Current Developments in Takeover Law and Practice

Overview

M&A transactions, including acquisitions, dispositions, mergers and spin-offs, are among the most important ways for companies to navigate the constantly changing competitive, economic and regulatory environment in which they operate. Yet, the evolving nature of this environment has also increased the complexity of engaging in these transactions.

The rapid changes and volatility in stock market valuations, macroeconomic developments such as interest rate cuts, changes in the domestic regulatory and political environment, a new and active U.S. administration, tariffs (actual and threatened) and conflicts and other geopolitical disruptions around the globe are just a few of the factors that a company must consider when undertaking an M&A transaction. Adding to this complexity is the continued heavy participation of hedge funds and private equity funds in M&A, changing dynamics in financing markets, and developments in corporate governance such as an increase in anti-ESG considerations and pressure on proxy advisory firms. The constantly evolving legal and market landscapes highlight the need for boards of directors to be fully informed of their legal obligations when considering and undertaking M&A, and for companies and their management teams to understand the different factors that can affect whether a transaction is successful.

M&A Trends and Developments

Deal Activity

2025 was a year of significantly increased M&A activity, in the United States and around the world. M&A deal volume in the United States exceeded $2.3 trillion, up 58% from 2024, and global M&A deal volume increased by over 42%. Notably, the number of very large M&A deals in the U.S. in 2025 —four $40 billion-plus deals, up from zero such deals in 2024 — reflects a substantial increase in bolder transactions that may have been viewed as too risky in prior regulatory and market environments. Notwithstanding concerns around tariffs, inflation and ongoing global conflicts, the M&A market ended the year energized across numerous industries. At the same time, the absolute number of deals was down, indicating that larger deals were the catalyst for the increase in overall deal volume.

Indeed, one highlight of 2025 was the reemergence of the megadeal. There were 68 deals globally worth $10 billion or more in 2025, exceeding the prior annual high set a decade earlier and the 30 such transactions announced in 2024. Many of the largest transactions were announced in the second half of the year, after initial concerns regarding tariffs and their consequences subsided. Major transactions in 2025 included Union Pacific’s $85 billion combination with Norfolk Southern, Teck Resources’ $69 billion merger of equals with Anglo American and Palo Alto Networks’ $25 billion acquisition of CyberArk, and such megadeals have continued into the start of 2026 with Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, Sysco’s $21.9 billion acquisition of Jetro Restaurant Depot, and the $44.8 billion combination of Unilever’s Foods business with McCormick. Notably, many of the acquirors in these big-ticket transactions have traditionally not engaged in significant M&A activity, another indicator of the attractiveness of the current dealmaking environment.

As expected, several macroeconomic, regulatory, political and geopolitical factors have affected the M&A landscape since the beginning of 2025. The return of President Donald Trump to the White House, with the Republican party having majorities in both houses of the U.S. Congress, shifted the tone and approach of federal regulators. In addition to the different approach taken by antitrust regulatory agencies in this administration, as described more below, regulators have increased regulatory scrutiny in other ways, as evidenced by the Federal Communications Commission indicating that it may condition M&A transaction approval on companies eliminating diversity, equity and inclusion policies.

In other contexts, the federal government has emerged as a dealmaker itself, taking equity stakes, governance rights and sometimes economic upside in order to bolster critical industries, such as rare earth, lithium and chip making. For example, the government invested $8.9 billion in Intel, paid for in large part with funds previously allocated under the CHIPS Act, to take a 9.9% equity stake and obtain other rights. The U.S. government also made investments to secure rare earth supply by taking equity stakes in, and in some cases entering into offtake and price support agreements with, companies such as MP Materials, USA Rare Earth, Vulcan Elements and Trilogy Metals. In addition, Nvidia and AMD entered into an agreement with the U.S. government to share a portion of revenues from chip sales to China in exchange for export licenses to China for chips previously subject to restrictions.

Still, volatility and uncertainty remain and affect the market. Challenges to the Federal Reserve Bank’s independence could impact interest rates. The threat of tariffs, despite the recent Supreme Court ruling, remains omnipresent, and attempts to boycott U.S. based companies have gained traction amidst geopolitical tension. Yet the M&A market continues to show resilience, with activity that far surpasses that of recent years.

M&A Sector Highlights

Bank M&A

2025 saw a sea change in regulatory receptivity for consolidation in the banking sector. Much has been written about quicker regulatory approvals, but the change in the banking sector is more fundamental. There is a consensus forming among U.S. bank regulators that consolidation can result in a stronger, more efficient and more stable industry. In addition to the completion of Capital One’s $35.3 billion acquisition of Discover in May, last year saw a number of substantial regional bank transactions with the combination of Synovus and Pinnacle Financial, Huntington’s acquisitions of Veritex and Cadence, Fifth Third’s acquisition of Comerica, PNC’s acquisition of FirstBank, Prosperity’s acquisitions of American Bank and Southwest Bancshares, and Mechanics Bank’s acquisition of HomeStreet, among others. The welcome shift of focus of bank regulators away from micromanaging banks toward material financial risks has also given reason for optimism in acquiring and growing banking franchises. During 2025, M&A also remained active across the broader financial services sector in asset management, insurance, payments, fintech and other areas.

Technology M&A

Technology M&A again represented the largest share of global M&A activity of all industries in 2025 at nearly 19% of deal volume, and M&A in the industry increased 65% from the prior year. The race for AI resources is fierce throughout Silicon Valley and has led to “acquihire” transactions, through which larger technology companies seek to expand their talent pool by absorbing smaller startups, sometimes through novel structures. However, in early 2026, the FTC indicated that it would increase scrutiny on such transactions or other efforts to hire away employees instead of acquiring the company outright to ensure companies do not utilize that structure to avoid the FTC’s merger review process. AI companies have also struck large, complex transactions for sheer computing power: OpenAI’s partnerships with Broadcom and AMD are just a couple of many examples. A continuing focus on AI is also bringing together the technology, industry and energy sectors, with hyperscalers like Alphabet, Microsoft and Amazon each expected to spend $100 billion or more on AI infrastructure by 2027. This activity has also led to substantial legal innovation, such as the recapitalization of OpenAI’s for-profit organization into a public benefit corporation, controlled by the nonprofit OpenAI Foundation.

Media, Entertainment and Telecom M&A

Media, entertainment and telecom accounted for a substantial portion of 2025’s global deal volume at 11%, though anticipated headwinds ranging from concerns of a bubble in the technology market to increased scrutiny from regulators, including those at the state level and in foreign jurisdictions, may dampen that momentum. The media and entertainment sector saw one of the largest takeover battles in corporate history, with Paramount Skydance having launched an unsolicited tender offer—as well as litigation and a proxy fight—in an ultimately successful attempt to top Netflix’s $82.7 billion deal to acquire Warner Bros. Discovery following a competitive auction process. Also noteworthy was Nextstar Media Group’s $6.2 billion acquisition of TEGNA, seeking to create one of the largest local TV broadcasters in the country, which subsequent to closing faced an effort by State attorneys general and private litigants to seek and obtain a preliminary injunction against integrating the two businesses.

