. Craig Lilly
Corporate M&A Partner
Craig Lilly is a corporate/M&A partner in the firm’s Palo Alto office. Craig’s practice focuses on complex cross-border mergers and acquisitions, and venture financings with numerous clients seeking CFIUS approval for such investments. Craig has wide ranging experience in advising strategics and private equity clients on a wide variety of transactions including stock and asset acquisitions, divestitures, ventures financings, recapitalizations, consolidations, auctions, leveraged buyouts and distressed investments. His practice also includes advising clients on corporate governance, domestic and global expansion and fund formation
Craig is a frequent author and lecturer on legal and business issues regarding mergers and acquisitions, private equity investments and corporate finance. He has been quoted in, or contributed to, articles and features in Bloomberg, The Wall Street Journal, Dow Jones events, The Deal Magazine, The Daily Deal, Hedge Fund Law Report, Reuters, The Venture Capital Roundtable, TheStreet.com and CFO.com. Craig is the former California reporter for the American Bar Association Committee on State Regulation of Securities (2006 to 2010).