What investment screening has done to cross-border deal timelines

Clients ask whether a transaction will be blocked. It is the wrong worry. Outright prohibition remains rare across the screening regimes our clients encounter. What has changed is timing, and timing is where the value goes.

A transaction that would have signed and completed in four months now signs in four and completes in nine, and the intervening five months are not free. They contain retention risk, customer uncertainty, financing that has to be extended, and a seller who is running a business it has already agreed to sell.

The critical path has moved

On most cross-border transactions we handle, the longest single item in the timetable is no longer the negotiation or the diligence. It is the sequencing of regulatory and third-party consents, several of which cannot be commenced until others have concluded.

That has a practical consequence for how a deal team should be organized. The consent map should exist before the purchase agreement is drafted, and it should be maintained by someone whose job it is, rather than assembled from a series of specialist memoranda in the final month.

Allocate the risk explicitly

Where a long conditional period is unavoidable, the agreement should say what happens during it in more detail than is customary. Who bears the cost of an extended financing commitment. What the seller may and may not do with the business. What happens to an earn-out period that now begins later than either party assumed.

The most frequently omitted term is the simplest: a long-stop date that reflects the actual expected duration rather than an optimistic one, and a defined consequence for reaching it that is not simply termination.

Engage before you are required to

Where a regime permits informal pre-notification contact, using it almost always shortens the formal review. It also surfaces, at a stage when the transaction structure can still be adjusted, the concerns that would otherwise emerge as conditions.

The instinct to delay contact until the position is fully prepared is understandable and usually counterproductive. Reviewers respond better to an early approach that acknowledges an open question than to a late one that has tried to close it unilaterally.