In an age where international commerce and trade deals may be under a regulatory microscope as never before, Reuters reported that a number of insurers have started to offer up protection that covers cross-border deals, focusing on Chinese companies that are looking to expand in the United States.
The newswire reported that the first firm to offer such insurance has been Britain’s Aon Plc, which, along with subsequent entrants, such as Jardine Lloyd Thompson Group, has targeted companies where proposed expansion might face stumbling blocks once in the sights of the U.S. Committee on Foreign Investment.
That committee, said the newswire, is a part of the Treasury Department that examines deals under a prism of national security. In the event that deals are scuttled, oftentimes, sellers insist that the Chinese firms buying those U.S. businesses pay what is known as a “reverse breakup fee.”
Such insurance may see accelerated adoption, as President-elect Donald Trump throws some uncertainty on the international corporate stage. The pace of outbound mergers and acquisitions has doubled in 2016 from a year earlier, said Reuters, to as much as $196 billion, and of that tally, 30 percent of deals have found their targets in the United States. Thus far, the aforementioned insurance has been used across a dozen deals, Reuters reported.
