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Under the new legislation, BEIS may block or impose conditions on deals.

By Tom D. Evans, Jonathan Parker, David J. Walker, Stephanie Adams, and Catherine Campbell

The UK’s National Security and Investment Act (NSI Act), is now officially in force, granting powers to the Secretary of State for Business, Energy and Industrial Strategy (BEIS) to screen a broad range of transactions on national security grounds, allowing BEIS to block or impose conditions on deals. Due to its retroactive application, the NSI Act is already impacting deals.

The NSI Act arrives at a time of heightened scrutiny of foreign direct investments (FDIs) across Europe. According to the latest edition of Latham & Watkins’ Private Equity Market Study, the prevalence of FDI approval conditions in deals continues to grow, reflective of the increased number of jurisdictions with FDI approval regimes and the high value, high profile, and strategically significant nature of the deals surveyed. With the advent of the NSI Act, we anticipate that this trend will continue, bringing new considerations and challenges to deals.

By Richard Butterwick, Nick Cline, Robbie McLaren, Terry Charalambous, and Catherine Campbell

In a complex and competitive market, minimising and mitigating risk in M&A is a key concern for deal teams. High demand for assets saw strong deal volumes and values in 2019, following a standout year in 2018. The search for opportunity has brought large corporates face to face with new or rapidly expanding businesses whose risk and compliance processes may not have kept pace with other areas of growth. New risks are gaining in size and profile — meaning companies must remain alert to value-compromising issues and inherited liabilities within targets. Corporate veil cases, as well as big-ticket regulatory fines for competition failures and data protection breaches, all indicate that corporates are in the firing line.