Key Antitrust Issues and Opportunities for Private Equity and Financial Sponsors
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Key Antitrust Issues and Opportunities for Private Equity and Financial Sponsors
Private equity and financial sponsor buyers face particular opportunities and challenges when dealing with global merger control and foreign investment regulations. In this note, our specialist competition lawyers provide insights and market experience on the key issues and their implications to give our clients the best chance of a smooth regulatory process.
Authors: Nicole Kar, Eram Khan and Nick Peristerakis
Competition authorities are getting faster at reviewing no-issues deals (even in China) reducing the impact of the regulatory approvals process on deal timetable. However, complex reviews such as bolt-on deals in the PE and financial sponsor context are taking much longer.
Warehousing structures are high risk in EU and China following the Canon/Toshiba decision, and still not permitted in the US. However, reverse warehousing or true options are still possible if structured properly.
Gun jumping can lead to huge fines on both sides of the Atlantic; deal teams and counsel need to exercise extreme caution on both interim covenants as well as their actual application in the period between signing and closing.
Both EU and US competition authorities view PE and financial sponsor buyers of divestment assets with increased scepticism. A case-by-case assessment is required before an investment decision is made, to see whether there is a realistic prospect of being considered a “suitable purchaser", depending on the industry in question, the business to be divested and the particular PE firm or financial sponsor’s track record and strategy.
US-style document production requests are now a standard part of EU merger review. PE houses, financial sponsors and their portfolio companies should implement document retention and creation guidelines not only for deal-specific documents but also ordinary course of business documents.
CFIUS enforcement is increasing in the US, while outside the US the number of jurisdictions conducting foreign investment reviews is growing and the intensity of these reviews is deepening. Foreign investment screens and building appropriate protections into deal documentation will be vital in mitigating the impact of such reviews.
Private equity houses and other financial investors rely on Linklaters’ market leading global experts to advise on all stages of a fund lifecycle, from establishing the fund and making investments, to ongoing portfolio assistance including restructuring advice, to exiting from those investments. We are able to draw on relevant expertise from best-in-class teams throughout our 30-office global network, to provide seamless advice to our financial investor clients on their most strategic transactions. The team’s experience includes advising on transactions across the major jurisdictions of Western Europe, Central and Eastern Europe, the Americas, the Middle East and Asia.
