New Publication Provides Compelling Analytical Framework for the CFIUS Process
A new publication by Theodore Moran of the Peterson Institute for International Economics addresses what it considers to be the two most important questions relating to the screening of inbound investment. Entitled “Three Threats: An Analytical Framework for the CFIUS Process,” Moran’s work responds to
- Under what circumstances might the foreign acquisition of a U.S. company constitute a genuine national security threat to the U.S.?
- How should CFIUS assess the risks and threats so as to separate what is serious from what is not?
According to a policy brief that summarizes the publication, as a platform for his analytical model, Moran sets out three categories of threats that might arise from inbound acquisitions:
- that a foreign-controlled supplier will deny goods or services to U.S. consumers
- that a foreign-controlled entity will access U.S. technology or expertise previously not available to it
- that the acquisition will be a means for infiltration, surveillance or sabotage in the U.S.
To analyze these threats properly, argues Moran, CFIUS must understand the “criticality” of the goods or services that the target provides, combined with a second-level assessment of whether alternative suppliers are available and how easily consumers can switch from one supplier to another.
Moran reviews several of the most high-profile CFIUS involvements of the past 8 years and concludes that most inbound acquisitions pose no credible threat to national security.
For professionals whose work involves inbound M&A, this publication is essential reading.
