USA TRENDS AND DEVELOPMENTS Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Vinita Sithapathy, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters
Foreign Interest in Cross-Border Deals Remains Strong Cross-border deals continue to face persistent chal- lenges – heightened scrutiny around national security, data privacy and foreign ownership – especially in sen- sitive sectors such as semiconductors and defence tech. However, foreign interest in cross-border deals remains strong, especially among European and Asian technology acquirers and investors, who are drawn by the scale and growth prospects of the US market. Despite the generally positive outlook, regulatory complexity and ongoing trade tensions still influence deal structures and extend transaction timelines. The new Outbound Investment Security Program (OISP), which took effect in January 2025, will either prohibit or require notification for US-led investments directly or indirectly supporting certain activities by entities in or controlled from China in sensitive sectors like semiconductors and microelectronics, quantum com- puting or AI. The scope of the regulations is broad and can include non-US investors in which US per- sons are participating in making the investment deci- sions and non-Chinese investment targets that have substantial affiliated operations in China. Further- more, the recently-passed Comprehensive Outbound Investment National Security Act of 2025 (COINS Act) codifies and revises the scope of the OISP, subject to implementing regulations that will be issued – possibly incrementally – between the beginning of 2026 and the first quarter of 2027. Optimism for Small-Cap Deals Although high-profile mega deals have been domi- nating the headlines, small-cap tech companies are increasingly attractive in M&A due to their specialised technologies, agile teams and innovative solutions that can be integrated into larger platforms or used to enter new markets. Operating in emerging or niche sectors, these firms offer strategic value to acquirers seeking scalability and innovation. Despite their appeal, small-caps carry higher volatility than large-cap counterparts, owing to limited resourc- es and less diversified operations. Hence, historically they have often received less attention from institu- tional investors, leading to potential undervaluation – making them prime acquisition targets. BNP Pari-
bas reports that, relative to large-cap indices, small- cap price-to-earnings multiples are more than 30% below historical averages, while their earnings growth is projected at 36% in 2026. These undervalued small- cap businesses may appeal to deal makers targeting agile, scalable businesses with strong fundamentals in 2026. Looking ahead, there is growing optimism for small- cap tech businesses, which are valued for their agility, innovation and scalability in a rapidly evolving market. More Flexible and Strategic Deal Structures Deal structures in US tech M&A have become increas- ingly flexible and strategic in 2025, reflecting valua- tion uncertainty, regulatory complexity and evolving buyer priorities. Earnouts and contingent payments are widely used to bridge pricing gaps, while minority investments and joint ventures help acquirers manage risk and preserve optionality. Acquihires (short for “acquisition hires”) and asset- only transactions allow buyers to selectively acquire talent and IP without full integration risk. Acquihir- ing is particularly useful in fast-evolving sectors with increasingly common talent gaps – for example, in AI, data science or cybersecurity, where the demand for high-performing teams is growing faster than supply and companies struggle to recruit and retain employ- ees with the necessary expertise. Structured roll-ups (a planned series of acquisitions designed to consolidate a market, create scale and improve operational efficiency) remain popular in frag- mented verticals, particularly among private equity sponsors, and convertible instruments are common in early-stage deals, as they offer flexibility, speed and reduced risk. Buyers are also incorporating regulatory risk-shifting clauses and alternative consideration mechanisms to navigate antitrust scrutiny and geopolitical sensitivi- ties, making deal architecture a critical component of successful tech transactions. Hybrid financing models that blend elements of debt and equity are also becoming more common, particu- larly in AI, semiconductor and infrastructure transac-
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