byWachtel，Lipton，Rosen&Katz(NewYork)andKing&WoodMalesons(Beijing)

　　MergersandAcquisitions(M&A)wasrobustin2014，hittingseveralnoteworthypost-crisishigh-watermarks:totalglobalvolumereachedUS$3.5trillion，cross-bordervolumereachedUS$1.3trillion(37%ofthetotal)andcross-borderM&AinvolvingU.S.companiesreachedUS$770billion(45%ofwhichwasincoming).AcquirersfromGermany，F(xiàn)rance，Canada，JapanandtheUnitedKingdomaccountedfor67%oftheincomingacquisitionsintotheU.S.，andacquirersfromChina，Indiaandotheremergingeconomiesaccountedforapproximately7%.Cross-borderdealsannouncedin2014includedsomeoftheyear’slargest，includingmanyaboveUS$10billionandanumberofrealblockbusters.

　　Weexpectcurrenttrendstocontinueinto2015，driven，inseveralkeyregions，bystrongcorporateearnings，largecorporatecashbalancesinsearchofyield，continuedavailabilityofhighlyattractivefinancingtowell-capitalizedborrowersandgenerallyhighstockprices.Afocusonindustryconsolidationinanumberofsectorsandathirstfortechnologyandbrandsingrowingeconomiessimilarlyareexpectedtocontinuetomotivatecross-borderdeals.

　　Eveninaworldthatisincreasinglyfracturedbyinternationaltensionsandprofounddisagreementsonpoliticsandpolicy，oftenviolentlyso，U.S.dealmarketscontinuetoberelativelyhospitabletooffshoreacquirersandinvestors.Withcarefuladvancepreparation，strategicimplementationandsophisticateddealstructuresthatanticipatelikelyconcerns，mostacquisitionsintheU.S.canbesuccessfullyachieved.Cross-borderdealsinvolvinginvestmentintotheU.S.aremorelikelytofailbecauseofpoorplanningandexecutionthanfundamentallegalorpoliticalrestrictions.

　　ThefollowingisourupdatedchecklistofissuesthatshouldbecarefullyconsideredinadvanceofanacquisitionorstrategicinvestmentintheU.S.Becauseeachcross-borderdealisunique，therelativesignificanceoftheissuesdiscussedbelowwilldependuponthespecificfacts，circumstancesanddynamicsofeachparticularsituation:

　　PoliticalandRegulatoryConsiderations.

　　Prospectivenon-U.S.acquirersofU.S.businessesorassetsshouldundertakeathoughtfulanalysisofU.S.politicalandregulatoryimplicationswellinadvanceofanyacquisitionproposalorprogram，particularlyifthetargetcompanyoperatesinasensitiveindustryoriftheacquirerissponsoredorfinancedbyaforeigngovernment，ororganizedinajurisdictionwhereahighlevelofgovernmentinvolvementinbusinessisgenerallyunderstoodtoexist.Itisimperativethatthelikelyconcernsoffederal，stateandlocalgovernmentagencies，employees，customers，suppliers，communitiesandotherinterestedpartiesbethoroughlyconsideredand，ifpossible，addressedpriortoanyacquisitionorinvestmentproposalbecomingpublic.Itisalsoessentialthatacomprehensivecommunicationsplanbeinplacepriortotheannouncementofatransactionsothatalloftherelevantconstituenciescanbeaddressedwiththeappropriatemessages.Itwilloftenbeuseful，ifnotessential，toinvolvelocalpublicrelationsfirmsatanearlystageintheplanningprocess.

