Planning Foreign Investment for 2027: Lessons From the CFIUS Annual Report

Key Takeaways

• CFIUS reviewed 347 covered transactions in calendar year 2025, an increase of nearly 7% from the prior year.
• More parties opted to file short-form declarations, but the report showed a noticeable decline in obtaining safe harbor via declarations.
• More than half of the notices proceeded to investigation. Withdrawals, refilings, and extended investigations continued to affect transaction timing.
• Technology-intensive manufacturing, including computer and electronics and aerospace manufacturing, represented an increasing share of Committee on Foreign Investment in the United States (“CFIUS”) notice activity.

As transaction parties plan for year-end and early 2027 investments, the recently published CFIUS Annual Report serves as a useful indicator of the Committee’s current priorities and the practical realities of obtaining clearance. The report shows a modest increase in CFIUS review activity, as well as a more demanding and less predictable process for parties seeking CFIUS clearance, especially those relying on the short-form declaration process. Moreover, the report shows that CFIUS remains a critical tool in foreign investment screening, as outlined last year in President Trump’s America First Investment Policy, and reinforces the importance of evaluating CFIUS issues early in transaction planning.

2025 CFIUS Filings Increased as Declaration Clearance Rates Declined

CFIUS reviewed or assessed 347 covered transactions in 2025 consisting of 207 written notices and 140 declarations, a near 7% overall increase from the previous year.

The 2025 figures continue to show meaningful CFIUS review of investments from U.S. allies and partners. Japan, France, Singapore, Germany, South Korea, and the United Kingdom were among the six leading countries for declarations. China accounted for the greatest number of notices filed, followed by Japan, the United Arab Emirates, Canada, and France. However, on a unique transaction basis, Japan, the UAE, and Canada were the leading countries for notice filings, reflecting the effect of withdrawal and refiling activity on China-related notices.

The 7% year-over-year increase was driven largely by the growth in declarations, while the number of full notices remained essentially unchanged. Although a short-form declaration can be an efficient filing option, especially for lower-risk transactions, the 2025 report illustrates that declarations do not reliably produce a definitive clearance determination.

Of the 140 declarations assessed in 2025, CFIUS concluded action with respect to approximately 66% — a decline from approximately 78% in 2024. The 36 full notice requests represented a substantial increase from the numbers reported in 2024.Though short-form declarations may be efficient in appropriate cases, the annual report shows that parties should not presume a declaration offers a guaranteed 30-day route to CFIUS clearance.

CFIUS Investigations, Withdrawals, and Refilings Extended Transaction Timelines

CFIUS conducted investigations in 114 of the 207 notices filed in 2025, or approximately 55% . Sixty-one notices were withdrawn, including 58 after commencement of the investigation period. Parties refiled notices in 51 instances, with 37 refilings occurring in 2025 and 14 occurring in 2026.

CFIUS also exercised its authority to add a 15-day extension to the usual 45-day investigation period in eight matters, compared with only two in 2024. Excluding periods in which statutory deadlines were tolled, the average duration was 45.4 calendar days for notices resolved during review and 82.8 calendar days for notices that reached investigation.

Appropriations lapses during 2025 further disrupted the process. CFIUS tolled deadlines in active matters for more than 120 days in aggregate and delayed acceptance of new filings.

CFIUS Scrutiny Increased for Technology and Advanced Manufacturing Transactions

The report indicates heightened CFIUS focus in reviewing U.S. businesses in technology intensive manufacturing. Manufacturing notices rose from 68 in 2024 to 79 in 2025. Notices involving computer and electronic product manufacturing, aerospace product and parts manufacturing, and transportation equipment manufacturing nearly doubled from the prior year.

The data is consistent with continued CFIUS attention to defense-related production, semiconductors and electronic components, advanced manufacturing, supply-chain resilience, and other strategically significant industrial capabilities. In 2025, the leading countries for covered transactions involving acquisitions of U.S. critical technologies were Japan, France, Israel, Germany, and the United Kingdom, followed by the Netherlands and Canada.

For parties evaluating CFIUS risk, the relevant U.S. business analysis remains transaction specific. The analysis includes the U.S. business’ technology and export control status, access and maintenance of sensitive personal data, and critical infrastructure activities, as well as the U.S. business’ history of government or defense contracts.

CFIUS Continued Enforcement of Non-Notified Transactions in 2025

CFIUS continued to identify and examine transactions that parties did not submit for review. In 2025, CFIUS identified thousands of potential non-notified transactions, investigated 90 potential matters to determine whether to open an inquiry, opened formal inquiries in 62 matters, and requested filings in nine matters.

The report also references Treasury’s Known Investor Pilot Program, which was initiated in connection with the administration’s proposed “fast-track” approach for qualifying foreign investors. The report provides no information about participating investors, eligibility standards, transaction outcomes, or the program’s effect on timing. Treasury’s February 2026 Request for Information sought public input on the program’s potential design and ways to streamline the CFIUS process, indicating that the program remains under development rather than a broadly available expedited-clearance route.

What the 2025 CFIUS Annual Report Means for M&A and Foreign Investment

The 2025 Annual Report reflects longer timelines and increased investigation and withdrawal activity, reinforcing the value of CFIUS analysis early planning and precise allocation of CFIUS risk in transaction documents.

The transaction timetable should reflect the likelihood of investigation, mitigation negotiations, withdrawal and refiling, and government side delays. Where mitigation is likely, the parties should develop a workable mitigation framework early rather than treating mitigation as a post-signing issue.

Parties should engage CFIUS counsel before finalizing an LOI or term sheet; and CFIUS diligence should be a separate workstream. An initial assessment can identify mandatory filing triggers, likely mitigation, and potential deal blockers before the parties become commercially committed. It also permits the parties, while terms remain flexible, to address CFIUS risk in the transaction timetable and transaction agreement.

If diligence identifies material risk, the parties should consider structural measures before signing. Options may include carving out sensitive assets or operations, and limiting foreign governance or information rights, such as restricting access to material nonpublic technical information. Even passive, non-M&A investments can still be a covered transaction if it provides board or observer rights, access to material nonpublic technical information, substantive decision-making rights, or appointment authority. The parties should assess the operational and financial consequences of such arrangements before committing to the transaction.

Where practicable, parties should file with CFIUS at or before signing to reduce the period of uncertainty. Transaction documents should also anticipate the possibility of delayed filing acceptance, extended review, mitigation negotiations, withdrawal, and refiling.

How M&A Agreements Should Allocate CFIUS Clearance and Mitigation Risk

The transaction agreement should contain standalone CFIUS language, separate from antitrust, export control, and other regulatory conditions. It should also state the parties’ regulatory efforts standard with specificity.

A hell-or-high-water covenant requires the buyer to accept CFIUS mitigation, subject only to any negotiated limitations. A reasonable best-efforts covenant requires meaningful efforts to obtain clearance but may permit the buyer to reject mitigation that is disproportionate, materially burdensome, or inconsistent with the transaction’s commercial rationale. A tailored mitigation covenant specifies the measures the buyer must accept and identifies the mitigation measures outside the buyer’s obligation.

A reverse break fee should reflect both the risk of non-clearance or unacceptable mitigation and the seller’s opportunity cost during an extended period of exclusivity. Generic references to “regulatory approval” are not sufficient, particularly given the decline in declaration clearances.

The period between signing and clearance presents material gun-jumping risk. Interim covenants should preserve existing management, security clearances, government contract performance, and export control compliance while permitting ordinary course operations and necessary business decisions.

For more information, please contact AGG International attorneys Clinton Yu, Luis Arandia, Mike Burke, or Kelley Chandler.