A European acquirer had spent fourteen months identifying its US target – a mid-market technology services company structured as a Delaware LLC (a limited liability company incorporated under Delaware corporate legislation). The deal economics were compelling. Then came the competition review. What had seemed like a bilateral business decision became a multi-agency regulatory process with the potential to delay or block a transaction that could not wait indefinitely.
This matter involved the acquisition of a US-domiciled Delaware LLC by a European strategic buyer, governed by a share purchase agreement subject to US federal and state law. Clearance was required under US antitrust legislation before closing conditions could be satisfied. The transaction closed after a targeted remedial undertaking was agreed with the reviewing authority, preserving the core deal structure.
This case study examines the strategy applied, the complications encountered at each milestone. Additionally. Three lessons that apply directly to cross-border M&A deals in the United States. particularly for buyers whose primary legal traditions lie outside the common law system.
Client profile and the challenge
The client was a European holding group with operating subsidiaries across several sectors, including professional technology services. Its US expansion had been primarily organic. This transaction represented its first significant inbound acquisition in the United States.
The target was a Delaware LLC providing managed IT infrastructure services to regulated industries. Its market position in two specific service verticals was strong – strong enough, in fact, to attract scrutiny from US antitrust regulators once the deal became public. The acquirer had limited prior experience with US merger control procedures and had not anticipated the timeline or the documentary intensity of the US pre-merger notification process.
The central legal challenge was threefold. First, the parties needed to determine whether the transaction met the thresholds triggering mandatory notification under US competition legislation. Second, they needed to manage the risk of a protracted second-phase investigation. Third, they needed to structure the share purchase agreement (SPA) so that closing conditions, representations and warranties, and termination rights were calibrated to the regulatory risk – not just to the commercial risk.
For related context on structuring acquisitions of US entities, see our full service overview covering M&A transactions in the United States.
Legal strategy: sequencing and structure
The team's first decision was to treat regulatory clearance not as a closing formality but as a deal-defining variable. This reframing shaped every structural choice that followed.
The SPA was drafted with an extended long-stop date. This gave the parties a defined window within which to obtain clearance without triggering automatic termination. The representations and warranties were carefully scoped to survive only through the period the acquirer could practically verify – given that due diligence had been conducted before the regulatory clock had started running. A reverse break fee was negotiated as protection for the seller against the risk of regulatory failure attributable to the buyer.
On the competition side, the team prepared a thorough pre-notification submission to the reviewing authority. The submission addressed market definition directly, providing data that argued for a broader market definition than the narrowest plausible reading. This is a known pressure point in US merger review: regulators in federal proceedings frequently contest market boundaries, and the outcome often determines whether a transaction proceeds with or without remedies.
Dispute resolution in the SPA was structured to use JAMS (Judicial Arbitration and Mediation Services) arbitration as the primary mechanism for post-closing commercial disputes. This was preferred over AAA arbitration (American Arbitration Association) for this matter given the institutional familiarity of both parties' counsel with JAMS procedures in complex commercial disputes. The parties also agreed that the US District Court for the relevant federal district would have exclusive jurisdiction over injunctive relief applications pending arbitral resolution.
The due diligence process covered US federal regulatory compliance, state-level licensing in the target's key operating states, and SEC (Securities and Exchange Commission) reporting obligations applicable to certain institutional investors in the target's capital structure. While the target itself was not a public company, several of its investors carried disclosure obligations that required careful management during the exclusivity period.
Key milestones and complications
The pre-notification phase ran longer than anticipated. The reviewing authority issued multiple rounds of requests for supplemental data. Each round reset the informal timeline for first-phase clearance. The extended long-stop date in the SPA proved critical – without it, the seller would have had grounds to terminate before the process concluded.
A second complication arose mid-process. One of the target's major clients – operating in a regulated industry – had a contractual change-of-control provision that required its prior written consent to any ownership transfer. This had been identified in due diligence but its timing implications had been underestimated. Obtaining that consent required a parallel negotiation track that consumed significant management attention and introduced a second critical path into the transaction timeline.
The third complication was valuation-related. During the regulatory review period, the target's operating performance in one vertical showed a material deviation from the projections used in the SPA's earn-out mechanism. The acquirer sought to invoke a material adverse change clause. After detailed analysis of the clause's drafting against the actual performance data, the team concluded that the deviation – though significant – did not meet the threshold set out in the SPA. This prevented a renegotiation attempt that could have delayed the transaction further or damaged the relationship with the seller.
Clearance was ultimately obtained subject to a targeted behavioural undertaking. The acquirer agreed to maintain certain interoperability standards in the two verticals that had attracted scrutiny. This outcome was within the range the team had identified as achievable at the outset of the regulatory strategy.
For buyers considering similar structures in parallel markets, our analysis of M&A transaction strategy in Brazil illustrates how civil law jurisdictions handle comparable competition clearance procedures differently.
To explore how your transaction structure would interact with US regulatory conditions, contact us at info@ferrazwhitmore.com.
Transferable lessons for cross-border M&A in the United States
Lesson 1: Treat regulatory clearance as a deal variable, not a closing step. US merger control review is not a formality. For transactions in concentrated markets or regulated industries, the review timeline can extend well beyond initial estimates. The SPA must be structured with that reality built in – through the long-stop date, through reverse break fee mechanics, and through representations and warranties that account for the period of regulatory uncertainty. Buyers who leave these provisions to standard templates frequently find themselves exposed when the process extends.
Lesson 2: Market definition is a strategic question, not a factual one. US antitrust authorities define markets in ways that directly determine whether a transaction faces remedies or proceeds cleanly. Experienced counsel will invest significant effort at the pre-notification stage in building a credible, data-supported argument for the market definition most favourable to the deal. Waiting for the authority to propose its own definition before responding is a losing approach. The argument must be made proactively and grounded in the economics of the specific verticals at issue.
Lesson 3: Change-of-control provisions in material contracts are a second critical path. Due diligence routinely identifies these provisions. What is less routinely addressed is their sequencing relative to the regulatory timeline. In this matter, the client consent process and the competition review ran in parallel – with neither party fully controlling either timeline. Future transactions in the United States benefit from mapping all third-party consent requirements against the regulatory timeline at the outset, then assigning responsibility and resources to each track accordingly.
The corporate legislation applicable to Delaware entities, the procedural rules of US federal courts, and the institutional frameworks of US arbitral bodies each create specific obligations and opportunities in cross-border transactions. For buyers unfamiliar with these systems. Engaging a law firm in the United States with cross-border M&A experience. ideally one that also understands the civil law tradition of the acquirer's home jurisdiction – materially reduces execution risk. Working with a lawyer experienced in United States deal structures means fewer surprises at the critical stages of the process.
For a preliminary review of your proposed US acquisition structure, email info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our M&A practice covers the full transaction lifecycle – from due diligence and SPA negotiation through to competition clearance and post-closing disputes – across both civil law and common law systems. The firm's dual-tradition approach is particularly suited to cross-border acquisitions where the buyer and target operate under different legal cultures, as is frequently the case in US inbound transactions by European strategic buyers. Our attorneys have advised on share purchase agreements, Delaware entity structuring, and US regulatory conditions in transactions spanning multiple industries. As a law firm advising on United States matters from a Lisbon base, we provide direct access to EU regulatory intelligence alongside US deal execution capability. To discuss your M&A transaction in the United States, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.