Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Advanced Search Go
Free Newsletter Sign Up

ANALYSIS: 2020 CFIUS Data Show Steady Workload Amid Hectic Year

July 27, 2021, 9:51 PM

Newly released official data regarding activities of the Committee on Foreign Investment in the U.S. (CFIUS) for calendar year 2020—the first year with recent CFIUS reforms in full effect and the year the pandemic put the M&A market on an extreme rollercoaster ride—show that the total number of filings made with the Committee stayed generally on par with 2019, falling by roughly 4%.

CFIUS reviews a portion of all U.S.-related investments and takeovers. Overall, last year saw the lowest level of global cross-border mergers and acquisitions deals—by both volume and count—of any year since 2013. But the U.S. fared the best, by deal count, of all global target countries, only experiencing a modest decrease in volume year-over-year.

These CFIUS stats tell a parallel story about cross-border investment in the U.S. The Committee was definitely busy last year, and no major crisis-driven drops can be seen in any of the statistics presented.

Declarations, Notices, and Outcomes

The Annual Report to Congress for calendar year 2020, released this week by the U.S. Department of the Treasury, includes a breakdown of the number of declarations and notices filed with the Committee and the outcomes of those filings. A declaration is a new short-form filing option introduced by the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Prior to Feb. 13, 2020, declarations were available only to those transactions covered by the Critical Technologies Pilot Program. After that date, the shorter filing option became generally available.

As would be expected, the data show that more deal parties opted to submit short-form declarations in 2020 (126 declarations filed) than they did in 2019 (94 declarations filed). And the report indicates that fewer long-form notices were filed in 2020 (187 notices filed) than in 2019 (231).

A total of 313 “covered transaction declarations” (including those filed under the pilot program) and “covered transaction notices” were filed in 2020 (187 notices and 126 declarations), compared with 325 declarations and notices filed in 2019 (231 notices and 94 declarations). These sums suggest that 2020 saw just 12 fewer total filings than the year prior.

Declarations. Of the 126 short-form declarations filed in 2020, according to the report, 81 resulted in all action being completed by the Committee, 28 resulted in a request for a written notice, 16 resulted in the parties being informed that the Committee was unable to complete action (also known in CFIUS parlance as “the shrug”), and one was withdrawn. Only two of the declarations submitted in 2020 were for real estate transactions. No declarations were rejected by the Committee during the period. Based on stipulations provided by the parties, 34 of the 126 declarations were subject to mandatory filing requirements.

Made with Flourish

If you are having trouble viewing this interactive graphic, please enable third-party cookies on your browser. Terminal users, please click here to view this interactive graphic.

In 2018, the first year of the pilot program, 20 declarations had been filed, followed by 94 in 2019. So, based on 2020’s total, it appears that declarations are proving an attractive filing option for deal parties—a win for CFIUS, with shorter submissions to review.

Notices. CFIUS reports that it reviewed 187 long-form “covered transaction notices,” 88 of which resulted in investigations. Looking at recent years’ investigation totals, a clear and steady decline in investigations starting in 2018 is visible—a change that CFIUS, in last year’s annual report, attributed to the extension of the period of time allowed for reviews brought by FIRRMA from 30 days to 45 days. That said, as a proportion of notices filed, investigations in 2020 stayed at a similar level to 2019: In 2020, 47% of notices resulted in investigation, and in 2019, 49% did.

Made with Flourish

If you are having trouble viewing this interactive graphic, please enable third-party cookies on your browser. Terminal users, please click here to view this interactive graphic.

Mitigation Measures & Conditions. According to the report, CFIUS concluded action on 16 of the 187 notices “after adopting mitigation measures pursuant to Section 721 to resolve national security concerns.” The report also details some of the types of mitigation measures and conditions required for deal parties to go forward. This list provides a window into the 2020 hurdles that some major M&A and investment deals faced on their way to announcing that they had gained CFIUS clearance for their transactions, and a preview of what deal parties may encounter in 2021.

