Frank Aquila and Melissa Sawyer highlight key characteristics of cross-border M&A deals that counsel should discuss with their client at the outset of the transaction, including:
. Disclosure and announcement issues;
. Regulatory and third party notification and approval issues;
. Securities law issues;
. Choice of law and dispute resolution issues;
. Selecting and working with local counsel;
. Governance issues; and
. Recent developments in cross-border transactions.
Excerpt:
Cross-border deals are on the rise. The phrase cross-border deals refers to a broad range of transactions in which the parties are from different jurisdictions. The league tables show that U.S. law firms are involved in billions of dollars of cross-border transactions every quarter. Recently, developments in the credit markets and the devaluation of the U.S. dollar, among other things, have resulted in increased activity by non-U.S. investors into U.S. businesses. Non-U.S. acquirers accounted for almost 25% of the approximately $1.4 trillion of U.S. M&A activity in 2007. The twelve biggest sovereign wealth funds currently have approximately $2.9 trillion of assets under management and have invested almost $60 billion in U.S. financing institutions alone in the past year. Non-U.S. buyers have also shown an intense appetite for U.S. infrastructure assets (like toll roads and ports) that have historically had steady returns. Meanwhile, many U.S. companies are increasingly looking for potential synergistic M&A opportunities in non-U.S. markets that they hope to enter or where they hope to expand existing businesses.
Cross-border deals raise a host of legal and technical challenges beyond those that typically arise in purely domestic transactions. One practical side-effect of the rise of cross-border transactions is that practitioners now have access to information about a plethora of M&A technologies (including ideas about transaction structures, financing methodologies and regulatory compliance) that are used in various jurisdictions. The extent of the available options can be overwhelming at times, but the core principles remain the same across most transactions. This article highlights certain of the key challenges and provides some practical tips for addressing issues that regularly arise in cross-border transactions.
Disclosure/Announcement Issues
Non-U.S. acquirers seeking to acquire U.S. businesses are often surprised by the extent of the public disclosure that they or the seller/target are required to make regarding the transaction. When representing a non-U.S. buyer, it is critical to educate your client about these requirements early in the process. Among other things, the U.S. disclosures may trigger disclosure requirements in the clients home jurisdiction, impact key transaction terms or acquisition strategy and/or affect the regulatory approval process. [footnotes omitted]