China Publishes Q&A on Administrative Policies for the Security of Cross-border Transfers
On April 9, 2025, the Cyberspace Administration of China (“CAC”) published a Q&A related to administrative policies on the security of cross-border transfers. Below is a list of certain of the questions published by the CAC each with a summary of the response from the CAC.
How can consistency of the criteria for the negative lists in different Pilot Free Trade Zones (“Pilot FTZs”) be ensured?
Pursuant to the Provisions on Facilitating and Regulating Cross-border Data Flow (the “Provisions”), the Pilot FTZs may each formulate their own negative list under the framework of the data classification and categorization protection. If a Pilot FTZ has issued a negative list, other Pilot FTZs in the same industry can adopt the issued negative list to avoid duplication. Currently, the negative list has covered 17 industries including automobile, drug, retail, civil aviation, re-insurance, deep sea field and seed industry
How should the necessity of cross-border transfers be understood and determined?
Pursuant to Articles 6 and 19 of the Personal Information Protection Law, the considerations for determining “necessity” include whether the processing of personal information:
is directly related to the purpose of the processing;
has minimal impact on individuals rights;
is limited to the minimum scope necessary to achieve the purpose; and
the retention period is limited to the shortest time necessary to achieve the purpose.
Therefore, an assessment on the necessity of a cross-border transfer must focus on the necessity of the cross-border transfer itself, the number of individuals impacted, and the necessity of the scope of data elements of the transfer. The CAC and the relevant competent industrial authorities intend to jointly refine and clarify the business scenarios of cross-border transfers in specific industries and provide more detailed guidelines in the future.
Can important data be transferred outside of China?
Yes, important data can be transferred outside of China if a security assessment determines that the transfer will not harm national security or public interest. As of March 2025, the CAC had completed 298 applications for security assessment on cross-border transfers, of which 44 applications involved important data and seven applications failed, which means the failure rate is only 15.9%. In these 44 applications, there are total 509 important data elements, among which 325 elements were approved for transfer and the pass rate is 64.9%.
Are there any more convenient channels for cross-border transfers between group companies?
If the scenarios for the cross-border transfers for multiple Chinese subsidiaries belonging to one group company are similar, it is permitted for the group company, as the applicant, to submit one consolidated application for security assessment or one consolidated filing of the standard contract (“SC”) for cross-border transfers.
Alternatively, if either of the Chinese affiliate and the oversea recipient obtains the certification for cross-border transfer, the relevant entities can carry out the data transfer activities within the certified scope. If a group company obtains such certification, it is permitted to transfer data within the group without concluding separate SCs with the affiliates in each country/region.
Is there a specific process for extending the validity period of cross-border data transfer related security assessment results?
The Provisions extend the validity period of the assessment results from two years to three years. Upon expiration of the validity period, if the data handler continues to carry out cross-border activities without any circumstances requiring re-application for a security assessment, it may apply to the local cyberspace administration authority for an extension 60 business days before the expiration of the validity period. The validity period of the security assessment results can then be extended for another three years. The CAC intends to revise and issue relevant policies related to the extension procedure to make conditions for cross-border transfers more convenient.
HM Treasury and FCA Proposals to Reform Regulation of UK AIFMs
On 7 April 2025, HM Treasury (HMT) published a consultation (Consultation) on the reform of the UK regulatory regime for alternative investment funds (AIFs) and their managers, alternative investment fund managers (AIFMs[CM1] ), and the Financial Conduct Authority (FCA) simultaneously published a call for input (Call for Input) on how to create a more proportionate, streamlined and simplified regime (the Call for Input and the Consultation together, the Proposals). The Proposals follow the UK’s implementation of the EU Alternative Investment Fund Managers Directive (UK AIFMD) in 2013 and the UK’s withdrawal from the European Union (Brexit) in 2020.
The Proposals aim to simplify the regulations relating to AIFMs and streamline the existing framework with the intention to make the UK more “attractive” for investment and to encourage growth within the UK economy.
The Current AIFM Regime
The current AIFM regime derives principally from the EU Alternative Investment Managers Directive (EU AIFMD). The application of this regime and the accompanying rules depend on whether an AIFM’s assets under management (AUM) exceed certain thresholds.
In the Consultation, HMT explains that these thresholds have not been updated or reviewed since the introduction of the EU AIFMD in 2013. HMT also describes the current regime creating a “cliff edge effect” where sudden market movements or changes in AUM valuations have inadvertently brought smaller AIFMs within the full scope of the AIFM regime, subjecting such firms to sudden and substantial compliance burdens which it believes has the potential to discourage growth.