In CFIUS’s words, the mitigation measures include:

  • “prohibiting or limiting the transfer or sharing of certain intellectual property, trade secrets, or technical knowledge;
  • establishing guidelines and terms for handling existing or future USG [U.S. government] contracts, USG customer information, and other sensitive information;
  • ensuring that only authorized persons have access to certain technology; that only authorized persons have access to U.S. Government, company, or customer information; and that the foreign acquirer not have direct or indirect access to systems that hold such information;
  • ensuring that only U.S. citizens handle certain products and services, and ensuring that certain activities and products are located only in the United States;
  • establishing a Corporate Security Committee and other mechanisms to ensure compliance with all required actions, including the appointment of a U.S. Government -approved security officer and/or member of the board of directors and requirements for security policies, annual reports, and independent audits; notifying, for approval, security officers or relevant U.S. Government parties in advance of foreign national visits to the U.S. business;
  • security protocols to ensure the integrity of goods or software sold to the U.S. Government;
  • notifying customers regarding the change of ownership; assurances of continuity of supply to the U.S. Government for defined periods, and notification and consultation prior to taking certain business decisions, reserving certain rights for the U.S. Government in the event that the company decides to exit a business line; establishing meetings to discuss business plans that might affect U.S. Government supply or raise national security considerations; and
  • exclusion of certain sensitive assets from the transaction; ensuring that only authorized vendors supply certain products or services; prior notification to and approval by relevant U.S. Government parties in connection with any increase in ownership or rights by the foreign acquirer; and divestiture by the foreign acquirer of all or part of the U.S. business.”

Top Acquirer Countries

Deals involving acquirers from Canada were the top filers of short-form declarations in 2021, with Japan in close second place, and the United Kingdom taking third place. For notices, Japan took first place, China took second, and the United Kingdom again took the bronze.

Made with Flourish

If you are having trouble viewing this interactive graphic, please enable third-party cookies on your browser. Terminal users, please click here to view this interactive graphic.

As discussed in previous analysis, Japanese investors were very active in commenting on and shaping the final regulations implementing FIRRMA, and we can glean from 2020’s numbers that Japanese investors viewed the U.S. as a favorable destination for foreign investment in 2020.

The fact that China is still among the top filers of notices is noteworthy and shows persistence on the part of Chinese investors. It’s also worth noting that China doesn’t make it into the top five for declarations filed, despite submitting relatively high numbers of notices, whereas Japan was a top filer of both.

Top Target Industries

The top U.S. target industry for declarations and notices filed in 2020, based on three-digit NAICS categories, was “Professions, Scientific, and Technical Services,” which covers subsectors such as architectural services, engineering services, computer system design services, management consulting services, and scientific and technical consulting services.

Made with Flourish

If you are having trouble viewing this interactive graphic, please enable third-party cookies on your browser. Terminal users, please click here to view this interactive graphic.

Deals involving targets in the “Computer and Electronic Product Manufacturing” category were the second most popular by each filing type. This category covers the semiconductor manufacturing, electronic component manufacturing, and computer equipment manufacturing subsectors, among others.


There is a general trend here of increased review by CFIUS over the past decade: The body of the report states that “While the number of notices filed in 2020 decreased from 2019, the overall number of transactions reviewed or assessed by the Committee increased substantially [from 2011 to 2020], due to the introduction of [short-form] declarations as a method for filing any type of transaction with the Committee.”

2020 was an unusual year—both for the transactional ecosystem in general and for CFIUS as well. Considering that the regulations implementing FIRRMA went into effect on Feb. 13, 2020, just a month before the March 11 pandemic declaration by the World Health Organization, the summary data in the report do not indicate drastic changes. The data in the report suggest that CFIUS had a comparable work load to 2019. Even so, the impacts of FIRRMA’s changes to the process, by way of higher numbers of declarations and lower numbers of notices and investigations, are starting to show.

With assistance from Jacquelyn Palmer.

Bloomberg Law subscribers can find related content on our In Focus: CFIUS resource.

If you’re reading this article on the Bloomberg Terminal, please run BLAW OUT <GO> to access the hyperlinked content or click here to view the web version of this article.