　　TransactionStructures.Structuresthatmaybehelpfulinsensitivesituationsincludeno-governanceandlow-governanceinvestments，minoritypositionsorjointventures，possiblywiththerighttoincreaseownershiporgovernanceovertime;partneringwithaU.S.companyormanagementorcollaboratingwithaU.S.sourceoffinancingorco-investor(suchasaprivateequityfirm);orutilizingacontrolledorpartlycontrolledU.S.acquisitionvehicle，possiblywithaboardofdirectorshavingasubstantialnumberofU.S.citizensandaprominentU.S.citizenasanon-executivechairman.Useofpreferredsecurities(ratherthanordinarycommonstock)orstructureddebtsecuritiesshouldalsobeconsidered.

　　CommitteeonForeignInvestmentintheU.S.(CFIUS).UndercurrentU.S.federallaw，CFIUS—amulti-agencygovernmentalbodychairedbytheSecretaryoftheTreasury，andtherecommendationsofwhichthePresidentoftheUnitedStateshaspersonalauthoritytoacceptorreject—hasdiscretiontoreviewtransactionsinwhichnon-U.S.acquirerscouldobtain“control”ofaU.S.businessorinwhichanon-U.S.acquirerinvestsinU.S.infrastructure，technologyorenergyassets.ThreeusefulrulesofthumbindealingwithCFIUSare:

　　First，ingeneralitisprudenttomakeavoluntaryfilingwithCFIUSifthelikelihoodofaninvestigationisreasonablyhighorifcompetingbiddersarelikelytotakeadvantageoftheuncertaintyofapotentialinvestigation;

　　Second，itisoftenbesttotaketheinitiativeandsuggestmethodsofmitigationearlyinthereviewprocessinordertohelpshapeanyremedialmeasuresandavoiddelayorpotentialdisapproval;

　　Third，RetainingadvisorswithsignificantCFIUSexpertiseandexperienceisoftencrucialtosuccessfulnavigationoftheCFIUSprocess.TransactionsthatmayrequireaCFIUSfilingshouldhaveacarefullycraftedcommunicationsplaninplacepriortoanypublicannouncementordisclosureofthependingtransactions.

　　AcquisitionCurrency.Whilecashremainsthepredominant(althoughnotexclusive)formofconsiderationincross-borderdeals，non-U.S.acquirersshouldthinkcreativelyaboutpotentialavenuesforofferingU.S.targetshareholdersasecuritythatallowsthemtoparticipateintheresultingglobalenterprise.Forexample，publiclylistedacquirersmayconsiderofferingexistingcommonstockordepositaryreceipts(g.，ADRs)orspecialsecurities(e.g.，contingentvaluerights).

　　M&APractice.ItisessentialtounderstandthecustomandpracticeofU.S.M&Atransactions.Forinstance，understandingwhentorespect—andwhentochallenge—atarget’ssale“process”maybecritical.Knowinghowandatwhatpriceleveltoenterthediscussionswilloftendeterminethesuccessorfailureofaproposal;insomesituationsitisprudenttostartwithanofferonthelowside，whileinothersituationsofferingafullpriceattheoutsetmaybeessentialtoachievinganegotiateddealanddiscouragingcompetitors.Sensitivitymustalsobegiventothedistinctcontoursofthetargetboard’sfiduciarydutiesanddecision-makingobligationsunderU.S.law.

　　U.S.BoardPracticeandCustom.IfthetargetisaU.S.publiccompany，theNon-U.S.participantsneedtobewell-advisedastotheroleofU.S.publiccompanyboardsandthelegal，regulatoryandlitigationframeworkandrisksthatcanconstrainorprescribeboardaction.ThesefactorscanimpactbothtacticsandtimingofM&Aprocessesandthenatureofcommunicationswiththetargetcompany.

