Acquiring a purely domestic U.S. company is relatively straightforward.
Things get complicated when the target is a U.S. multinational company.
One of the deals we’re working on in my office concerns just that.
I was speaking to in-house counsel about the transaction and thought it would make for a great post someday.
The article discusses 8 key areas that in-house counsel should focus on when dealing with the acquisition of a U.S. company with a global presence.
While they are all great points, I’m going to list and comment on what I think are the 5 most important areas.
1. Merger Control. An early step in any planning process should be determining where pre-merger filings need to be made. Even if you think that the transaction will not cause substantive antitrust concerns, your transaction timeline (and budget) may be affected by required pre-merger filings and reviews. Target companies with European operations may be covered by the EC Merger Regulation; if the transaction does not have a sufficient “EU dimension” you may still fall within the ambit of the merger review laws of individual European countries. China’s merger control laws have become increasingly important given the number of U.S. companies with affiliates or joint ventures in the People’s Republic of China. There are also, however, a number of jurisdictions whose merger control laws appear to be addressed less to substantive concerns and more to raising revenue, as the thresholds which necessitate filings seem to be very low bars. Developing a matrix of required filings, built in part on data from the employee and real estate lists, is therefore a necessary exercise.
These are great points. I’d like to add another. Special consideration should also be given to the distinct contours of the target board’s fiduciary duties and decision-making obligations under U.S. law.
2. Sales Channels and Sensitive Payments. If the target has contracts with foreign government agencies or state-controlled industries, or if employees of its subsidiaries interact with foreign government officials, you need to familiarize yourself with the U.S. Foreign Corrupt Practices Act before beginning your due diligence. Ask to see the target’s compliance program and the procedures that implement it – including what training is given and how often – in order to make sure that the target’s senior management has a genuine commitment to preventing and detecting corruption. Violations