What Is CFIUS?
CFIUS is a committee of federal agencies, led by the Treasury Department and including the Departments of Defense, Justice, Commerce, and Homeland Security among others, that screens foreign acquisitions of US businesses. Its authority comes from Section 721 of the Defense Production Act, and its mandate is narrow but powerful: assess whether a deal threatens national security and act if it does.
The Foreign Investment Risk Review Modernization Act of 2018, known as FIRRMA, expanded the committee's reach well beyond outright takeovers. CFIUS can now review certain non-controlling investments in companies involving critical technologies, critical infrastructure, sensitive personal data, and even real estate near military installations, which pulled many venture and growth deals into scope.
How a CFIUS Review Works
Most filings are voluntary, though FIRRMA made them mandatory for certain critical-technology deals and investments involving foreign government-controlled buyers. Parties can submit a short-form declaration, which CFIUS assesses within 30 days, or a full joint voluntary notice that starts a 45-day review, followed if needed by a 45-day investigation and a final 15-day window for a presidential decision.
CFIUS rarely needs a formal block because it can negotiate mitigation agreements, such as data-access controls or governance restrictions, or quietly signal that parties should withdraw. Presidential prohibitions are uncommon but consequential, as when Broadcom's hostile bid for Qualcomm was blocked in 2018. Critically, deals that never file receive a safe harbor from nothing, and CFIUS can order divestment years after closing.
Why CFIUS Matters in Deals
Any transaction with a foreign buyer, or a US buyer backed by significant foreign capital, must be evaluated for CFIUS exposure before signing. Merger agreements allocate this risk through closing conditions, efforts covenants, and sometimes reverse termination fees payable if clearance fails, and the review can add three to six months or more to a deal timeline.
For bankers, CFIUS shapes who can credibly bid in an auction: a strategic buyer from a sensitive jurisdiction may be discounted or excluded despite offering the highest price. Understanding when a filing is likely, and how mitigation might salvage a deal, is increasingly core knowledge for anyone advising on cross-border M&A or raising capital from sovereign investors.