　　Financing.Volatilityintheglobalcreditmarketsin2014wasmorepronouncedthanintheimmediatepast，whichresultedinmorefrequentclosingsofthe“windows”inwhichparticularsortsoffinancingareavailable，particularlyfornon-investmentgradeissuers.Whilethevolumeoffinancingandtheratesatwhichfinancinghasbeenavailableforinvestmentgradeissuerscontinuestobefavorableandhasfacilitatedacquisitions，adivergencehasemergedforhigh-yieldissuerslookingforacquisitionfinancing，wheretheavailabilityofcommittedfinancing，particularlyfordealsrequiringalongclosingperiodorasubstantialamountoffinancing，hasbecomeconstrainedandmorecostly.Thishasresultedinpartfromactivitiesofregulatorsworldwide，andparticularlyintheU.S.，toreducefinancingactivityforhighlyleverageddeals–atrendthatmaycontinueforsometime.Importantquestionstoconsiderwhenfinancingatransactionincludewherefinancingwiththemostfavorabletermsandconditionsisavailable;howcommittedthefinancingis;whichlendershavethebestunderstandingoftheacquirer’sandtarget’sbusinesses;whethertoexplorealternative，non-traditionalfinancingsourcesandstructures，includingsellerpaper;whethertherearetransactionstructuresthatcanminimizerefinancingrequirements;andhowcomfortablethetargetwillfeelwiththetermsandconditionsofthefinancing.

　　Litigation.Excludingthecontextofcompetingbidsinwhichlitigationplaysaroleinthecontest，andofgoing-privatetransactionsinitiatedbycontrollingshareholdersormanagement，whichformaseparatecategoryrequiringspecialcareandplanning.Inallcases，theacquirer，itsdirectors，shareholdersandoffshorereportersandregulatorsshouldbeconditionedinadvance(totheextentpossible)toexpectlitigationandnottoviewitasasignoftrouble.Inaddition，itisimportanttounderstandtheU.S.discoveryprocessinlitigationasitissignificantlydifferentthantheprocessinotherjurisdictionsand，eveninthecontextofasettlement，willrequiretheacquirertoprovideresponsiveinformationanddocuments(includingemails)totheplaintiffs.

　　TaxConsiderations.Non-U.S.acquirersfrequentlywillneedtoconsiderwhethertoinvestdirectlyfromtheirhomejurisdictionorthroughU.S.ornon-U.S.subsidiaries，theimpactofthetransactionontaxattributesoftheU.S.target(e.g.，losscarryforwards)，thedeductibilityofinterestexpenseincurredonacquisitionindebtedness，andeligibilityforreducedratesofwithholdingoncross-borderpaymentsofinterest，dividendsandroyaltiesunderapplicableU.S.taxtreaties.BecausetheU.S.doesnothavea“participationexemption”regimethatexemptsdividendincomefromnon-U.S.subsidiaries，anon-U.S.acquirerofaU.S.targetwithnon-U.S.subsidiariesmaywishtoanalyzethetaxcostofextractingsuchsubsidiariesfromtheU.S.group.

　　DisclosureObligations.Howandwhenanacquirer’sinterestinthetargetispubliclydisclosedshouldbecarefullycontrolledandconsidered，keepinginmindthevariousownershipthresholdsthattriggermandatorydisclosureonaSchedule13DunderthefederalsecuritieslawsandunderregulatoryagencyrulessuchasthoseoftheFederalReserveBoard，theFederalEnergyRegulatoryCommission(FERC)andtheFederalCommunicationsCommission(FCC).WhiletheHart-Scott-RodinoAntitrustImprovementsAct(HSR)doesnotrequiredisclosuretothegeneralpublic，theHSRrulesdorequiredisclosuretothetarget’smanagementbeforerelativelylowownershipthresholdscanbecrossed.Non-U.S.acquirershavetobemindfulofdisclosurenormsandtimingrequirementsrelatingtohomecountryrequirementswithrespecttocross-borderinvestmentandacquisitionactivity.

　　ShareholderApproval.BecausefewU.S.publiccompanieshaveoneormorecontrollingshareholders，obtainingpublicshareholderapprovalistypicallyakeyconsiderationinU.S.transactions.Understandinginadvancetherolesofarbitrageurs，hedgefunds，institutionalinvestors，privateequityfunds，proxyvotingadvisorsandotherimportantmarketplayers—andtheirlikelyviewsoftheanticipatedacquisitionattemptaswellaswhentheyappearanddisappearfromthescene—canbepivotaltothesuccessorfailureofthetransaction.