Healthcare M&A

Healthcare deals accounted for nearly 9% of 2025’s global deal volume, with deals of all sizes making headlines. Abbott Laboratories’ $21 billion acquisition of Exact Sciences was one of the largest deals across sectors, a demonstration of the interest in cancer detection and diagnostic technology. Pfizer’s acquisition of Metsera for $10 billion also made headlines given Novo Nordisk’s topping bid, though Pfizer ultimately prevailed. The consideration paid by Pfizer included a contingent value right (“CVR”), consistent with a broader trend of offering CVRs in 2025. For example, in June 2025, Carlyle and SK Capital closed their acquisition of bluebird bio pursuant to which tendering shareholders had the right to elect to receive either all-cash consideration or a lower cash payment at closing along with a CVR payable if bluebird bio meets a specified net sales milestone. Blackstone and TPG’s acquisition of Hologic similarly contemplates a CVR based on revenue of Hologic’s Breast Health business exceeding certain thresholds in FY 2026 and 2027. When structured carefully, CVRs are one way to help bridge valuation gaps in public company transactions, though they continue to be seen predominantly in healthcare transactions (in fact, nearly half of public company deals announced in 2025 involving a U.S. target company in the healthcare sector involved a CVR component).

Unsolicited M&A

Hostile and unsolicited transactions accounted for approximately 7.5% of global M&A activity in 2025, compared to about 11% in 2024 and 8% in 2023. The most prominent example of unsolicited M&A in 2025 was Paramount Skydance’s unsolicited bid for Warner Bros. Discovery. Paramount Skydance’s unsolicited advances led Warner Bros. Discovery’s board of directors to launch a review of strategic alternatives, which resulted in Netflix penning a deal to acquire the Studios & Streaming businesses of Warner Bros. Discovery for $82.7 billion; however, Paramount Skydance made an overbid, and Warner Bros. Discovery’s board of directors ultimately declared Paramount Skydance’s subsequent bid to acquire the entire company for $110 billion to be superior. In the healthcare industry, Novo Nordisk attempted to acquire obesity drug developer Metsera after Pfizer had already entered into a definitive agreement with Metsera, though Pfizer ultimately prevailed at an increased price of $10 billion. Although opportunistic behavior typically is not rewarded, takeover preparedness remains critical in today’s M&A environment to ensure a beneficial outcome for shareholders.

Cross-Border M&A

Cross-border deals represented 30% ($1.46 trillion) of global M&A volume last year. Cross-border M&A volume grew by 24% in 2025 compared to 2024, underpacing the global M&A deal volume increase of over 42%. Significant cross-border transactions included Palo Alto Networks’ $25 billion acquisition of CyberArk, an Israeli company, and the $55 billion leveraged buyout of Electronic Arts by Silver Lake, Saudi Arabia’s Public Investment Fund and Affinity Partners. There were 12 cross-border transactions exceeding $10 billion announced in 2025, higher than the 10 such transactions in 2024 and nine signed in 2023.

A notable cross-border development in 2025 was Japanese steelmaker Nippon Steel’s acquisition of U. S. Steel for $15 billion. The transaction exemplified President Trump’s interest in deals that could impact national security or strategic industries and highlighted the importance of CFIUS in cross-border transactions. The acquisition of the storied American steelmaker was approved by the Trump administration on the condition that the federal government receive a “golden share” with certain governance rights — despite the fact that President Biden had blocked the acquisition just months prior.

Overall, dealmakers pursuing cross-border M&A in 2026 should be nimble and strategic as they navigate ongoing geopolitical conflicts, national security concerns and possible tariffs and trade wars under the current administration.

Private Equity Trends

A significant portion of 2025 deal volume was driven by private equity, with a rebound in sponsor exit activity. Although the number of sponsor-led deals is up modestly year-over-year, deal volume is up more substantially as sponsors have focused on larger transactions. In fact, global private equity deal volume reached approximately $2.1 trillion in 2025, a high since the banner Covid-era year of 2021. And although private equity fundraising dipped by 11% last year, the second straight year fundraising fell, aggregate dry powder remains near its 2023 historical peak, suggesting that there will continue to be significant buyside demand and funding for private equity deals. Significant private equity transactions last year included Thoma Bravo’s $12.3 billion acquisition of Dayforce, the $55 billion leveraged buyout of Electronic Arts (the largest leveraged buyout ever recorded) by Silver Lake, Saudi Arabia’s Public Investment Fund and Affinity Partners, and the $18.3 billion leveraged buyout of Hologic by Blackstone and TPG. Certain of these transactions exemplify the trend of well-regarded sponsors pairing up with each other or with sovereign wealth funds to diversify risk and put together bids that may have been unattractive — or impossible — for a sponsor to do alone. In addition to consortium deals for acquisitions, the year also saw an increase in the number of partial exits and sponsor-to-sponsor sales. Sponsor activity increased in the second half of the year in particular, indicating ongoing momentum that is expected to continue into 2026.

However, exit hold periods continue to remain elevated as compared to pre-pandemic levels, with sponsors having an average holding period of approximately five years in 2023-2025, compared to 4.2 years in 2021-2022. The longest hold periods were recorded in the telecom and media industry, followed by the energy and utilities industry and the industrials industry. As a result, continuation funds continued to be another alternative exit strategy. Continuation funds raised the same LP and sponsor issues in 2025 as in previous years, related to existing LPs seeking the highest price while new continuation fund investors demand the lowest price. It remains to be seen whether the growth in secondary and co-investment funds will cause continuation funds to increase going forward or whether the overarching alignment issues will keep their use consistent with current levels. In any case, high-profile write-offs by certain continuation funds in 2025 served as a stark reminder of these potential alignment and reputational issues.

Private equity sponsors also continued the trend of utilizing creative and nimble structures to execute transactions, such as through partnerships with other sponsors or strategics. For example, in April 2025, GTCR, Global Payments and FIS announced a unique three-way transaction in which Global Payments acquired GTCR’s 55% stake and FIS’s 45% stake in Worldpay for $24.25 billion in cash and stock, and FIS concurrently acquired Global Payments’ Issuer Solutions business through a combination of cash and the transfer of its 45% Worldpay stake to Global Payments. The transaction structure allowed GTCR to partially exit its previous 55% investment in FIS while taking a significant ownership stake in Global Payments, and enabled both Global Payments and FIS to enhance and streamline their strategic focus on their respective core businesses.

Acquisition Financing

Debt financing markets soared in 2025, fueling acquisitions at scale, refinancings, repricings and dividend recapitalizations, and provided borrowers across the credit spectrum with access to a broader range of financing sources and solutions than ever before.

With the boom in mega M&A deals came the return of mega acquisition finance commitments. These include the likes of Paramount Skydance, which obtained an aggregate of $54 billion worth of committed financing from Bank of America, Citigroup and Apollo to support its acquisition of Warner Bros. Discovery, and Abbott Laboratories, which received $20 billion in commitments to fund its acquisition of the early cancer detection company Exact Sciences.

The investment market also saw innovative technology come to the fore as banks competed for their share of these and other large commitments. Investment grade corporate buyers have historically relied on the traditional 364-day bridge loan commitment to finance major acquisitions. Market participants have embraced a new structure: the delayed draw term loan, which offers investment grade borrowers the ability to draw down what they need in tranches over time, thus resulting in a significantly more attractive fee arrangement without compromising certainty of funding or terms. Additionally, investment grade lenders are offering borrowers more flexibility around closing timing. In response to regulatory uncertainty, lenders are also agreeing to allow borrowers to keep their commitments in place for limited periods beyond specified termination dates in return for payment of margin interest from the borrower. These developments, taken together, have led to products that better match the realities of modern M&A dealmaking.

