FRANCE Law and Practice Contributed by: Idris Hebbat, Camille Perrin, Franck Vacher and Nicolas Menard-Durand, C-Level Partners
Key Regulatory Authorities for Private Equity Transactions Private equity transactions in France are subject to
of control, meaning that sovereign wealth fund par - ticipation at any level can trigger enhanced scrutiny. The “chain of control” concept introduced in 2019 means that even indirect sovereign wealth fund par - ticipation through intermediate investment vehicles can subject transactions to foreign investment review, particularly in strategic sectors. EU Foreign Subsidies Regulation (FSR) Impact The EU FSR has become highly relevant for private equity transactions in France since its implementa - tion. The FSR introduces a new merger review regime, separate from and in addition to existing merger con - trol and foreign direct investment (FDI) controls. This creates an additional layer of regulatory complexity for private equity transactions, particularly those involv - ing: • funds with non-EU limited partners; • portfolio companies that may have received gov - ernment support; and • transactions exceeding EUR500 million where parties received non-EU subsidies above EUR50 million. The scope and depth of due diligence reviews con - tinue to be determined on a case-by-case basis and vary from deal to deal. The level of legal due diligence depends on factors such as the scale of the intended transaction, the kind of business run by the target company, the estimated risk level, etc. Emerging AI use cases, heightened cybersecurity risks, evolving ESG expectations, and the demand for operational resilience are reshaping how asset owners assess and manage risks. 4. Due Diligence 4.1 General Information Confidential documents continue to be exchanged through virtual data rooms and parties are typically required to sign confidentiality agreements.
review by the following authorities. French Competition Authority (FCA)
France has a mandatory and suspensory merger control regime, which means that transactions that meet the relevant criteria need to be notified to the competition authority and cleared before they can be completed. It is also necessary to consider EU merger control rules. The thresholds remain: • the total global pre-tax turnover of all the compa - nies, groups of legal persons or individuals who are parties to the merger is greater than EUR150 million; • the total pre-tax turnover generated in France by at least two of the companies, groups of legal persons or individuals concerned is greater than EUR50 million; and • the transaction is not within the EU’s jurisdiction (the above-mentioned thresholds being EUR5 bil - lion and EUR250 million, respectively). Minister of the Economy and Finance – enhanced foreign investment controls France has amended its foreign direct investment rules, expanding the scope of covered investments and covered activities subject to controls. Notably, foreign-owned unincorporated businesses registered in France are now encompassed. The 2024 amendments have permanently consoli - dated the temporary measures introduced during the COVID-19 pandemic, making the 10% threshold for listed companies a permanent feature of the French foreign investment control regime. Sovereign Wealth Funds and Financial Investor Distinctions French regulators do differentiate between different types of financial investors, with particular scrutiny applied to sovereign wealth funds and state-controlled entities. The foreign investment control regime consid - ers not just the immediate investor but the entire chain
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