As Germany’s criteria to pass the national security requirements of international M&A transactions grows, Hogan Lovells is looking to technology to ease the complex process.
With a steadily increasing list of activities within international mergers and acquisitions transactions that can trigger regulators’ attention, all parties involved are chasing their tails trying to figure out how to work through the complex criteria.
To try and ease the spiderweb of regulation, last week, Hogan Lovells launched a BRYTER-powered app called the German Foreign Investment Control Guide that looks to allow the buyers, sellers and target companies to identify whether the transaction in question will trigger a foreign direct investment (FDI) screening by the German government, further lengthening the process.
LTN: What does Hogan Lovells’ new tool—the German Foreign Investment Control Guide—aim to do?
The aim of the tool is to basically give companies who intend to [make international mergers and acquisitions] transactions through Germany [an easier way] to input the basic data regarding the shares or assets which will be required and [additional information about] which areas to target.
It’s hard to manage what activities can be considered for national security or public audit, which [you will need to know] in order to file [with] the German government. It is very easy for an [FDI] screening procedure to be triggered. Once the FDI procedure is triggered, it means that without undue delay … they have to file the transaction to the authority, which is generally the Ministry of Economics but can be other authorities also, lengthening the process.
How does the tool work?
[The user] inputs the basic information on the transaction, then the transaction structure, the target activities and investor-related information. Once you enter it … you will basically get a summary that indicates whether it is likely to trigger a mandatory [FDI] filing or no filing.
Then, we will give a brief summary of which ministries are likely to be involved through the duration of the transaction, and also, at the end, a brief summary of recent case law and developments [pertinent to the transaction]. So, basically, we have compiled one to two pages of the most relevant data and features.
What made Hogan Lovells think of creating this solution?
The process of dealing with an FDI filing can be burdensome. It can be difficult to gather the information that is needed, and to coordinate the parties. Then we were thinking how can this information be very efficiently put together and how can the documents needed at the end be gathered easily.
However, the starting point of the solution was some years ago when we were organizing a legal tech event in cooperation with BRYTER, an automation platform, along with lawyers, students and people from the scientific community. That was the first time we had an idea of creating legal tech for FDIs. Because, [we all were] thinking, how can we streamline this process? And could we somehow use tech to simplify and make it more efficient?
What are you using the automation tool BRYTER for in addition to this?
The German FDI tool is the first external-facing BRYTER application we’ve launched. We have another project that will shortly go into beta testing with a select group of clients. We also have one live internal application—a business services appraisal review tool, and two other internal facing tools in development, which we are hoping to launch before the end of the year—an intake review tool and a legal tech product selection tool.