In the non-investment grade markets, private credit funds continue to prove themselves as critical sources of capital, but traditional banks also made aggressive moves to solidify their position. In Q3 2025, syndicated loan issuance reached a record $404 billion—the busiest quarter on record. One has to look no further on the acquisition front than to the $20 billion commitment led by JPMorgan for the $55 billion leveraged buyout of Electronic Arts, the largest single bank commitment of its kind. By the end of 2025, banks refinanced over $34 billion of loans previously held by private credit providers (an increase of approximately 18% from 2024) as borrowers sought the cheaper financing available through syndication to institutional lenders. This shift from previous years was particularly evident in large-scale deals where the lower interest spreads of the syndicated loan market seemed to attract borrowers more than the bespoke, and often more expensive, terms of private credit.

This push and pull between traditional banks and private credit redounded to the benefit of borrowers. Amid intensifying competition among lenders and a more-favorable interest rate environment, borrowers, led by private equity sponsors, pushed for increasingly aggressive terms. These ranged from increased portability (i.e., allowing debt to remain outstanding, subject to certain conditions, even after a change of control of the borrower) to terms that would impose materially higher risk on lenders, such as negative covenant baskets that increase as a borrower’s business grows but never shrink if the company’s business contracts, expanded rights to block certain institutions from becoming lenders and provisions designed to prevent lenders from banding together in certain circumstances. Although lenders resisted most of these asks, their recurring appearance at the negotiating table underscored borrowers’ growing bargaining power.

Shareholder Litigation

Shareholder litigation challenging merger and acquisition activity remains common. Continuing the trend sparked by the Delaware Court of Chancery’s 2016 In re Trulia, Inc. Shareholder Litigation decision, which curtailed the ability to settle such suits in Delaware by way of added disclosures, the bulk of these litigations in recent years have been styled as claims under the federal securities laws and were filed in federal court. Although recent reports from NERA and Cornerstone Research suggest that the number of such lawsuits has continued their downward trend of the past several years, these studies only account for class actions.1 There has been a significant shift by stockholders toward filing merger objection suits on an individual basis rather than on behalf of a putative class—potentially to avoid class action filing limitations and disclosure requirements under the PSLRA—and therefore, these studies do not necessarily reflect the change in the number of merger-objection suits filed.

Merger-objection litigation generally challenges disclosures made in connection with M&A activity under Sections 14(a), 14(d) and/or 14(e) of the Exchange Act, and it sometimes also alleges breaches of state-law fiduciary duties. The overwhelming majority of such federal suits are “mooted” by the issuance of supplemental disclosures and the payment of the stockholder plaintiffs’ lawyers’ fees. Although federal courts have generally afforded minimal scrutiny to the resolution of disclosure claims asserted by individual stockholders, such settlements are still subject to some degree of judicial review. In particular, federal courts are required to determine that the stockholder’s complaint was not frivolous under Rule 11 of the Federal Rules of Civil Procedure before approving the dismissal of a case pursuant to a settlement.[2] Furthermore, the Seventh Circuit has instructed federal trial courts that “suits seeking extra disclosure should be reviewed immediately after being filed.”[3] On this basis, the Seventh Circuit in 2024 upheld a decision rejecting certain individual disclosure-only settlements because “the disclosures sought . . . were worthless to the shareholders.”[4] Potentially in response to these decisions, there has been a recent drop in the filing of individual disclosure-only stockholder complaints, with many stockholders opting instead to issue and resolve disclosure demands out of court entirely. In any event, unless the federal courts begin applying a more onerous scrutiny to such resolutions akin to Delaware’s Trulia review of settlements, we expect this settlement activity to continue.

The substantive suits that remain have often been filed in Delaware, although recent amendments to the Delaware General Corporation Law are expected to curtail certain types of shareholder merger litigation in Delaware. In the years leading up to the amendments, as discussed in Section II, the Delaware Court of Chancery had allowed plaintiffs to claim—at least at the initial pleadings stage of litigation—that stockholders with far less than majority voting power exercised control of the corporation and thus owed fiduciary duties to the corporation and its stockholders. Despite some recent post-trial decisions that reiterated Delaware’s traditionally onerous standard for a plaintiff to allege that a minority stockholder exercises control of a corporation,[5] that trend created opportunities for plaintiffs to avoid dismissal under the Corwin doctrine (which allows for pleadings-stage dismissals of certain types of suits based on fully informed stockholder approval of non-controlling stockholder transactions) by alleging that the challenged transaction concerned controlling stockholders. In addition, the Delaware Supreme Court held in In re Match Group, Inc. Derivative Litigation that the M&F Worldwide framework—requiring approval of both a special committee of independent directors and a fully informed majority of the minority stockholders in order to lower the standard of review from entire fairness to business judgment—applied to all transactions with controlling stockholders, not only squeeze-out mergers.[6] The Court also held in Match that every single member of a special committee, rather than a majority of the committee, was required to be “wholly independent.”[7] However, in April 2025, in a case initiated prior to the 2025 Delaware General Corporation Law amendments, the Delaware Court of Chancery dismissed nearly all of a lawsuit challenging an acquisition by CD&R of Focus Financial Partners on the grounds that 20% holder Stone Point Capital was the target’s controlling stockholder, and that Stone Point Capital breached its fiduciary duties by channeling the deal to CD&R. The Delaware Court of Chancery held that a stockholder with such a small stake could not be deemed a controlling stockholder absent additional well-pleaded facts showing actual control.[8]

Other states, such as Nevada and Texas, have sought to use the Delaware corporate climate, especially in situations involving controlling stockholders, as an opportunity to chip away at Delaware’s dominant share of the market for incorporations. In Texas, for example, the governor signed a bill into law on May 19, 2025 that, among other things, allows corporations to establish a minimum ownership threshold, up to 3%, for stockholders to initiate a derivative proceeding on behalf of the corporation. As discussed further in Section I.C.2 below, although the number of reincorporation proposals reached a peak in 2025—30 proposals compared to six or seven in the prior several years—Delaware is likely to remain the dominant state of incorporation due to its experienced judiciary and vast jurisprudence in business matters, among other factors.[9]

In response to these developments, the Delaware legislature on March 25, 2025 enacted landmark amendments to the Delaware General Corporation Law that provide safe harbors from judicial review for many transactions involving controlling stockholders and other conflicted fiduciaries. Among other things, the amendments (i) limit the circumstances in which a stockholder can be found to owe fiduciary duties as a “controlling stockholder,” (ii) provide various procedural mechanisms for transactions involving conflicted fiduciaries to obtain safe harbors from judicial review, (iii) establish criteria for determining whether a director or stockholder is “disinterested” with respect to a transaction (including a presumption of independence for public company directors determined to be independent under the corporation’s listing standards), and (iv) exculpate controlling stockholders for good faith actions taken in their capacity as stockholders. The amendments generally apply retroactively, except to litigation pending as of February 17, 2025. The amendments are expected to reduce stockholder challengers to mergers in Delaware, particularly in the context of controlling stockholder transactions.