HMT Consultation
As a result of the “cliff edge effect”, the Consultation proposes to remove the thresholds and allow the FCA to determine proportionate and tailored rules.
Additionally, HMT proposes two “sub-threshold” categories of “small registered AIFM” that are yet to be authorised:
unauthorised property collective investment schemes; and
internally managed investment companies.
In particular, the Consultation discusses the following key items:
relocating definitions of “managing an AIF”, “AIF”, and “Collective Investment Undertaking” to the Regulated Activities Order, with no change to the regulatory scope;
confirming that there are no plans to amend the UK National Private Placement Regime;
potentially removing the FCA notification requirements when certain AIFMs acquire control of unlisted companies;
prudential rules for AIFMs;
at this stage, there are no proposals to change the rules applying to depositaries, but the FCA is calling for further evidence on whether any changes could be warranted;
reviewing the requirement for appointing external valuers; and
regulatory reporting under AIFMD.
Call for Input
Three New AIFM Thresholds
In the Call for Input, the FCA proposes new categorisations for AIFMs relating to their AIFs’ aggregate net asset value (NAV) (rather than the AUM) of their funds. This metric should be friendlier for managers on the basis that the NAV takes also into consideration the firm’s liabilities and is closer to the “actual value” of the firm, instead of purely considering the value of all assets of the firm.
The Call for Input proposes three divisions and the ability to opt-up to a higher category:
1. Small firms (NAV of £100m or less)
This category of firms would be subject to essential requirements to ensure consumer protection and will “reflect a minimum standard appropriate to a firm entrusted with managing a fund.”
2. Mid-sized firms (NAV more than £100m but less than £5bn)
This category of firms would have a comprehensive regulatory regime that is consistent with the rules that apply to the largest firms, but with fewer procedural requirements. This should, it is hoped, result in the regime for mid-sized firms being more flexible and less onerous than for the largest firms.
3. The largest firms (NAV of £5bn or more)
This category of firms would be subject to rules that are similar to the current full scope UK AIFM regime but tailoring the rules to specific types of activities and strategies. The FCA also intends to simplify AIFMs’ disclosure and reporting requirements.
Other Key Points
Additionally, the Call for Input also considers the following points:
new rule structure for UK AIFMs managing unauthorised AIFs; and
tailoring the rules to UK AIFMs based on the activities they undertake – for example, differentiating between venture capital firms, private equity firms, hedge funds and investment trusts – and their category.
What This Could Mean for UK Asset Management
Driving economic growth is a fundamental point of the current Labour government’s agenda and can be seen through the Proposals. This is also one of, if not the, first time that the UK government and HMT have taken advantage of and embraced Brexit to deviate from the retained EU regulations in an effort to strengthen London as a finance hub.
While the rules relating to Undertakings for the Collective Investment in Transferable Securities (i.e., EU and UK mutual funds, known as UCITS) are unaffected by the Proposals, the Proposals suggest a significant rethink of the UK asset management framework. The Proposals could reduce the regulatory burden on many UK AIFMs, which should be a great benefit to the UK asset management industry post-Brexit. The Proposals therefore focus on emerging and smaller AIFMs in a bid to provide an environment where such firms can continue to grow, without restrictive administrative and regulatory burden.
We expect that this regulatory shift will be welcomed by the market as it has been a complaint for a long time that the current UK AIFMD regime has had too broad of an approach to apply to differing business models.
The Call for Input and the Consultation close on 9 June 2025. The FCA intends to consult on detailed rules in the first half of 2026, subject to feedback and to decisions by HMT on the future regime, while HMT intends to publish a draft statutory instrument for feedback, depending on the outcome of the Consultation.
The Call for Input and the Consultation are available here and here, respectively.
Leander Rodricks, trainee in the Financial Markets and Funds practice, contributed to this advisory.
Ten Minute Interview: Bridging M&A Valuation Gaps with Earnouts and Rollovers [VIDEO]
Brian Lucareli, director of Foley Private Client Services (PCS) and co-chair of the Family Offices group, sits down with Arthur Vorbrodt, senior counsel and member of Foley’s Transactions group, for a 10-minute interview to discuss bridging M&A valuation gaps with earnouts and rollovers. During this session, Arthur explained the pros and cons of utilizing rollover equity, earnout payments, and/or a combination thereof, and discussed how a family office may utilize these contingent consideration mechanics, as tools to bridge M&A transaction valuation gaps with sellers.
