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Freshfields research reveals rising levels of protectionism within the G7 and its impact on cross-border deal-making

Global law firm, Freshfields Bruckhaus Deringer LLP (‘Freshfields’), is publishing the results of recent research today, highlighting the extent to which restrictive legislation introduced on foreign investment and public interest grounds is sweeping through the G7 and impacting cross-border M&A activity. 
 
The firm has analysed data sourced from the United Nations Conference on Trade and Development (‘UNCTAD’) alongside its own business intelligence, with the research revealing that 71 per cent of the G7 countries(1) have strengthened or implemented their foreign investment or public interest regimes since 2014. 
 
Important further changes to foreign investment frameworks are expected both within and outside of the G7, with the US, the UK and EU currently reviewing their foreign investment frameworks.  
 
Global M&A activity has already been impacted by these new increased levels of scrutiny. There has been a 30 per cent increase since 2014 in the number of the leading transactions(2) that Freshfields has worked on that have been affected by foreign investment rules or public interest issues. This finding is based on a review of the major M&A deals in which the firm has been involved. 
 
Commenting on these research findings, John Davies, co-head of the Freshfields Public Interest and Foreign Investment Group, states: 
 
“With many countries tightening their laws on foreign investment and public interest issues, it is clear that cross-border deal-makers are now operating in a different climate.
 
“Navigating stricter legislation is only part of the story. It is crucial for any business looking at a potentially sensitive cross-border transaction to engage with all potential stakeholders using the right narrative.
 
“We have ramped up our capabilities in this area. A significant number of our lawyers have joined the firm from governmental or regulatory roles, with our CFIUS experience having recently been enhanced by the arrival of Shawn Cooley, who joined our DC team from the US Department of Homeland Security. Our Public Interest and Foreign Investment Group also draws on our experiences of working on some of the most challenging public interest deals in recent years to offer clients a globally coordinated approach when dealing with heightened levels of scrutiny.”
 
Bruce Embley, partner and global co-head of M&A at Freshfields, adds:
 
“This is an area of increased focus for our clients, particularly for the most high profile M&A transactions. Whilst the restrictions and level of regulatory and political scrutiny is increasing, our experience shows that M&A counter parties can still take a number of steps to improve their chances of successfully navigating these choppier waters.”
 
ENDS

Notes for editors

End notes:

(1) 71 per cent of the G7 countries (five countries) have strengthened or implemented their foreign investment or public interest regimes since 2014. These countries are:

  • Italy
  • Germany
  • France
  • Canada
  • Japan.

It is also worth noting that the US and UK are currently reviewing their foreign investment regimes and that, outside of the G7, Russia has strengthened its regime and the EU is carrying out a review of its framework.

(2) Freshfields analysed all of the mandates it has worked on since 2014 that were valued at over $1bn.

For further information:

Please follow the links below to access further insights from the Freshfields Public Interest and Foreign Investment Group in this area:

About Freshfields Bruckhaus Deringer LLP

Freshfields Bruckhaus Deringer LLP is a global law firm with a long-standing track record of successfully supporting the world's leading national and multinational corporations, financial institutions and governments on ground-breaking and business-critical mandates. Our 2,800 plus lawyers deliver results worldwide through our own offices and alongside leading local firms.  Our commitment, local and multi-national expertise and business know-how means our clients rely on us when it matters most.

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