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The Implications of CFIUS' Rising Profile On M&A


The Committee on Foreign Investment in the U.S. (CFIUS) is increasing its prominence, resulting in a rise of legal work on the front end of many deals. As a result, many attorneys “are feeling the increased workload as they attempt to ensure there isn't a foreign investment aspect that might trip up a transaction down the line,” Kelly Kroll tells Law360.

Kroll states that for many years, CFIUS would only come up very rarely. “Now, with the new rules, you are starting to see it come up more and more often. It's not blowing up deals, since we are making sure to get ahead of any issues, but it's certainly slowing deals down.”

As the rules laid out in the Foreign Investment Risk Review Modernization Act of 2018, or FIRRMA, were gradually implemented, Kroll noted that she has been spending more and more time on CFIUS-related matters. "The first step, to me, is to find out what the ownership structure [of the target] is and whether we have any foreign ownership issues. Before FIRRMA, people would make their own interpretations about these things, and they could feel warm and fuzzy about it because the Treasury Department didn't have the staff to go running after every deal," Kroll said. "There are a lot of deals that went through a few years ago that may not have gone through today."

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