Safety Basics XII: Key Insights into OSHA Investigations and Inspections [Podcast]
In episode 12 of Ogletree Deakins’ Safety Basics podcast series, John Surma (shareholder, Houston) sits down with Karen Tynan (shareholder, Sacramento) to discuss the intricacies of OSHA inspections and investigations. Karen and John cover how to effectively manage interactions with OSHA and ensure compliance. They also discuss the various types of inspections, the importance of understanding employer rights, and best practices for handling document requests, walkarounds, and employee interviews.
Employment Law This Week – Can the President Fire NLRB Members Without Cause? SCOTUS May Decide [Video, Podcast]
This week, we’re examining the potential shake-up in presidential power over independent federal agencies and what a review of a 90-year-old precedent by the Supreme Court of the United States (SCOTUS) could mean for regulatory authority and employers nationwide.
Can the President Fire NLRB Members Without Cause? SCOTUS May Decide
With presidential power over independent federal agencies entering uncharted territory, SCOTUS may soon revisit its 1935 Humphrey’s Executor decision, which limits a president’s ability to fire members of independent federal agencies—such as the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission—without cause. SCOTUS could choose to:
reaffirm Humphrey’s Executor,
overturn the case entirely (potentially politicizing agency functions), or
define “for cause” and allow terminations only under stringent circumstances.
Former Acting Attorney General of the United States and Epstein Becker Green attorney Stuart Gerson explores how a shift in this precedent could impact employers, industries, and the balance of federal power.
OSHA in 2025: Observations and Expectations
The beginning of the second Trump administration has left employers asking myriad questions with respect to the Occupational Safety and Health Administration (OSHA). Are there plans to eliminate OSHA? Will inspections and citations continue? What will happen to proposed rules? Will new rules be introduced?
We have been closely monitoring federal OSHA developments and are well positioned to help employers navigate these difficult questions. Here are a few of our takeaways from what we have seen so far.
Yes, OSHA Still Exists, and A Return to OSHA as We Knew it Under the First Trump Administration is Likely
Speculation that the Trump administration would move to eliminate OSHA has proven to be just that — speculation. Indeed, the following nominations signal a return to the OSHA we knew under his first administration:
Representative Lori Chavez-DeRemer as Secretary Labor. With the support of the Teamsters Union and a reputation as one of the more pro-labor Republicans in the House of Representatives, this nomination projects a balanced approach.
David Keeling as Assistant Secretary of Labor for Occupational Safety and Health. As a former high-level safety director at Amazon, Mr. Keeling’s nomination mirrors that of former FedEx safety official Scott Mugno during the first administration.
Deputy Solicitor of Labor Jonathan Snare for the Occupational Safety and Health Review Commission (OSHRC). This appointment at a minimum shows the administration’s intent to not let the Commission be vacant.
What a Return to “Trump 1.0” Means for Occupational Safety and Health
Inspections and citations will continue. Make no mistake, OSHA inspectors at the state and federal levels will continue to conduct in-person inspections of your worksite and will issue citations. While the total number of OSHA inspectors was reduced during his first administration, the overall number of inspections was on par with the Biden administration.
Current proposed rules will likely not be finalized. During the Biden administration, OSHA advanced three rules to the proposed stage that are unlikely to advance during the current administration.
Heat Stress. While a public hearing is tentatively scheduled for June 16, 2025 the proposed rule received significant pushback from the regulated community, especially with respect to the regulation of indoor worksites.
Walkaround Rule. This proposed rule, which would allow union representatives to accompany an OSHA inspector for inspections at non-unionized worksites, has been challenged in court by the U.S. Chamber of Commerce.
Emergency Response Rule. This is another rule that received significant pushback from the regulated community, including from the Chemical Safety and Hazard Prevention Board, which commented that the rule was not sufficiently protective of frontline responders.
Few if any new rules will be proposed. In line with the lack of rulemaking during the first Trump administration, coupled with the new Regulatory Freeze and significant staffing cuts at the National Institute for Occupational Safety and Health (NIOSH), employers can expect few if any new proposed rules from OSHA for the next four years.
Increased reliance on the general duty clause. Instead of advancing specific rules (such as heat stress and workplace violence), this administration’s OSHA will likely return to its reliance on the general duty clause to issue citations. Note that the burden of proof for OSHA is significantly higher in these general duty cases.
