Conclusion

Considering both the practical implications and regulatory landscape is critical in planning a transaction. Failure to consider CFIUS and other national security-related issues can have a severe impact on a proposed investment or acquisition, including:

• Delays or, post-closing, the unraveling of the transaction.

• Post-closing mitigation demands by the US government.

• Failure to close in the agreed-upon time frame and expose buyers and sellers to the risk of break-up fees and additional legal fees.

• Scrutiny for export control and other violations of US law.

To avoid this, parties should flag potential national security concerns as part of the due diligence process, focusing on the following: 

• Security – critical technologies, critical infrastructure, otherwise sensitive US assets or supply chain, access to classified or sensitive personal information, US government contracts 

• Sector – defense, energy, telecom, data management and information security, as well as US TID businesses

• Location – proximity to sensitive US assets 

• Export Controls – military, dual use or missile technology 

• Acquirer – nationality of concern; whether or not state-owned 

The keen focus on national security factors and the increasing trend of heightened scrutiny of foreign investment must be treated as a key consideration in any transaction involving foreign buyers.