Thursday, April 6, 2006

CFIUS and foreign investment in the US

Brad Feld recently wrote about the US government’s recent scotching of a merger between Sourcefire and CheckPoint, apparently over concerns about certain technology being owned by an Israeli company. This reminded me of something I wrote a little over four years ago, namely, that 9/11 was used as a cover for the government getting a wider berth in investigating and potentially killing acquisitions of US companies.

This isn’t as sexy (or potentially polarizing) an issue as civil liberties, prisoner torture or illegal wiretaps — but any tech entrepreneur should be paying attention. This is needless meddling in business by the government. (And no, for the record, I didn’t think the Dubai ports deal was a problem.) Nobody raised a stink four years ago, and a quick web search indicates a number of cases where CFIUS was used to slow down potential mergers. The point isn’t that the inquiry is misguided (which it seems to be in certain cases) — but that this is an often unexpected hiccup for entrepreneurs looking for an appropriate exit. Anyone who cares about growing their business or looking for corporate partners should give this issue more thought, and contact your representatives if you’re concerned about the potential interference CFIUS will bring…

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