Highlights from the CFIUS Annual Report
August 07, 2024
Key Takeaways
- The U.S. Department of the Treasury’s Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) has published its Annual Report to Congress for 2023 (the “Annual Report”), which provides important data on CFIUS’ activities, including notices, declarations, mitigation, and enforcement actions through 2023.
- The Annual Report holds important insights for dealmakers contemplating participation by foreign investors for investments in U.S. businesses. Of note, 2023 marked a 22% decline in the number of transactions reviewed by CFIUS as compared to 2022, in which CFIUS reviewed a record number of transactions. However, this decline corresponds to a proportional reduction in M&A transactions in the global market over the past year.
- Notwithstanding, the Annual Report demonstrates that it is more complicated than ever to navigate the CFIUS process. CFIUS continues to actively pursue the use of mitigation measures, pursued a record number of enforcement actions in 2023, and has published two notices of proposed rulemaking to strengthen its implementing regulations (which we discuss here and here).
- Considering these developments, dealmakers should evaluate CFIUS risks at the start of the transaction process and develop a sophisticated strategy to navigate the CFIUS process. We can help. Below, we highlight key data and takeaways from the Annual Report that dealmakers should know.
Timelines for CFIUS reviews continue to increase.
Absent a withdraw/refile, the longest possible review timeline for CFIUS review is 105 days. This includes an initial review period of 45 days, a possible additional 45-day investigation if determined necessary (in CFIUS’ sole discretion) and, in extraordinary circumstances, an additional 15-day extension of the investigation period (prior to submission for presidential consideration). Notably, CFIUS exercised its authority to extend an investigation in extraordinary circumstances once in 2023 (it did not do so in 2022).
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