Compliance Hot Spots: CFIUS Changes in Focus

David Fagan is quoted in The National Law Journal regarding a CFIUS pilot program which will require short-form notices of foreign investments involving critical technology in 27 industries, including defense, telecommunications and metal production. The pilot program could bring an unprecedented number of transactions under the purview of CFIUS.

Mr. Fagan says, “The amount of work that has to go into it is going to create pressure within the system. That whole dynamic in turn creates some uncertainty. And in a transaction process, in an M&A process, the things that matter are timing and certainty. Into this process now you’re creating uncertainty on timing and you’re creating uncertainty on exactly how it’s going to work. I think for everybody there’s going to be a 12 to 24 month process at least where it could be painful.”

He adds, “Previously, we would have had more work than people would anticipate on transactions being tossed around. The pre-transaction stage has always been a key part of the practice, but a lot of the work has been on the execution side: pursuing the filing, grappling with CFIUS issues, dealing with mitigation and the like. I think a macro thing that’s going to happen here is there’s going to be a lot more work on the front end, at least in the near term, thinking through these issues.”