USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang, Gregory Gewirtz and Vinita Sithapathy, Linklaters
Health plans The buyer would need to know whether the health plans are self-insured and whether they maintain adequate stop-loss coverage. The parties must also understand their obligations under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and similar state laws that provide benefit continuation coverage after termination of employment. Certain states may also require the payout of accrued leave or other benefits. Additionally, the buyer must also consider: • whether the employer provides retiree medical liability; • whether any such plans are terminable at will or whether they provide lifetime benefits; and • how such plans’ liability will be apportioned Section 280G of the Code regulates “golden para - chute” payments made to certain key employees in M&A transactions. If Section 280G is triggered, excise taxes may be imposed on key executives at the com - pany and the company may lose corporate deduc - tions, so early analysis will be critical. 2.6 National Security Review between the buyer and the seller. Golden Parachute Excise Taxes There are generally four different US bodies respon - sible for addressing national security concerns that could arise from inbound foreign investments: • the Committee on Foreign Investment in the United States (CFIUS); • the Defense Counterintelligence and Security Agency (DCSA); • the Directorate of Defense Trade Controls of the Department of State (DDTC); and • the Committee for the Assessment of Foreign Par - ticipation in the United States Telecommunications Services Sector (Team Telecom). An Outbound Investment Security Program (OISP) applicable to outbound foreign investments is also in place. A single transaction can implicate more than one regime.
CFIUS is a multi-agency panel charged with identify - ing and addressing national security risks arising from a wide variety of foreign investments in US businesses and certain transactions involving US real estate. The CFIUS process normally involves a joint filing by the parties to a transaction, typically followed by addi - tional questions from CFIUS. CFIUS has jurisdiction over any acquisition of control of a US business (often including US activities of a non-US parent) and also has jurisdiction over certain non-controlling invest - ments in companies involved with critical technolo - gies, critical infrastructure or sensitive personal data (“TID Businesses”). Investments in TID Businesses can sometimes be subject to mandatory pre-closing CFIUS filings. CFIUS’ jurisdiction over a transaction is perpetual, and CFIUS will have the right to call in the transaction for review at any time before or after closing. On the other hand, CFIUS offers a “safe harbour” against fur - ther review if it has cleared an acquisition of control or a non-controlling investment (though in the latter case incremental acquisitions that increase the investor’s rights can be subject to a new CFIUS case). The DCSA is an element of the US Department of Defense, responsible for mitigating foreign ownership, control or influence (FOCI) of government contractors and subcontractors. Traditionally, FOCI mitigation was limited to US busi - nesses that hold facility security clearances. In 2024, the DCSA began selectively mitigating FOCI of certain US government contractors and subcontractors that do not hold facility security clearances but are other - wise engaged in activities the DCSA deems sensitive. The DCSA does not approve transactions, but failure to receive FOCI mitigation could lead to the DCSA terminating the contractor’s facility clearance, disa - bling its ability to continue performing on sensitive contracts. The DDTC regulates foreign ownership or control of manufacturers, service providers, exporters and bro - kers whose activities are governed by the International Traffic in Arms Regulations (ITAR), a set of export con - trols governing military goods and services. The DDTC requires pre- and post-closing notifications of new or
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