　　IntegrationPlanning.Oneofthereasonsdealssometimesfailispoorpost-acquisitionintegration，particularlyincross-borderdealswheremultiplecultures，languagesandhistoricbusinessmethodsmaycreatefriction.Ifpossible，theexecutivesandconsultantswhowillberesponsibleforintegrationshouldbeinvolvedintheearlystagesofthedealsothattheycanhelpformulateand“own”theplansthattheywillbeexpectedtoexecute.

　　CorporateGovernanceandSecuritiesLaw.U.S.securitiesandcorporategovernancerulescanbetroublesomefornon-U.S.acquirerswhowillbeissuingsecuritiesthatwillbecomepubliclytradedintheU.S.asaresultofanacquisition.SECrules，theSarbanes-OxleyandDodd-FrankActsandstockexchangerequirementsshouldbeevaluatedtoensurecompatibilitywithhomecountryrulesandtobecertainthatthenon-U.S.acquirerwillbeabletocomply.Rulesrelatingtodirectorindependence，internalcontrolreportsandloanstoofficersanddirectors，amongothers，canfrequentlyraiseissuesfornon-U.S.companieslistingintheU.S..Non-U.S.acquirersshouldalsobemindfulthatU.S.securitiesregulationsmayapplytoacquisitionsandotherbusinesscombinationactivitiesinvolvingnon-U.S.companieswithU.S.securityholders.

　　AntitrustIssues.Totheextentthatanon-U.S.acquirerdirectlyorindirectlycompetesorholdsaninterestinacompanythatcompetesinthesameindustryasthetargetcompany，antitrustconcernsmayariseeitheratthefederalagencyorstateattorneysgenerallevel.Althoughlesstypical，concernscanalsoariseiftheforeignacquirercompeteseitherinanupstreamordownstreammarketofthetarget.Asnotedabove，pre-closingintegrationeffortsshouldalsobeconductedwithsensitivitytoantitrustrequirementsthatcanbelimiting.Homecountrycompetitionlawsmayraisetheirownsetsofissuesthatshouldbecarefullyanalyzedwithcounsel.TheadministrationoftheantitrustlawsintheU.S.iscarriedoutbyhighlyprofessionalagenciesrelyingonwell-establishedanalyticalframeworks.Theoutcomesofthevastmajorityoftransactionscanbeeasilypredicted.

　　DueDiligence.Duediligencemethodsmusttakeaccountofthetargetjurisdiction’slegalregimeand，particularlyimportantinacompetitiveauctionsituation，localnorms.Manyduediligencerequestsarebestchanneledthroughlegalorfinancialintermediariesasopposedtobeingmadedirectlytothetargetcompany.Makingduediligencerequeststhatappeartothetargetasparticularlyunusualorunreasonable(notuncommonincross-borderdeals)caneasilycauseabiddertolosecredibility.Similarly，missingasignificantlocalissueforlackoflocalknowledgecanbehighlyproblematicandcostly.

　　Collaboration.Mostobstaclestoadealarebestaddressedinpartnershipwithlocalplayerswhoseinterestsarealignedwiththoseoftheacquirer.Ifpossible，relationshipswiththetargetcompany’smanagementandotherlocalforcesshouldbeestablishedwellinadvancesothatpoliticalandotherconcernscanbeaddressedtogether，andsothatallpoliticians，regulatorsandotherstakeholderscanbeapproachedbythewholegroupinaconsistent，collaborativeandcooperativefashion.

　　(Contributedby:AdamO.EmmerichandRobinPanovka，Wachtel，Lipton，Rosen&Katz(NewYork)andKaidingWang，GangJingandLianghuaWangofKing&WoodMalesons(Beijing))