States will push agendas in different directions. With OSHA on the rulemaking sidelines for the foreseeable future, expect state plan states to attempt to grab, or rescind, regulatory power over workplace health and safety. For example, CalOSHA officials have recently commented on the need to create “an independent Cal/OSHA that is not dependent in any way on a federal OSHA.” Meanwhile, the Kentucky Legislature recently introduced House Bill 398, which would prevent the state from issuing a safety regulation that is more stringent than federal OSHA.
Next Steps for Employers:
Given the current state of OSHA and what we expect moving forward, employers should:
Review current OSHA injury and illness recordkeeping and reporting practices.
Develop a written plan for responding if an OSHA inspector arrives at your worksite.
Assess what OSHA standards currently apply to your worksite.
Take reasonable steps to address known hazards and document all efforts to abate.
Evaluate training programs and train managers on compliance with the current standards.
Watch for state legislation regarding workplace safety and health, especially in state plan states.
Continue evaluating the pending rules from the Biden administration; compliance with these rules is not currently mandated.
The Pendulum Swings Back (Again) on Prohibition of Incidental Take under the Migratory Bird Treaty Act
The scope of the prohibition of “take” under the Migratory Bird Treaty Act (MBTA or the Act) – and specifically whether the prohibition includes the incidental (unintentional) take of migratory birds – is an issue that has been hotly debated for years. As we reported previously, the federal circuit courts do not agree on the issue, and the federal government’s position has changed several times in recent years, depending on the political party in control of the Executive Branch.
The Trump administration amended the government’s position again on April 11, 2025, when the Acting Solicitor for the US Department of the Interior issued a one-page legal opinion (or “M-Opinion”) repealing opinion M-37065, which was issued during the Biden administration and specified that the MBTA prohibits both intentional and incidental take of migratory birds, and restoring opinion M-37050, which was issued during the first Trump administration and specifies that only intentional take of migratory birds is prohibited. This latest legal opinion cites President Trump’s January 20, 2025 Executive Order on “Unleashing American Energy,” which directed the heads of each federal agency to implement plans “to suspend, revise, or rescind all agency actions identified as unduly burdensome,” and Interior Secretary Doug Burgum’s identification of opinion M-37065 as falling within this directive as reasons for the change of direction.
Enacted over 100 years ago, in 1918, the MBTA is one of the oldest wildlife protection laws in the US. and protects approximately 90 percent of all birds occurring in North America. The Act makes it a crime for any person to “take” a migratory bird. “Take” is defined broadly under the MBTA to include “pursue, hunt, shoot, wound, kill, trap, capture, or collect” migratory birds, or to attempt such activities. 50 C.F.R. § 10.12.
The original purpose of the MBTA was to regulate over-hunting of migratory birds, primarily by commercial enterprises, but the US Fish and Wildlife Service (USFWS or the Service) – the agency with primary responsibility for MBTA enforcement – broadened its interpretation during the 1970s and began prosecuting incidental take of protected birds. Since that time, persons engaging in an activity likely to result in a take of migratory birds, however unintentional and otherwise lawful, have faced the risk of enforcement. Permits for incidental take under the MBTA remain unavailable, as efforts to establish a permitting program under the Biden administration stalled, and the Service withdrew a rule that it was developing in late 2023. This lack of available permitting adds to the long-term uncertainty created by the federal government’s shifting interpretations of the scope of the MBTA take prohibition for those engaged in industries or activities that may result in unintentional and even unavoidable incidental impacts to birds.
Adding to this uncertainty, the federal courts of appeals have split on the scope of the MBTA’s take prohibition. The Fifth and Eighth Circuits have held that the MBTA does not prohibit incidental take, while the Second and Tenth Circuits have held that it does. As a result, the geographic location where an action that could result in take of migratory birds occurs may determine the risk of enforcement under the Act.
While the US Supreme Court has not had occasion to consider the question, the US District Court for the Southern District of New York reviewed the first Trump administration’s opinion M-37050, found it unlawful, and vacated it in 2020. See Natural Res. Def. Council v. US Dep’t of the Interior, 478 F.Supp.3d 469 (S.D.N.Y. 2020). For this reason, the April 11 opinion specifies that the newly restored M-Opinion will be “administrative and binding on the Department, except with respect to actions relying on such opinion that are taken within the jurisdiction of the United States District Court for the Southern District of New York.” In addition, a similar legal challenge to this new opinion, perhaps in a different jurisdiction, is a distinct possibility. Regardless of the outcome of any such legal challenge, the new M-Opinion signals that the Department of the Interior can be expected to exercise its discretion to forego enforcement action for incidental take of migratory birds while the current administration remains in control.
