The scope
Review of foreign investment on national security grounds now extends well past defence contractors. Critical technologies, critical infrastructure, and sensitive personal data on US persons each bring transactions into scope, and certain real estate near sensitive sites is covered separately. Some transactions are subject to mandatory filing; many others are filed voluntarily to obtain finality.
The practical position for a non-US acquirer is that scope must be assessed on every US acquisition, not only on obvious ones.
What it does to the transaction
Timetable. A filing adds months. Where the review extends into a further investigation period, longer. The transaction timetable, financing commitments, and interim operating arrangements all have to accommodate it.
Conditions. Review can result in mitigation: governance restrictions, security agreements, personnel requirements, data handling commitments, or divestiture of a portion of the business. These change what the buyer acquires.
Deal terms. Who bears the risk of a negative outcome is negotiated: the scope of the buyer's efforts obligation, whether divestiture commitments are required, reverse termination fees, and the outside date.
Competitive position. Where a seller runs a process with both domestic and foreign bidders, review risk is priced. A foreign bidder frequently has to compensate for it in price or in terms.
Structuring responses
- Assess scope at the outset, before the bid; it affects what you are willing to offer
- Where control is the trigger, consider whether a non-controlling structure achieves the commercial objective — though passive investments in certain sectors are themselves covered
- Address the buyer's ownership chain early: ultimate beneficial ownership and any state-linked investors are central to the assessment
- Negotiate the efforts standard and the fee explicitly rather than accepting a generic covenant
- Plan interim operating arrangements for a long gap between signing and closing
The realistic reading
Review is not a prohibition on foreign investment and most transactions clear. What it is, reliably, is a source of delay and conditionality that has to be priced and structured for. Buyers who treat it as a formality discover it late; buyers who build the transaction around it generally close.
