Early Planning Can Boost Chances of CFIUS Clearance, Law Firm Says

Considerations surrounding the Committee on Foreign Investment in the U.S. “should be baked into deal planning as early as possible,” especially as CFIUS scrutiny on Chinese investments is “not expected to ease any time soon,” Kilpatrick Townsend said in a June client alert. The firm said compliance officers whose company is pondering foreign investment from China need “to involve your regulatory teams as soon as possible” so the company can “identify the challenges likely to surface during the CFIUS process.”

Companies should also consider “engaging CFIUS early and often” during any potential filing, the firm said. “Opening a dialogue that allows CFIUS to understand the parties and the deal involved will help CFIUS put any security risks in the proper contexts.”

Businesses can also help a potential CFIUS review by proposing mitigation -- “such as carving out certain divisions or technology” from being included in the acquisition” -- if the deal may pose a national security risk. “[W]hile the regulatory environment remains challenging with respect to Chinese investment in the United States, early planning and concrete steps during the review process can help shift the odds in favor of a CFIUS clearance.”