Part Three: Setting up for success

Navigating regulatory hurdles and mitigating risk

Our analysis has shown that, while there is greater complexity and regulation, for the vast majority of deals, there is a route through. With the right approach and advice, you can navigate regulatory hurdles, mitigate risk and get deals done. Set out below are a few of the key points to be borne in mind on every deal.

1 – Go / no-go

For both buy and sell side it is important to think about the regulatory perspective of a deal from the very outset. We recommend thinking about this from the start. What is the likelihood of a transaction being subject to antitrust, FDI or other regulation? Assess how this will impact on the overall process and cost and factor that in. Spend time and effort on a roadmap before you construct the deal. Have early and strategic discussions, bringing in expertise and keep the C Suite apprised of the complexities, risks and impact on timing from the outset.

“I think it’s got to be the first thing you think about when you scope out a deal. Have the antitrust people on the call. Have the FDI people on the call, thinking about how the deal can be done. Let’s treat this in the same way we would treat due diligence. Get it right up front. That’s an important mindset.” Robin Johnson Partner, M&A, Eversheds Sutherland

2 – Work with experienced advisors who have experience with regulators

Navigating the evolving regulatory landscape can be challenging, especially with different regimes and expectations. Therefore, having a team who have experience with regulators across jurisdictions and who understand their requirements has become an essential part of deal making. For newer FDI regimes in particular, having somebody on hand with plenty of experience can provide invaluable insights and save time.

“On a number of our most difficult cases, I’ve been able to get in front of regulators and negotiate remedies. Good relationships with regulators enable us to pick up the phone when necessary and weed out any tricky points.” Claire Morgan Partner, Competition, Trade and Foreign Investment, Eversheds Sutherland

3 – Ensure accurate deal documentation

Seeking guidance from advisors who have been through the process means you can anticipate what information you are going to be asked to provide. Ensure relevant wider team members and departments within your organization understand what may be expected for the regulatory process and know how to present it accurately. Missteps on the information you send to regulators can prevent timely and smooth assessment of transactions. Anticipating answers and clear communication is vital.

“Control the quality of your submission. The right experts will help you frame it in the most collaborative, transparent, constructive way possible. You want to ensure you’ve maximized your chances of getting through at the first ask.” Anthony Walsh Partner, M&A, Eversheds Sutherland

4 – Preparation is key

It is important to be organised and proactive. Preparing internal information in readiness for notifications and throughout interactions helps cut timelines and ensures deals are not de-railed. Consider what questions you are likely to be asked by regulators and have a plan ready in advance on what you would send them, within hours, or even minutes of the information request.

“We’re increasingly trying to get on the front foot and think about things earlier. That obviously impacts costs associated with the transaction, but it’s something we’re very aware of as an organization.” Ed Lawrence Integration Manager, EMEA, Parker Hannifin

5 – Keep messaging consistent across different regimes

Antitrust regulators talk to each other and in some regions, for example the EU and between specific countries, there can be greater coordination on FDI investigations. A joined up message is vital; not only across different areas of regulation, but across different geographies too. Ensure that, when regulators do inevitably connect, they have the same outline message around a deal, and it is consistent.

“Global deals can trigger multiple FDI and antitrust filings at the same time. Making sure you have a consistent message to regulators globally, across both antitrust and FDI, presents a consolidated picture to governments and third parties.” Claire Morgan Partner, Competition, Trade and Foreign Investment, Eversheds Sutherland

6 – Be alive to new issues

It’s important to be aware that new issues within the regulatory environment are a constant possibility. New theories of harm in antitrust arise regularly, while national security is a fluid and ever-changing concept. So it is important not to rely on precedents. Work with your advisors to assess and navigate potential new issues and consider how these may impact your transaction.

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