1. Start Regulatory Screening before the Deal Structure Is Fixed
Early screening should identify rules that may change structure or timing. Entity law governs corporate authority, while federal law separately governs foreign investment and premerger notification.
Map Corporate and Due Diligence Risks
- Confirm capitalization, shareholder rights, authority, and required approvals.
- Review contracts for assignment, consent, and change-of-control provisions.
- Identify licenses, regulated assets, technology, data, and liabilities.
Screen Foreign Investment before the Loi
Foreign investment screening should examine buyer ownership, governance rights, and the target's activities. Transaction value alone does not determine CFIUS jurisdiction.
| Issue | Key Question | Impact |
|---|---|---|
| Ownership | Who controls the buyer? | CFIUS analysis |
| Sensitive Business | Does the target involve critical technology, infrastructure, or sensitive personal data? | National security review |
| Investor Rights | Will the buyer receive control, board, information, or decision rights? | Covered investment analysis |
2. Turn Pre-Loi Findings into the Deal Framework
Once risks are mapped, the parties can test whether the structure fits the regulatory path. Cross-border M&A legal counsel can carry those findings into the LOI and purchase agreement.
Choose the Acquisition Structure
An asset purchase agreement can allocate assumed and excluded liabilities, but successor exposure may remain.
| Issue | Stock Purchase | Asset Purchase |
|---|---|---|
| Acquisition | Buyer acquires equity interests. | Buyer acquires specified assets. |
| Contracts | Change-of-control terms may apply. | Assignments and consents may be required. |
| Liability | Historic entity liabilities remain central. | Successor liability needs separate review. |
As a general state-law rule, an asset buyer does not assume the seller's liabilities merely by purchasing assets. Exceptions can include assumption, merger or de facto merger, mere continuation, or a fraudulent transaction.
Carry Due Diligence into the Purchase Agreement
Corporate due diligence should lead to drafting decisions, not end with a risk list.
- Tailor representations and warranties to identified legal and compliance risks.
- Allocate filing duties, cooperation obligations, mitigation commitments, and approval risk.
- Set indemnification, escrow, outside-date, and termination provisions where appropriate.
3. Coordinate Regulatory Approval with the Closing Timeline
Foreign investment and antitrust review use separate federal tests. Each should be analyzed independently, then aligned with signing and closing.
Determine the Cfius Filing Path
CFIUS can review foreign-control transactions and certain non-controlling investments in TID U.S. .usinesses. Critical technology or qualifying foreign-government interests can trigger mandatory filings.
- Trace relevant foreign ownership and governance rights.
- Determine whether the target is a TID U.S. .usiness and whether mandatory filing applies.
- When required, submit a declaration or notice at least 30 days before completion.
A declaration has a 30-day assessment period, while an accepted notice starts an initial review of up to 45 days. A CFIUS compliance review can align that process with closing.
Check Hsr and Other Merger Filings
For transactions closing on or after February 17, 2026, the HSR minimum size-of-transaction threshold is $133.9 million. Valuation rules, other thresholds, and exemptions still matter.
- Calculate transaction value under HSR rules, not only the purchase price.
- Apply the size-of-person test when required and assess available exemptions.
- Coordinate waiting periods with foreign merger-control and sector approvals.
An antitrust and competition review can run alongside other regulatory workstreams.
4. Align Financing and Closing Mechanics
Regulatory clearance does not by itself make a deal ready to close. Financing, approvals, funds flow, escrow, and other conditions must converge on the closing date.
Sequence the Closing Conditions
- Coordinate financing, authorizations, regulatory clearances, and other conditions precedent.
- Address currency mechanics and foreign-exchange exposure when funding uses multiple currencies.
- Confirm payment instructions, escrow funding, documents, and closing sequence.
Prepare for Multijurisdictional Closing
- Identify documents and approvals required before funds can move.
- Coordinate execution, delivery, and filing requirements across jurisdictions.
- Assign responsibility for post-closing filings and deliverables.
5. Manage Post-Closing Claims and Final Payments
Closing may leave indemnification claims, earn-outs, holdbacks, and deferred consideration unresolved. The agreement should define claim and payment procedures.
Track Indemnification and Holdbacks
- Monitor survival periods, claim notices, caps, baskets, and unresolved claims.
- Follow agreed procedures for withholding or releasing escrow and holdback amounts.
- Preserve records needed to evaluate claims.
Resolve Earn-Outs and Final Deliverables
- Apply the agreed accounting method to deferred consideration.
- Complete transition arrangements and outstanding regulatory deliverables.
- Release funds when contractual payment conditions are satisfied.
6. Frequently Asked Questions
Can CFIUS review a minority investment without foreign control?
Yes. CFIUS can cover certain non-controlling investments in TID U.S. .usinesses when the investor receives specified information, board-related, or decision-making rights.
Do CFIUS and HSR filings apply to the same transactions?
Not necessarily. CFIUS addresses national security concerns, while HSR governs federal premerger notification. A transaction may implicate one regime, both, or neither.
Can the parties sign before CFIUS review is complete?
Yes, depending on the transaction. Parties may sign subject to regulatory closing conditions, but mandatory filing requirements must be satisfied before completion.
Does an asset purchase shield the buyer from existing liabilities?
Not necessarily. Contract terms can allocate assumed and excluded liabilities, but successor-liability rules may create exposure the agreement alone cannot eliminate.
7. Plan the Legal Workstream before Binding Terms
Cross-border M&A legal counsel is most useful when screening, structure, drafting, financing, and closing follow one timetable. SJKP's attorneys can assess filing paths, structure protections, and coordinate the legal workstream through post-closing obligations.
31 Jul, 2026
