Political and regulatory developments, stakeholder sentiment and media trends in key markets
Political considerations have now become a key success factor for cross-border deals. The Nippon Steel/US Steel transaction is probably the most prominent example of a highly politicized cross-border transaction, drawing the attention and public involvement of two U.S. Presidents (Biden and then Trump) – but this is true even in less visible transactions and sectors with fewer direct links to national security. Governments are increasingly organizing their approach to foreign investment around economic security, expanding screening procedures in scope and intensity, while media and political scrutiny of foreign investors intensifies. As a result, successful dealmakers must be much more politically savvy – able to identify decisive trends, assess their impact on deal structure and align stakeholder engagement from due diligence to closing.
To better understand what drives political and regulatory scrutiny of cross-border deals in key global markets, our teams again surveyed political decision-makers and opinion leaders across the U.S., Germany, the Netherlands, France, Japan, Italy, and the EU.
Across markets, the message is clear: a decisive majority favors tighter foreign direct investment (FDI) screening, and the lines between security and economic policy continue to blur. The deal risk map grows even more complex as sectoral sensitivities broaden and authorities scrutinize even investor capital from countries traditionally deemed allies more closely.
Our top recommendations to dealmakers:
Integrate political risk assessment into deal strategy from the outset and structure your transaction accordingly
Develop market-specific communication strategies within a coherent global framework
Identify and be ready to engage with a broad range of stakeholders beyond regulators
Executive Summary
FDI scrutiny shows no signs of easing: Decisive majorities across all surveyed markets want governments to screen FDI more stringently. Figures remain virtually unchanged from last year’s assessment, confirming that support for more stringent measures is a political baseline rather than a temporary phenomenon.
Technology, jobs and supply chains are main concerns, but emphasis varies: Dealmakers must understand and address the substantive issues stakeholders prioritize in their region, as this is often key to securing approval.
Defense, critical infrastructure and strategic industries in focus: Defense, unsurprisingly, remains the sector respondents consider most sensitive, with around two-thirds or more rating it as the top sector to focus on in screening. Health and biotech, energy and critical raw materials, ICT infrastructure and semiconductors also consistently rank high for sensitivity across most markets.
Greater scrutiny sought for Chinese investors: China continues to stand out as a country of concern, with more than half of respondents in every capital surveyed asking for closer investment scrutiny. In European capitals and Washington, survey respondents also favor closer scrutiny of investments originating from the Middle East. In Europe, calls for closer reviews of U.S. investments are growing.
Cross-jurisdictional comparison of findings: Chinese investments and screening in defense are a top focus for all jurisdictions, with stronger regional variations for other sectors
Geographic focus: China remains under the most intense scrutiny among political decision-makers and opinion leaders, with over 75% of respondents in the U.S. and Germany, over 70% in France, Italy and the Netherlands, and nearly 90% in Japan saying Chinese investments should be reviewed more closely. At the same time, majorities in Brussels, France, Germany, Italy, the Netherlands and the U.S. now support closer review of investments originating from the Middle East. Notably, even “friendly” capitals can face scrutiny. Around half of European respondents call for closer review of U.S. investments, mirroring transatlantic political tensions and growing geoeconomic use of trade and industrial policy tools.
Sectoral focus: What qualifies as “national security” ultimately remains a political judgment – making it essential for dealmakers to understand which sectors are currently in the political spotlight. Beyond defense, priorities diverge meaningfully from market to market. U.S. and Japanese respondents prioritize ICT infrastructure and semiconductors, with over half flagging these sectors. European countries show particular concern for energy and critical raw materials, reflecting ongoing debates about strategic autonomy and supply chain resilience. Health and biotech emerge as critical sectors globally, with between half and two-thirds of respondents across markets marking them as especially sensitive.
Areas of concern: Technology transfer ranks as a top consideration in France, Japan and the U.S., where between one-third and more than half of respondents believe authorities should pay attention to this issue in the review process. Job retention features prominently in France, Germany and Italy, with roughly half or more of respondents prioritizing it. Although job retention is not a formal screening criterion, it often plays a political role that transaction parties can leverage in the review process. Germany, the U.S. and Brussels particularly emphasize security of supply. Government connections and subsidies receive heightened attention in the U.S. and Japan, while Italy and France place particular weight on strategic or heritage value of target assets. Whether formally codified or not, successful dealmakers anticipate politically salient concerns early and address these proactively in deal design.
Recommendations for dealmakers and communicators
Integrate political risk assessment into deal strategy from the outset and structure your transaction accordingly: Our survey results confirm that political concerns are broad, multi-layered and vary across jurisdictions. Against this backdrop, political and regulatory risks can no longer be treated as a late-stage check. By integrating political dimensions into early due diligence, deal teams can identify politically exposed elements and build in credible mitigation – on deal structure, timing and commitments – before positions harden.
Develop market-specific communication strategies within a coherent global framework: The divergences highlighted in the surveys – with respect to sectors, investor origins and issues of concern – show that the same transaction will be read differently by stakeholders from market to market. Dealmakers need communication plans that address local sensitivities effectively while ensuring that core messages remain consistent globally. The goal is to avoid contradictory narratives across jurisdictions that could complicate approval.
Identify and be ready to engage with a broad range of stakeholders beyond regulators: As the survey shows, many influential concerns are not formal screening criteria but shape the political environment in which authorities operate. Parliaments, regional leaders, trade unions, business associations, media and think tanks can all influence a deal’s trajectory. Early mapping of stakeholders, targeted engagement and credible commitments on issues of concern helps prevent political issues from escalating into risks to deal closure.
Regional insights
How we support you in getting the deal done
Our team of senior experts – including former high-level government officials, competition lawyers, tier 1 media journalists and seasoned advisors based in the world’s financial and political hubs – stands ready to support you in getting the deal done. With deep knowledge of political, regulatory and transaction processes, we work seamlessly and efficiently alongside legal and financial advisors. This integrated approach enables us to help investors and corporates navigate complex transactions and articulate strategic deal rationales in a way that aligns with political agendas, regulatory requirements, public sentiment and investor expectations.