Further, the decision in March 2025 by the Delaware Court of Chancery in Desktop Metal, Inc. v. Nano Dimension Ltd., was seen as a victory for deal certainty. There, after an acquirer signed a deal with a 3D printing company, an activist shareholder replaced the acquirer’s board and directed its new management to slow-walk negotiations with CFIUS, the last regulator whose approval was required to satisfy the closing conditions to the merger. That foot-dragging, the court held, breached the buyer’s obligation to use reasonable best efforts to close the merger promptly. Emphasizing that a “party cannot go looking for a way out of its deal,” the court focused on the buyer’s dilatory responses and shifting positions in its dealings with CFIUS.[10] The entire dispute was resolved in just three months, with the court ordering specific performance.

Activism and Engagement

Hedge Fund Activism

The Activism Landscape

Activity by hedge funds has been consistently elevated in recent years, both domestically and abroad, and 2025 was no exception. In the United States, the number of activist campaigns was up approximately 23% year over year, as the country remained the most active jurisdiction, representing more than half of all activity.[11] Asia Pacific also saw a rapid increase in activity, with Japan and South Korea both experiencing activism well in excess of historical levels. Matters of business strategy, operations, capital allocation and structure, CEO succession, M&A, options for monetizing corporate assets, stock buybacks and other economic decisions remain key subjects of shareholder pressure, with operational matters attracting particular attention amid the ongoing geopolitical volatility.

Hedge fund activists have also pushed for governance changes when courting proxy advisory services and governance-oriented investors, particularly as they seek board representation, often through one or a few board seats or, in certain cases, control of the board. Activists have also increasingly targeted top management for removal and replacement by activist sponsored candidates. The prevalence of activist campaigns explicitly targeting CEOs has increased over the last few years, and even prominent CEOs and those of large companies have not been immune. A record 32 U.S. CEOs resigned in 2025 within one year of an activist campaign.[12] In addition, M&A activism accelerated in the second half of 2025 amid a surge in deal activity, appearing in 54% of H2 2025 campaigns versus 35% of H1 2025 campaigns. In fact, 61% of Q4 2025 activism campaigns had an M&A-related thesis, which is the highest level in five years.[13]

While the more established activists maintained their outsized role in the 2025 proxy season, first-time activists accounted for approximately 50% of activists and 27% of campaigns, in-line with the record levels experienced in 2024.[14] As demonstrated time and again, no company is too large, too small, too new or too successful to be immune from activism. Activists are increasingly working together—or “swarming”—marquee mega-cap companies, including to push an M&A or breakup thesis. Activists are also persisting year-over-year—as evidenced by Elliott Management’s campaigns against Phillips 66 in 2024 and 2025, and Nelson Peltz’s successive campaigns against Disney in 2023 and 2024—with activists returning more prepared and potentially more successful. Companies that were able to resolve an activist situation in 2025, but continue to underperform this year, may find themselves subject to a second round of activism focused on the implementation of a publicly disclosed “strategic alternatives” review.

Set forth below are some of the key recent trends and developments in activism:

SEC Guidance on Schedule 13D and 13G. On February 11, 2025, the SEC published a Corporation Finance Interpretation (CFI), clarifying that investors seeking to exert pressure on a company to implement specific measures may lose their “passive investor” status and be disqualified from filing a short-form Schedule 13G. As a result, some shareholders have become more cautious about initiating conversations, especially on sensitive topics like director elections, executive compensation, and ESG issues. This dynamic has put the onus on boards to be proactive about continued engagement opportunities, asking for meetings with investors, setting agenda topics and asking targeted questions to solicit investor perspectives.

Updates to Rule 14a-8 Shareholder Proposals. Rule 14a-8 permits eligible shareholders to submit proposals for inclusion in a company’s proxy materials at a relatively low cost, compared to a proxy contest. In November 2025, in a dramatic reconsideration of its role in the Rule 14a-8 shareholder proposal process, the SEC Division of Corporation Finance announced that for the 2025-2026 proxy season, it would not substantively respond to no-action requests for companies’ reliance on virtually all bases for exclusion of shareholder proposals under Rule 14a-8, effectively leaving it to companies to decide whether to omit these proposals. In January 2026, the SEC issued updated guidance, providing that the SEC will now object to a voluntary submission of a notice of exempt solicitation filed by a person that does not beneficially own over $5 million of the company’s shares. The SEC staff noted that such voluntary submissions appear to be primarily a means for smaller shareholders to generate publicity.

SEC Exemptive Order on Tender Offers. In April 2026, the SEC issued an exemptive order, permitting certain tender offers to remain open for a minimum offering period of 10 business days (instead of the typical 20 business days) if they meet various criteria. Among other things, to fall within the criteria of the exemptive order, (i) the consideration must consist only of cash at a fixed price, (ii) any change in the percentage of securities sought (if more than 2% of the subject securities) or the consideration offered must be announced at least five business days before the expiration of the offer and (iii) any other material change in terms must be announced at least two business days before the expiration of the offer. A tender offer made pursuant to Regulation 14D (i.e., a tender offer not made by the issuer) qualifies only if, among other things, it is made pursuant to a negotiated agreement with the subject company and the offer is for all outstanding securities of the subject class. In addition, the exemption does not apply to 13e-3 “going-private” transactions or tender offers relying on the SEC’s cross-border exemption rules.

The Role of Proxy Advisors. Proxy advisory firms, like ISS and Glass Lewis, which historically play a crucial role in proxy contests, have recently been under considerable legislative and regulatory pressure. In December 2025, President Trump issued an Executive Order aimed at “increas[ing] oversight of and tak[ing] action to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition.”[15] Among other things, the Executive Order mandates that the SEC Chairman (i) review all rules relating to proxy advisors and consider revising or rescinding them, especially to the extent that they implicate DEI and ESG policies, (ii) consider revising or rescinding all rules relating to shareholder proposals, including Exchange Act Rule 14a-8, that are inconsistent with the purpose of the Executive Order, and (iii) analyze whether a proxy advisor serves as a vehicle for investment advisers to act as a “group” for purposes of the Exchange Act. The Executive Order also mandates that the FTC Chairman investigate whether proxy advisors engage in unfair methods of competition or unfair or deceptive practices that harm U.S. consumers, and that the Secretary of Labor revise regulations regarding the fiduciary status of individuals who manage or, like proxy advisors, advise those who manage shares held by plans covered under the Employee Retirement Income Security Act of 1974 (ERISA) and strengthen the fiduciary standards for ERISA plans.

More Engaged Retail. Companies are increasingly finding avenues to communicate with their retail shareholder base to garner support. Some are looking into the idea of implementing auto-voting programs for retail investors, believing that retail investors are generally inclined to support boards and management teams. And in September 2025, the SEC issued a letter confirming that, subject to certain conditions, it would not recommend enforcement action against Exxon Mobile’s retail voting program, which allows retail investors to opt into having their shares voted automatically in accordance with the recommendations of Exxon Mobile’s Board of Directors. Companies will continue to be creative and active in engaging their retail base, especially for corporate decisions that require a higher quorum to achieve (such as M&A or reincorporation proposals). Such efforts are already being met with some resistance from activists and their law firms, and may in the future be scrutinized by investors, proxy advisory firms, and other constituencies with an interest in how shareholder elections are administered. Retail shareholders should not be treated as a monolith, and depending on the specifics of the situation, some of these efforts may not have the intended consequences. We also have seen retail investors undertake activist tactics at companies in the form of organized social media campaigns, and in some cases their efforts have turned public companies into “meme stocks.”

