Rights that carry regulatory weight
In a foreign investment agreement, the investor's rights are not just commercial terms. A board seat, or access to certain nonpublic technical information, can bring a minority investment within CFIUS jurisdiction even when the stake is small, if the U.S. business works with sensitive technology or data. In some situations, depending on the technology involved and who stands behind the investor, a filing is mandatory before closing. Structuring the investment as passive, with limited information rights, is sometimes an option, but it has to match what the investor actually needs. These choices should be made deliberately rather than left to standard form language. Side letters granting extra rights to a single investor count as well and are easy to overlook.
Terms both sides negotiate
Beyond regulatory issues, these agreements address valuation, preferred rights, anti-dilution protection, transfer restrictions, and what happens on a later sale or financing. Representations about sanctions, export controls, and the investor's ownership chain have become standard. A closing condition tied to regulatory clearance, and an allocation of risk if clearance is delayed or comes with conditions, protect both parties. Where the investor is from a country with outbound investment approvals or reporting, the timing of those steps should be built into the schedule. Governing law and dispute resolution terms matter more when the parties are in different countries.
Reviewing the deal
We start by understanding the company's business, the investor's identity and ownership, and the rights on the table. From there we assess whether the deal may fall within CFIUS review, whether a filing is required or advisable, and what mitigation might be requested. We review the term sheet and draft agreements so that the commercial and regulatory pieces fit together. In a first conversation we can usually identify the main decision points and the information we will need from both sides. For later rounds, we also check whether rights granted now would complicate future investors' own reviews.
