Q. Now, here’s a phrase very few people know, but really is important amid all the news stories about foreign companies using the cheap dollar as a reason to buy up US companies… First, what in the world does the acryonym stand for?
A. The Committee on Foreign Investment in the United States. It’s an inter-agency committee, made up of a big list. The Treasury chairs the committee, but Justice, Homeland Security, State, Defense, Energy, and others participate as well. And they’re looking at a basic question: does the proposed acquisition raise national security issues?

Q. So what transactions are covered exactly?
A. The law and regulations are very broad. Technically, it covers and acquisition of “control” of any US entity engaged in interstate commerce by foreign persons. And “control” could be exercised in any number of ways, formally and informally– you’re not off the hook just because you’re buying less than 50% of the US entity.

Q. As a practical matter, how does CFIUS look at potential transactions?
A. Essentially, it’s a 2X2 grid. Is the acquiring entity hostile or friendly? And is the target company key to national defense or homeland security issues? So a Canadian company that wants to buy a US ice cream maker is probably in good shape; but if a North Korean company wants to buy a solid rocket fuel specialist company, I can imagine problems. Most of the real issues so far have been around acquisitions of computer technology companies.

Q. How does the process actually work, then?
A. US companies that might be involved in such transactions should file a “voluntary” notice with a lot of information about the proposed investor, all laid out in regulations. But of course CFIUS can intervene in any transaction even if the voluntary notice is not filed. If there are real concerns after the review, the President makes the final call about blocking a deal.

Q. Funny we haven’t heard much about all this… have a lot of deals actually been blocked?
A. Only a couple… but almost a hundred proposed transactions have been withdrawn after CFIUS started taking a deeper look. So it’s had a significant impact in the past, one that’s likely to grow over the next many years.