Considerations
To avoid this, parties should flag potential national security concerns early, 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.
Considering both the practical implications and regulatory landscape is critical in transaction planning.
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 the risk of break-up fees and additional legal fees.
Scrutiny for export control and other violations of US law.