M&A Activism

A large portion of shareholder activism is oriented wholly or partially toward M&A, a trend which continued into 2025, with 61% of Q4 2025 campaigns involving an M&A thesis, which is the highest proportion in five years. There are three key types of M&A activism: first, campaigns to sell the entire target company; second, campaigns aimed at breaking up a target company or having the target company divest a non-core business line; and, third, campaigns that attempt to scuttle or improve an existing deal. “Sell the company” campaigns were a key driver, reflecting a common push by activists for companies to explore or pursue transformative M&A as an alternative to perceived “stalled” or “failed” stand-alone strategies. Some notable M&A-focused campaigns in 2025 included Barington Capital’s push for a breakup of the business units at Matthews International and Dalton Investments’ push for a spin-off of Fuji Media Holdings’ real estate business.

Governance Landscape

Companies continue to face an evolving corporate governance landscape defined by ongoing scrutiny of a company’s approach to stakeholder relations, board skillsets and composition, and overall governance bona fides. The growth of the stakeholder-centric corporate governance model, as embodied in Martin Lipton’s articulation of the New Paradigm,[16] has been a key development in the corporate governance landscape in recent years. This approach reimagines corporate governance as a cooperative exercise among and involving a corporation’s stockholders, directors, managers, employees and business partners, as well as the communities in which the corporation operates. The shift to the New Paradigm has been in part a reaction to the transition of the U.S. corporate governance system from a board-centric model to a shareholder centric model in prior decades. The New Paradigm for corporate governance seeks to mitigate the adverse impacts of short-termism and recognizes an appropriate balance of stakeholder interests as the bedrock of sustainable, long-term value creation.

The New Paradigm has emerged in an era that has seen tremendous growth in passive investing. The growth of passive investing has continued to outpace that of actively managed funds, a sea change from two decades earlier when passively held assets represented only 6% of a much smaller AUM pool. A significant portion of the companies that constitute the S&P 500 now have Vanguard, BlackRock and State Street among their “top five” shareholders. For the largest passive funds, their long-term investment horizon, coupled with their broad-based investments, have created a heightened need for investment stewardship geared toward identifying and addressing systemic risks within their sizeable portfolios. The rise of ESG has coincided with the growth of passive investing and investment stewardship teams at the largest passive funds and have helped redefine expectations of boards and management with respect to the oversight of risks that have previously not been captured in financial reporting, such as sustainability, cybersecurity and human capital risks.

However, the past few years have seen increasing politicization and backlash against ESG. Indeed, the term “ESG” itself has begun to steadily fade from the investor and corporate lexicon in the wake of cultural and political clashes over its meaning and purpose. “Anti-ESG” legislation adopted by several states has created legal and financial hurdles related to ESG for investment firms. Many institutional investors have gone quiet on ESG amid public criticism and congressional subpoenas. In February 2025, ISS announced that, in response to President Trump’s Executive Orders on diversity, equity and inclusion, it would “indefinitely halt” consideration of gender, racial and ethnic diversity of U.S. company boards when making voting recommendations.[17] Glass Lewis followed suit in March, announcing that it “will flag all director election proposals at US companies in which [the] recommendation is based, at least in part, on considerations of gender or underrepresented community diversity” and offer an alternative recommendation.[18] In addition, in March 2025, the SEC announced that it had determined to end its defense of the climate disclosure rules that had been adopted in 2024 and were the subject of ongoing litigation in the Eighth Circuit.

Set forth below are some of the key recent trends and developments in corporate governance matters.

Semi-Annual Versus Quarterly Reporting. In response to a social media post by President Trump calling for public companies to not be required to report on a quarterly basis, the SEC is exploring a proposal that would allow companies to opt into a semi-annual reporting regime. For most companies, quarterly reporting consumes substantial time and expense and imposes opportunity costs, as management teams focus on quarterly results. A shift to semi-annual reporting could allow companies to spend more time and resources on long-term value creation, rather than short-term results. However, companies may have other reasons to continue to provide quarterly updates, including debt covenants, investor expectations and greater trading flexibility for insiders.

The “Big Three” Shift Their Approach to Stewardship. Last year, the “Big Three” asset managers—BlackRock, Vanguard and State Street—signaled that they are shifting their approach to stewardship. In particular, each of these institutions split its proxy voting team into two separate groups, each with their own voting decision-makers, voting policies and perspectives, to meet the growing demand for a more nuanced approach to voting and to reflect clients’ differing—and often opposing—stewardship philosophies. It is now more important than ever for boards to find one on-one opportunities with their key investors to better understand how they hold and vote their shares. In addition, the Big Three have continued to expand their pass-through voting programs that allow individual investors to vote on matters companies submit to their shareholders.

Ongoing Dominance of Delaware. Historically, Delaware has been the gold standard for incorporation for most public companies, due to its well-established corporate law and highly specialized judiciary, which have created a stable and predictable legal environment. More recently, however, two states—Texas and Nevada—have implemented changes seeking to attract incorporations. In late 2024, Texas launched its own business court, modeled after the Delaware Chancery Court, and last year, Texas made significant business-friendly updates to its state corporate law, including to codify the business judgment rule and to allow companies to set higher ownership thresholds for shareholder proposals submitted under Rule 14a-8. Similarly, Nevada updated its state corporate laws to make business-friendly changes and limit the reliance on Delaware case law in interpreting Nevada law. Several high-profile reincorporations to these states, including Tesla’s reincorporation in Texas and TripAdvisor’s and Dropbox’s reincorporations in Nevada, have captured the attention of the corporate community.

However, for the vast majority of existing public companies, Delaware will likely remain “home” for the foreseeable future for several important reasons. First, reincorporation requires shareholder approval, and many investors still prefer Delaware due to the predictability and strong shareholder protections. Second, reincorporation is associated with high transaction costs and litigation risk, especially for early movers. Finally, Delaware has responded to the challenges by Texas and Nevada by instituting reforms of its own, most notably through SB 21, a meaningful set of amendments to the Delaware General Corporation Law that, among other things, expanded the safe harbor protections for directors, officers and controlling shareholders for conflicted and controlling shareholder transactions and limited the scope of permissible Section 220 “books and records” demands. Boards should continue to stay abreast of these updates and the potential impact on governance rules and norms. Moreover, certain of the Texas Business Court’s early decisions have cast doubt about whether and to what extent Texas will be a more company-friendly home. For example, last year, the Texas Business Court held that the duties of loyalty and care cannot be fully eliminated in a partnership; in contrast, Delaware allows partners to contractually waive all duties other than the implied contractual covenant of good faith and fair dealing.