CMS Releases FY 2026 Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule
On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System proposed rule. The proposed rule would update Medicare fee-for-service payment rates and policies for inpatient hospitals and LTCHs for FY 2026. Comments on the proposed rule are due on June 10, 2025. A fact sheet is available here. The proposed rule notably does not include anticipated provisions on hospital conditions of participation related to gender-affirming care.
KEY TAKEAWAYS FROM THE FY 2026 IPPS PROPOSED RULE
Standardized Amount: CMS proposes a 2.4% increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful electronic health record users. This reflects a projected FY 2026 hospital market basket increase of 3.2%, less a 0.8 percentage point productivity adjustment.
Medicare Severity Diagnosis-Related Group (MS-DRG) Updates: CMS proposes creating new MS-DRG 209 for complex aortic arch procedures, MS-DRG 213 for endovascular abdominal aorta and iliac branch procedures, MS-DRGs 359 and 360 for percutaneous coronary atherectomy with intraluminal device, MS-DRG 318 for percutaneous coronary atherectomy without intraluminal device, and MS-DRGs 403 and 404 for hip or knee procedures with principal diagnosis of periprosthetic joint infection. CMS proposes to delete hypertensive encephalopathy MS-DRGs 077, 078, and 079.
Transforming Episode Accountability Model (TEAM): CMS proposes several updates to TEAM, including a limited deferment for certain hospitals, neutral scoring on quality for hospitals with insufficient quality data, changes to the payment methodology and risk adjustment, and expansion of the skilled nursing facility three-day rule waiver. The basic tenets of the model remain the same: it is a five-year mandatory model that will begin on January 1, 2026.
Special Rural Designations: While Congress typically extends the Medicare-dependent hospital (MDH) program and low-volume hospital payment adjustment, both are set to expire on September 30, 2025, and Congress has not yet acted to extend them further. Because CMS could not assume the continuation of these programs for purposes of the FY 2026 proposed rule, CMS states that as of October 1, 2025, hospitals that previously qualified for MDH status will be paid based on the federal rate. On the same date, both the qualifying criteria and the payment adjustment methodology for the low-volume adjustment will revert to the statutory requirements that were in effect prior to FY 2011.
New Technology Add-On Payments: For FY 2027 and beyond, CMS proposes one minor policy change and proposes to broaden the application details publicly posted online.
Quality Reporting Programs: The rule signals future quality measures supporting the Make America Healthy Again priorities of well-being and nutrition, and proposes to remove quality measures on health equity and social determinants of health.
Wage Index: CMS proposes to discontinue the low wage index policy and to use a different transition policy to phase out the policy for affected hospitals.
Disproportionate Share Hospital Payments and Uncompensated Care Payments: The total proposed uncompensated care payment to eligible disproportionate share hospitals for FY 2026 is $7.29 billion, an increase from the $5.78 billion finalized in FY 2025.
Graduate Medical Education: CMS proposes technical changes to the calculation of full-time equivalent resident counts, caps, and three-year rolling averages for direct graduate medical education. CMS also proposes technical changes to the calculation of net nursing and allied health education costs.
Requests for Information (RFIs): CMS solicits comments on the use of the Health Level 7® Fast Healthcare Interoperability Resources® in electronic clinical quality measure reporting in various quality reporting programs. CMS also seeks public input on ways to streamline regulations, reduce administrative burdens, and identify duplicative requirements across the Medicare program. Responses to this RFI are to be submitted through a web-based form, separate from other comments on the rule.
Additional Authors: Maddie News, Simeon Niles, Kristen O’Brien, Parashar Patel, Erica Stocker, Devin Stone, and Eric Zimmerman
Mergers and Acquisitions in Australia in 2025
A Recap: Expectations for 2025 Versus Reality to Date
2025 began with optimism that mergers and acquisitions (M&A) activity would continue to increase this year. In Australia and globally, 2024 saw the value of M&A activity increase on the prior year, with many surveys recording cautious optimism for increased deal flow in the year ahead across sectors and regions.
The key drivers of the expected upturn in M&A were the following:
Record levels of dry powder in private capital and private equity (PE) hands.
An expectation of further interest rate reductions.
The benefits of reduced regulation—cutting red tape was a mainstay of the policy promises of many of the political parties elected in 2024’s election cycles around the globe.
Greater political certainty following the unusually high number of elections globally in 2024.
Hot sectors, including technology, especially digital transformation, and artificial intelligence starting to deliver (or not) on its transformative promise, energy transition and financial services.
