Private Equity & Financial Sponsors: Antitrust and Foreign Investment Outlook 2021

5 themes that will impact your deal-making

2020 was a rocky year in many ways, including in the world of antitrust. With the rise of foreign investment protectionism and increasingly interventionist merger control regimes, coupled with the impact of Covid-19 on the world’s economy, there were plenty of issues to keep dealmakers on their toes. And 2021 looks set to be no less active – the CMA’s post-Brexit jurisdictional powers and the UK National Security & Investment Bill are just two developments that will make sure of that.

We’ve identified five evolving themes that will be relevant for keeping deals on track in 2021. Whether speeding things up or slowing things down, the implications of these developments make it more important than ever to closely analyse antitrust risks and address these in sale documentation early on.

5 themes that will impact your deal-making in 2021

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Getting to grips with the new landscape in the UK

Dealmakers looking to execute acquisitions involving UK businesses face a new regulatory landscape with the UK’s CMA now having stand-alone merger control jurisdiction and the UK introducing its own national security review process this year. Investors will need to ensure that SPA provisions suitably address the additional risks introduced by these processes.

Read more Getting to grips with the new landscape in the UK

State intervention – here to stay

There are more foreign investment regimes catching a broader range of deals in far more sectors than ever before. Given the impacts the development of these regimes are having on transactions globally, foreign investment has become a key component of early stage deal planning for all potential investors.

Read more State intervention – here to stay

UK Takeover Code consultation – is logic prevailing?

Whilst aimed at reducing uncertainty for offeree shareholders, the proposed changes to the Takeover Code may have a chilling effect on financial sponsor offerors, with longer term financing commitments and without the safety-net of being able to invoke a condition if a review goes to an unwelcome Phase 2.

Read more UK Takeover Code consultation – is logic prevailing?

Europe – smoother sailing for many but a word of warning for some

The European Commission is increasingly looking to streamline its review of cases that have little impact on competition, meaning faster approvals for stand-alone financial investments. At the same time, the EC is keen to ensure transactions which harm competition do not slip under the radar potentially bringing added scrutiny to bolt-on strategies.

Read more Europe – smoother sailing for many but a word of warning for some

Impact of Covid-19 on merger reviews

The surge in M&A in Q3 2020 shows that despite the Covid crisis, there is room for significant M&A activity. While antitrust regulators have handled the crisis well overall, dealmakers should pay particular attention to long stop dates, antitrust risk allocation and pre-closing covenants, to make sure that Covid-related delays do not derail their deals.

Read more Impact of Covid-19 on merger reviews

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Private Equity & Financial Sponsors: Antitrust and Foreign Investment Outlook 2021




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