Continued Rise of AI. Artificial intelligence (AI) was top of mind for boards, management, shareholders and the public throughout 2025. News cycles were dominated by large and high profile AI transactions, from “acquihires” (transactions in which larger AI companies sought to expand their talent pool by acquiring smaller startups) to multibillion dollar financings (such as OpenAI’s $40 billion investment round led by SoftBank in 2025 and $122 billion investment round backed by Amazon, NVIDIA and SoftBank at the start of 2026) to strategic partnerships for computing power (such as OpenAI’s partnerships with Broadcom, NVIDIA and AMD). Companies in a wide range of industries are increasingly expected to incorporate AI in their product offerings and day-to-day business operations. Boards should also be thoughtful about integrating AI expertise into the boardroom, to ensure effective oversight of AI-related risks and opportunities. Boards will be expected to familiarize themselves with the competitive landscape and understand how AI factors into a company’s business model and strategy. Directors with meaningful AI experience and backgrounds will continue to be in high demand.

Regulatory Trends

U.S. Antitrust Trends

Following years of aggressive enforcement, at the beginning of 2025, there was widespread anticipation that the second Trump administration would usher in a more favorable regulatory environment for dealmaking. Thus far, these expectations appear justified. The Trump administration promptly installed new leadership at the antitrust agencies, with Andrew Ferguson taking over as Chairman of the Federal Trade Commission in January 2025, and Gail Slater taking office as the new Assistant Attorney General in charge of the Antitrust Division of the Department of Justice in March. As the year progressed, the agencies signaled a return to more established antitrust enforcement practices. The agencies have committed to improving transparency and streamlining the merger review process, including by resuming a willingness to settle merger reviews, a traditional practice eschewed during the Biden administration. As more merger investigations are resolved with negotiated remedies, the number of court challenges has declined. A more constructive regulatory environment, however, does not imply that companies undertaking strategic transactions will be given a free pass. While the agencies are taking a pragmatic approach, they continue to enforce the antitrust laws and closely scrutinize transactions that raise potential concerns, including in industries––such as technology and healthcare––at the center of the Trump administration’s economic agenda.

The new administration has also taken action to supervise the antitrust agencies more directly and to align their activities with its policy priorities, and leadership at both agencies have embraced this new approach. In February 2025, the President issued an Executive Order establishing policies to “ensure Presidential supervision and control of the entire executive branch . . . including so-called independent agencies.”[19] This shift toward direct executive supervision was evident in the President’s dismissal of the FTC’s two Democratic Commissioners in March 2025 on grounds that their service was “inconsistent” with the administration’s priorities. Former Commissioner Slaughter challenged her termination as a violation of the FTC Act. The case is currently pending before the U.S. Supreme Court, which is expected to issue a decision in the first half of 2026. The outcome of the case could have major implications for the independence of the FTC and other federal agencies. In a similar development, in February 2026, Gail Slater stepped down as AAG in charge of the DOJ’s Antitrust Division, after less than a year in the role, reportedly due to mounting tension with the DOJ leadership and the administration over merger enforcement decisions. Deputy Assistant Attorney General Omeed Assefi was appointed as acting head of the Antitrust Division. The agencies’ efforts to more closely align their policy agenda and enforcement decisions with the administration’s priorities has and will continue to add uncertainty to the merger review process.

In a significant departure from the prior administration, the FTC and DOJ have shown a renewed openness to settling merger reviews with negotiated remedies, rather than resorting to litigation, even for fixable deals. In fact, in the final year of the Biden administration, the DOJ did not enter into a single merger settlement. By contrast, in 2025, the DOJ entered into five settlements, all of which involved structural remedies. Notable settlements include Hewlett Packard Enterprises/Juniper Networks, which resolved the only court challenge initiated by the DOJ under the new administration, and UnitedHealth/Amedisys, which resolved a lawsuit filed under the Biden administration. The DOJ also entered into consent agreements to resolve concerns in the Keysight/Spirent, Safran/Raytheon, and Constellation Energy/Calpine mergers without first initiating a legal challenge to block those transactions. Under Chairman Ferguson, the FTC settled four merger investigations. Two settlements—Synopsys/Ansys and Alimentation Couche Tard/Giant Eagle—involved structural remedies. In a statement issued in connection with the Synopsys/Ansys settlement, Chairman Ferguson outlined his approach to merger remedies, emphasising a strong preference for structural remedies. Notwithstanding his statement that behavioral remedies are “disfavored,” the FTC entered into two settlements this past year involving non-divestiture remedies. In Boeing/Spirit AeroSystems—a vertical merger combining an aircraft manufacturer with a key supplier of aerostructures—the FTC agreed to a combination of structural and behavioral remedies, and the FTC’s settlement in Omnicom/Interpublic Group involved behavioral remedies only.

Notwithstanding the renewed pragmatism, the agencies remain enforcement-minded and have shown a willingness to pursue court challenges of mergers. Each of the challenges brought by the agencies this past year focused on loss of direct competition between the merging parties, indicating a return to more traditional theories of harm.

The FTC, in particular, has maintained an active docket, challenging three transactions. In GTCR/Surmodics, the agency alleged that the transaction would have eliminated competition between Surmodics and Biocoat, a GTCR portfolio company, for the provision of “hydrophilic coatings in the United States.” Shortly after the FTC filed its lawsuit, the parties proposed to divest part of Biocoat’s hydrophilic coatings business. While the FTC rejected the proffered settlement, the District Court for the Northern District of Illinois found that the proposed divestiture was sufficient to mitigate the alleged anticompetitive effects and ruled against the FTC. The agency successfully blocked medical device supplier Edwards Lifescience’s proposed acquisition of JenaValve. The FTC’s complaint alleged that Edwards was JenaValve’s only competitor, and that the acquisition would reduce competition for lifesaving medical devices used to treat a potentially fatal heart condition. After a six-day trial, on January 9, 2026, the District Court for the District of Columbia granted the FTC’s motion for a preliminary injunction. Finally, the FTC filed a lawsuit to block Henkel’s proposed acquisition of Liquid Nails, which competes with Loctite, a popular brand of construction adhesives owned by Henkel. The FTC alleges that the deal “would bring under one roof the two biggest brands—by far—of construction adhesives sold domestically.” The lawsuit remains pending.

The DOJ had a lighter merger litigation docket in 2025 than the FTC. Except for the Hewlett Packard Enterprises lawsuit, which was later settled, the agency did not initiate any merger challenge. A pending litigation inherited from the prior administration—UnitedHealth/Amedisys—was settled with significant divestitures, and another—American Express GBT/CWT—was dropped just before the trial was set to begin.

Under the Trump administration, the agencies continue to explore expansive theories of harm in merger investigations. They have retained, and cited favorably in recent complaints, the 2023 Merger Guidelines adopted under the Biden administration, which include lower concentration tolerances and novel and more expansive theories of harm than the prior guidelines. Merger investigations continue to probe some of the theories of harm memorialized in the 2023 Guidelines, including notably labor market competition. The agencies have also focused on labor market competition outside of the merger context. Despite the continued focus on labor, the FTC in September abandoned its defense of a broad rule adopted under the prior administration banning almost all non-compete provisions in employment agreements, electing instead to prioritize case by-case enforcement against anticompetitive practices in the labor markets.

