Non-U.S. investors face an increasingly challenging investment landscape. Regulatory scrutiny is on the rise. The reach of the Committee on Foreign Investment in the United States (CFIUS) is broader than ever. Non-U.S. investors and their counsel require the assistance of a team of trusted advisers to negotiate and navigate mitigation agreements—ideally well before any deal is signed.
StoneTurn brings a team of experts who have worked with regulators on the federal, state and local levels, as well as countless government agencies worldwide. We draw upon our high-level government expertise to assess transactions that would be subject to CFIUS reviews, and work with companies to operationalize compliance. We understand both the government’s perspective on national security and the business realities of how to successfully manage an organization subject to the terms of government mitigation.
From its base in Washington, DC, StoneTurn’s National Security & CFIUS Compliance team partners with investors, or investees, to evaluate potential transactions with the view of a CFIUS regulator. We work with you and your counsel to develop a strategy to close and optimize each deal.
Whether you are assessing potential investment targets or the ink on your transaction is already dry―turn to us for pragmatic international trade compliance insights and a proven track record as a trusted adviser.
How We Help
Pre-Transaction
Committee for Foreign Investment in the U.S. (CFIUS) Risk Assessments
National security investment reviews by CFIUS and other national agencies can be broad and the existence of a national security risk is not always apparent to the untrained eye. For example, companies without a robust Global Trade Controls compliance program are often flagged by CFIUS as a security risk. Understanding the potential concerns of government regulators early in the deal process is essential. StoneTurn experts, who have deep experience with CFIUS reviews both in government and the private sector, can help identify challenges that might arise and develop strategies to help neutralize those challenges.
Investigative Due Diligence
StoneTurn’s seasoned investigators perform essential due diligence on potential targets, investors and partners, mining both data and human resources within the framework of a national security review. Our experts then identify and report on the potential impact, both positive and negative, the facts may have on a CFIUS review.
FOCI Mitigation Consulting
When an entity handles classified information as part of its business, it’s subject to the U.S. government’s industrial security program, administered by the Defense Counterintelligence and Security Agency (DCSA). Post-transaction access to classified information requires mitigation of any deal-related Foreign Ownership, Control, or Influence (FOCI). Mitigation decisions by DCSA will impact investments in ways that are not entirely intuitive and can have significant operational impact on the mitigated business. StoneTurn’s experts help senior leaders to develop successful business strategies within the operational constraints of mitigation.
Deal Negotiations
CFIUS and FOCI Mitigation Support
While CFIUS ultimately approves most deals that are submitted for their review, this approval frequently requires the acquiring company to enter into a binding agreement with the government to mitigate the identified national security concerns. Mitigation terms can range from minor contractual commitments by a foreign parent to significant and detailed operational restrictions on the U.S. subsidiary. CFIUS mitigation can be in addition to FOCI mitigation.
If a foreign company requires access to U.S. classified information, further mitigation would also be required under the Department of Defense’s Foreign Owned, Controlled or Influenced (FOCI) program administered by DCSA. FOCI mitigation requires additional special corporate structures and operational requirements to preserve and protect classified information that can be onerous and lead to operational restrictions.
StoneTurn can help companies facing these challenges. Our National Security and CFIUS Compliance experts have advised companies on what mitigation structures would make them most competitive in an industry or business line. StoneTurn professionals bring experience negotiating mitigation terms on both the government and private sector side of deals, giving us unique insight into these structures.
StoneTurn has also advised foreign companies on strategy for entering a U.S. market space as well as potential mitigation that is likely to be encountered. Our professionals help anticipate, analyze, and strategize potential mitigation proposals from the government. We can also assist in balancing the competing interests of other countries conducting national security reviews of foreign inbound investments.
Post-Transaction
Independent Reviews & Monitoring
Once a mitigation agreement is in place, creating the procedures and policies necessary for a successful, growing business to ensure compliance can be challenging. We view compliance not only as a business imperative but also as a potential competitive differentiator.
StoneTurn professionals bring experience successfully operating CFIUS- and FOCI-mitigated companies. We can help a company to establish a new mitigation regime or help to improve an existing entity’s business performance or compliance. Our team works with companies to implement or enhance necessary internal controls and also monitors mitigated operations to ensure compliance and efficiency. In fact, the StoneTurn team currently serves as CFIUS compliance auditor, providing independent review of compliance with mitigation agreements and reporting findings to the United States government.
