U.S. UPDATE – 2020 Checklist for Successful Acquisitions in the United States

Cross-Border M&A –
2020 Checklist for Successful Acquisitions in the United States

M&A continued its robust pace in 2019, with nearly $3.9 trillion in global deal volume for the year, the third-highest volume of the last decade.  The U.S. market was particularly strong, making up for relative weakness in Europe and Asia.  The boom was fueled largely by mega-deals, with a surge in transformative transactions compensating for a decline in smaller deals and the raw number of deals.  The seven largest transactions of 2019 – all announced in the first six months of the year – accounted for nearly $500 billion in deal volume.  Three transactions – the sale of Celgene to Bristol-Myers Squibb, the merger of United Technologies and Raytheon and the sale of Allergan to AbbVie – each exceeded $80 billion.  By the end of 2019, the volume of transactions of more than $20 billion was 41% higher than in 2018, while the volume of all other transactions was down 13% versus 2018.

As for cross-border deals, a relatively low $1.2 trillion of last year’s deals (including only one of the 10 largest deals) were cross-border, reflecting dealmakers’ watchful eye on international trade tensions, the impact of Brexit and geo-political shifts.  Approximately 14% of last year’s $1.9 trillion U.S. deal volume involved non-U.S. acquirors, with foreign capital helping to fuel many domestic deals as well.  Canadian, French, German, Japanese and U.K. acquirors accounted for approximately 53% of the volume of cross-border deals involving U.S. targets, and acquirors from China, India and other emerging economies accounted for approximately 8%.

Despite the inevitable uncertainties inherent in the current climate, we expect cross-border transactions into the U.S. to continue to offer compelling opportunities.  And, as always, transacting parties will do better if they are well-prepared for the cultural, political, regulatory and technical complexity inherent in cross-border deals.  Advance preparation, strategic implementation and deal structures calibrated to likely concerns are critically important, as is a thoughtful assessment of recent changes to the CFIUS regime and U.S. governance trends discussed below.

The following is our updated checklist of issues that should be carefully considered in advance of an acquisition or strategic investment in the U.S.  Because each cross-border deal is unique, the relative significance of the issues discussed below will depend upon the specific facts, circumstances and dynamics of each particular situation.

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