The FTC and DOJ have also disavowed hostility towards private equity and its business model. The industry was subject to intense antitrust scrutiny under the Biden administration, which brought novel lawsuits against private equity firms, including an unprecedented merger challenge against Welsh Carson based on a serial-acquirer theory. In contrast, the only challenge against a private equity deal—GTCR’s acquisition of Surmodics—brought by the FTC under the new administration was based on a traditional horizontal theory of harm, claiming that the transaction would eliminate direct competition between Surmodics and Biocoat, a GTCR portfolio company.

While private equity may benefit from a more favorable regulatory environment, both the FTC and DOJ have vowed to vigorously enforce the antitrust laws in the technology industry, and in 2025, the agencies continued to prosecute high-profile monopolization cases against Big Tech companies that were filed by prior administrations. The agencies have so far had mixed results in their monopolization cases. The FTC is appealing its recent loss against Meta, in which it failed to prove that Meta had illegally monopolized the personal social networking market through its acquisitions of Instagram and WhatsApp. And while the DOJ won both its monopolization cases against Google, it failed to secure a structural breakup of Google’s search business. In addition, the FTC has recently increased scrutiny of so-called “acqui-hires,” whereby tech companies hire all or most of a startup’s employees instead of buying the company, to determine whether they may be intended to evade the agency’s merger review process. It remains to be seen whether the agencies’ proclaimed hostility towards Big Tech will impact dealmaking in the industry. On the other hand, in an encouraging sign for the sector, the DOJ recently cleared Google’s $32 billion acquisition of Wiz announced in March 2025.

The administration also continues to prioritize antitrust enforcement in the healthcare sector. In April, President Trump issued an Executive Order tasking the FTC and DOJ to issue a manufacturers,”[20] and a number of investigatory and enforcement initiatives have been announced following the Executive Order. The FTC remains particularly active with respect to merger enforcement in this space, with two of the agency’s three merger litigations last year involving the healthcare sector. In addition, the proposed merger of Aya Healthcare and Cross Country Healthcare, two healthcare staffing software providers, was abandoned in late 2025 in the face of FTC’s concerns. In November 2025, Novo Nordisk, the maker of Ozempic and other GLP-1 drugs, dropped its bid to acquire Metsera after the FTC expressed concerns that the deal structure would violate the HSR Act. We expect that the industry will continue to attract legal and political scrutiny in 2026.

Last year brought implementation of the most significant overhaul of the HSR premerger notification program in over four decades, with changes to the notification form adopted under the Biden administration taking effect in February 2025. The changes significantly increased the burden associated with preparing HSR filings. The new rules were challenged by the U.S. Chamber of Commerce and other business groups as outside the FTC’s statutory authority, alleging they were arbitrary and capricious in violation of the Administrative Procedure Act; litigation continued after the changes were implemented. In a major development, on February 12, 2026, the district court for the Eastern District of Texas ruled for the plaintiffs and vacated the new rules.[21] The FTC appealed the decision to the Fifth Circuit and sought a stay of the lower court’s decision pending the appeal. On March 19, 2026, after the Fifth Circuit denied the FTC’s motion for an emergency stay, the agency reinstated the HSR form that was in place before February 2025.

Finally, state attorneys general were increasingly assertive in merger reviews this past year, and we expect that trend to continue in 2026. A coalition of state attorneys general—including New York and California—recently intervened in the federal Tunney Act review of the DOJ’s Hewlett Packard Enterprises settlement, claiming that its terms are inadequate. The increased activity from state attorneys general parallels efforts during President Trump’s first term, when state enforcers stepped up their role in merger reviews claiming to “fill the void” left by lax federal enforcement. Furthering this trend, Washington and Colorado became the first states to adopt universal premerger notification regimes, which require transacting parties meeting certain thresholds to submit their HSR notification forms to the state attorneys general at the same time they file with the FTC and DOJ. California recently passed a similar bill, which will become effective on January 1, 2027, and other states are considering similar legislation. The increase in direct notification requirements likely portends more state involvement in merger reviews going forward. Finally, in April 2026, a group of state attorneys general, together with a private plaintiff, recently obtained an extraordinary preliminary injunction remedy preventing Nexstar from integrating its TEGNA acquisition pending a full trial on their antitrust claims.

National Security Considerations

Recently, regulatory scrutiny of foreign investments for potential national security concerns has increased in numerous jurisdictions around the world. In the United States, the scope and impact of regulatory scrutiny of foreign investments by the Committee on Foreign Investment in the United States (“CFIUS”) has expanded significantly over the last decade. Most recently, new rules that became effective in December 2024 substantially expanded the scope of CFIUS’s jurisdiction over real estate transactions involving foreign investors, by adding nearly 60 locations to the existing list of military installations whose proximity to a potential real estate purchase could create CFIUS jurisdiction. In addition, over the last several years, successive administrations have increased regulatory oversight of companies operating in telecommunications or other sensitive industries that have potential links to China.

As a result, the role of CFIUS and the need to factor the risks and timing of the CFIUS review process into deal analysis and planning have been further heightened. The Foreign Investment Risk Review Modernization Act (“FIRRMA”)[22] introduced mandatory notification requirements for certain transactions, including investments in U.S. businesses associated with critical technologies, critical infrastructure, or sensitive personal data of U.S. citizens where a foreign government has a “substantial interest” (i.e., 49% or more) in the acquiror.[23] Critical technology and critical infrastructure are broad and flexible concepts, and FIRRMA includes in that rubric “emerging and foundational technologies” used in computer storage, semiconductors and telecommunications equipment sectors and critical infrastructure in a variety of sectors.[24] Supply chain vulnerabilities during the pandemic also increased the likelihood that investments in U.S. healthcare, pharma and biotech companies will be closely reviewed by CFIUS.

While most transactions that have run into CFIUS opposition in recent years have involved Chinese investors and U.S. businesses engaged in critical technologies—in particular, the design or production of semiconductors—or that have access to sensitive personal data of U.S. citizens, acquirors from all non-U.S. jurisdictions should consider the U.S. political and national security environment with care. The case of Nippon Steel’s acquisition of U. S. Steel, which was blocked by President Biden and then permitted by President Trump only after the imposition of significant conditions, is instructive. On January 3, 2025, after losing the election, and despite Nippon Steel having offered significant mitigating measures to allay CFIUS’s expressed national security concerns, President Biden nevertheless issued an order blocking the deal. In an unprecedented move, within three months of taking office, President Trump ordered a new national security review of the deal, and ultimately approved the transaction in June 2025 on the condition that the federal government receive a “golden share” with certain governance rights in the storied American steelmaker.

While notification of a foreign investment to CFIUS remains largely voluntary, transactions that are not reviewed pre-closing will remain subject to potential CFIUS review in perpetuity. A decision whether to make a voluntary filing generally depends on an assessment of the risk that a deal may draw CFIUS’s attention. In a transaction involving an investment in a U.S. business by a foreign person, it is important to determine early in the process whether the investment will require a mandatory filing or may attract CFIUS attention. Parties should agree on their overall CFIUS strategy and consider the appropriate allocation of risk in the event that CFIUS approval is not obtained, as well as timing considerations in light of possibly prolonged CFIUS review. From a transaction-structuring perspective, although practice varies, a number of cross border transactions in recent years have sought to address CFIUS-related non-consummation risk by including reverse break fees specifically tied to the CFIUS review process. In some of these transactions, particularly in transactions involving Chinese acquirors, U.S. sellers have sought to secure the payment of the reverse break fee by requiring the acquiror to deposit the amount of the fee into a U.S. escrow account in U.S. dollars, either at signing or in installments over a period of time following signing.

