DealLawyers.com Blog

Hunton Andrews Kurth recently issued a mid-year review of notable CFIUS developments. This excerpt discusses an emerging trend toward requiring parties to enter into national security agreements as part of their mitigation efforts in voluntarily noticed transactions:

Increasingly, we are seeing – and other practitioners have also reported seeing – CFIUS require national security agreements to mitigate national security concerns in voluntarily-noticed transactions where the parties did not foresee significant national security issues.

In many situations where national security agreements are required by CFIUS, the parties to such transactions recognize well before notices or declarations are filed that the transaction at issue may require mitigation commitments to be made before CFIUS will clear the transaction.  While the need for mitigation is determined on a case-by-case basis, the trend towards more national security agreements, if borne out, may signal a lower threshold at CFIUS for requiring mitigation than prevailed in the past.

The memo also highlights a big potential downside associated with CFIUS’s approach – the perception that there is a lower threshold for mitigation agreements may result in fewer parties making voluntary filings.

– John Jenkins