EU Foreign Subsidies Regulation – M&A Implications for Private Equity

The EU Foreign Subsidies Regulation (FSR), which entered into force in January 2023 and will become applicable in July 2023, will for the first time empower the European Commission to investigate ‘financial contributions’ received by businesses operating in the EU from non-EU governments, including the UK and Switzerland.

Among other screening tools, the FSR introduces a new mandatory notification regime for M&A deals that meet certain financial thresholds, which will sit alongside existing EU merger control and national foreign direct investment screening.

In addition to the usual M&A considerations (such as completion timetable, closing conditions and risk allocation in deal documents), the FSR is bound to introduce additional – and potentially significant – disclosure requirements on private equity firms.