Although CFIUS has historically focused on foreign investments in the United States, in recent years the U.S. government has issued new rules prohibiting certain outbound investments by U.S. businesses. In 2023, President Biden issued an Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern, which gave the Treasury Department jurisdiction to review certain outbound foreign investments by U.S. businesses. This outbound review process is often referred to as “reverse CFIUS.” In October 2024, the Treasury Department released a final rule imposing restrictions on U.S. outbound investment in Chinese companies active in developing certain national security technologies. The rule, which took effect on January 2, 2025, imposes additional diligence responsibilities, record-keeping and notification requirements, and restricts U.S. persons and their controlled foreign entities from engaging in certain transactions with foreign persons in “countries of concern” (currently limited to China, including Hong Kong and Macau) that perform defined activities related to semiconductors and microelectronics, quantum information technologies or artificial intelligence. The rule applies to a broad range of investments, including, among others, the acquisitions of equity or contingent equity interests, provision of certain debt financing, conversion of contingent equity into equity interests, and involvement in greenfield or brownfield investment. The rule defines two different classes of covered transactions—prohibited transactions and notifiable transactions—based on the type of activity in a sensitive sector in which the Chinese target engages. A transaction is prohibited if it involves sensitive sectors implicating certain advanced or foundational technologies, such as design software for semiconductors, semiconductor fabrication or packaging equipment, and a range of activities related to quantum computing. The rule requires a party to notify the Treasury Department if it invests in a foreign target engaged in designing, fabricating or packaging integrated circuits (where the transaction is not prohibited), or developing AI systems designed for, among other uses, military or government intelligence, cybersecurity applications, or control of robotic systems. On December 18, 2025, President Trump signed into law the Comprehensive Outbound Investment National Security (COINS) Act, which largely codifies the prohibitions and notification requirements under the existing outbound investment security program, but will eventually modify its scope, expanding the targeted countries and industry sectors. The COINS Act will not take effect until the Treasury Department issues new regulations, which it must do by March 13, 2027. In the meantime, the existing regime remains in effect.

The European Union has also adopted a framework to screen foreign direct investments, which encourages EU member states to adopt a CFIUS-style foreign direct investment regime focusing on national security concerns. By the end of 2025, all EU member states had adopted or enhanced foreign investment screening regimes, many of which cover a large number of industries and transactions.

In addition, another development that may affect execution risk in many transactions is the EU’s adoption of the Regulation on Foreign Subsidies Distorting the Internal Market, which went into effect in October 2023. The regulation, which aims to address distortions caused by government subsidies to foreign companies, includes a mandatory notification and review regime for certain acquisitions of EU-based companies by foreign investors that have received subsidies (broadly defined) or other contributions from non-EU governments in the three years prior to the deal. The review process will run in parallel to the traditional merger review, and the European Commission will have new investigatory powers and the ability to impose measures to mitigate the effects of foreign subsidies. Recent statistics show that the new screening tool catches about three times more deals than originally expected by the European Commission, creating significant burdens for M&A deals involving companies or businesses that have an active presence in the EU.

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The complete publication is available here.

1Edward Flores, Svetlana Starykh, & Ivelina Velikova, NERA, Recent Trends in Securities Class Action Litigation: 2025 Full-Year Review 3 (Jan. 21, 2026); Cornerstone Research, Securities Class Action Filings: 2025 Midyear Assessment 4 (2025).(go back)

2Alcarez v. Akorn, Inc., 99 F.4th 368, 377 (7th Cir. 2024). (go back)

3Id. at 373.(go back)

4Id. at 377.(go back)

5Id.; In re Oracle Corp. Derivative Litig., 339 A.3d 1, 19-20 (Del. 2025).(go back)

6In re Match Grp., Inc. Derivative Litig., 315 A.3d 446 (Del. 2024).(go back)

7Id. at 473.(go back)

8Anchorage Police & Fire Ret. Sys. v. Adolf, C.A. No. 2024-0354-KSJM, 2025 WL 1000153 (Del. Ch. Apr. 3, 2025).(go back)

9Sam Nolledo et al., Glass Lewis, The State of U.S. Reincorporation in 2025: The Growing Threat and Reality of “DEXIT,” (Oct. 9, 2025), https://www.glasslewis.com/article/state-of-us-reincorporation-2025-growing-threat-reality-dexit.(go back)

10Desktop Metal, Inc. v. Nano Dimension Ltd., C.A. No. 2024-1303-KSJM, 2025 WL 904521, at *2, *23 (Del. Ch. Mar. 24, 2025). (go back)

11Barclays Shareholder Advisory Group, 2025 Review of Shareholder Activism (Jan. 9, 2026), https://www.ib.barclays/content/dam/barclaysmicrosites/ibpublic/documents/ourinsights/Q4-2025-Shareholder-Activism/Barclays%202025%20Review%20of%20Shareholder%20Activism.pdf. (go back)

12Id.(go back)

13Id.(go back)

14Lazard, 2025 Review of Shareholder Activism (Jan. 5, 2026), https://www.lazard.com/research-insights/annual-review-of-shareholder-activism-2025/. (go back)

15Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors, Exec. Order No. 14,366, 90 Fed. Reg. 58503, 58503 (Dec. 11, 2025). (go back)

16Martin Lipton, International Business Council of the World Economic Forum, The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth (2016), https://www.wlrk.com/webdocs/wlrknew/AttorneyPubs/WLRK.25960.16.pdf; see also The British Academy, Policy and Practice for Purposeful Business (2021), https://www.thebritishacademy.ac.uk/documents/3462/Policy-and-Practice-for-Purposeful-Business-The-British-Academy.pdf.(go back)

17ISS, Statement Regarding Consideration of Diversity Factors in U.S. Director Election Assessment (Feb. 11, 2025), https://insights.issgovernance.com/posts/statement-regarding-consideration-of-diversity-factors-in-u-s-director-election-assessments/. (go back)

18Glass Lewis, Supplemental Statement on Diversity Considerations at U.S. Companies (Mar. 2025), https://resources.glasslewis.com/hubfs/Supplementary%20Guidance/2025%20Supplemental%20Statement%20on%20Diversity%20Consideration%20at%20US%20Companies.pdf.(go back)

19Ensuring Accountability for All Agencies, Exec. Order No. 14,215, 90 Fed. Reg. 10447, 10447 (Feb. 18, 2025). (go back)

20Lowering Drug Prices by Once Again Putting Americans First, Exec. Order No. 14,273, 90 Fed. Reg. 16441, 16443 (Apr. 15, 2025).(go back)

21Chamber of Commerce v. FTC, No. 6:25-cv-9-JDK, 2026 WL 402498 (E.D. Tex. Feb. 12, 2026).(go back)

22Foreign Investment Risk Review Modernization Act of 2018, Pub. L. No. 115-232, 132 Stat. 1636, 2174-2207 (2018). (go back)

23Id., 132 Stat. at 2185.(go back)

24Id., 132 Stat. at 2218-19.(go back)