However, Q1 did not deliver on these early promises in the manner expected. In the United States, the expectations of greater certainty that dealmakers looked forward to because of single-party control of the White House and both houses of Congress was tempered by a lack of clarity on implementation.
Whilst directionally it remained clear through Q1 that significantly higher tariffs will be imposed by the United States on imports from many countries in addition to China, the extent remained unpredictable and the real motivations for introducing them uncertain. Similarly, whilst the new administration’s efforts to remove red tape were eagerly anticipated by many, the pace and extent of executive orders has surprised and is leading to widespread challenge, again undermining certainty.
Citing productivity and wage growth concerns, the Reserve Bank of Australia indicated at the end of March that further target rate cuts were unlikely in the near term.
Then the US “Liberation Day” tariffs were announced on 2 April, and the hopes of a more stable economic and political environment for M&A in 2025 were confounded. The sharp declines in global market indices immediately following their announcement is testament to the significant underestimation of the scope and size of the tariffs initially announced. Pauses on implementation, retaliatory and further tariffs, as well as bi-lateral tariff reduction negotiations, are set to continue to bring surprises for some time. Market sentiment will continue to decline as recessionary fears abound.
Meanwhile, Australia is gearing up for its own federal elections in May 2025, and economists currently predict that interest rate cuts of around one percentage point (in aggregate) are likely over the next 12 months, with the first cut predicted in May.
So, what for M&A in the balance of 2025?
Predictions
Trade Instability
In terms of the political forces shaping Australian M&A, Australia’s federal elections have already been trumped by US tariff announcements.1 We are at the start of the biggest reworking of international trade relations in over a century. With only 5% of our goods exports going to the United States, and (so far) the lowest levels of reciprocal US tariffs applied to Australia, the direct impacts to Australia’s economy are likely to be far outweighed by the indirect effects of the tariffs applied to China and other trading partners. Capital flows, including direct investment, must shift in anticipation of and in response to these changes, but forecasting the impacts on different sectors and businesses (and their effect on valuations) will remain complex for some time, weighing heavily on M&A activity until winners and losers start to emerge.
Foreign Investment
With a weak dollar and a stable political and regulatory environment, Australia will continue to be an attractive destination for inbound investment, not least in the energy transition, technology and resources sectors. Rising defence expenditure around the globe, and AUKUS, remain tailwinds for Australian defence sector investment. We expect further increases in Japanese inbound investment driven by their own domestic pressures. However, a report prepared by KPMG and the University of Sydney2 pours cold water on a further strengthening of interest from Chinese investors, despite the 43% year-on-year increase in 2024, citing Foreign Investment Review Board (FIRB) restrictions on critical minerals and, more generally, a move toward greater investment in Southeast Asia and Belt and Road Initiative countries.
FIRB
Last year, FIRB made welcome headway in shortening its response times for straightforward decisions. The recent updates to FIRB’s tax guidance and the new submissions portal are likely to require front-loading of the provision of tax information by applicants, which should further support a shortening of average approval times. These changes are welcome, as is the introduction of a refund/credit scheme for filing fees in an unsuccessful competitive bid. Whilst these changes will not affect the volume of M&A, they may well facilitate an increase in the speed of execution of auction processes.
Regulatory Changes
Whilst we do not expect the outcome of federal elections to be a key driver of M&A activity in 2025 overall, the slowing of FIRB approvals during caretaker mode and the potential backlog post-election will lead some inbound deal timetables to lengthen in the short term, especially if there is a change in government. In Q2, we expect Australia’s move to a mandatory and suspensory merger clearance regime will have the opposite effect. Even as full details of the new merger regime continue to be revealed, we expect some activity will be brought forward to avoid falling under the new regime at the start of 2026.
Larger Deals
Although surveys report an increase in total transaction value in 2024, they also show there were fewer transactions overall. After the rush of transaction activity in 2021 and 2022, and the proximity to the end of post-pandemic stimulus, it is perhaps too easy to characterise the current environment as one of caution. However, market perception is still that deals are taking longer to execute, with early engagement turning frequently into protracted courtship and translating into longer and more thorough due diligence processes. This favours a concentration on deals with larger cheque sizes, a trend mirrored in Australian venture capital (VC) investing in 2024 and which we see set to continue in 2025.
PE
Globally, PE deal volumes surged in 2024, with Mergermarket reporting PE acquisitions and exits exceeding US$25.3 billion and US$18.9 billion, respectively. There remains an avalanche of committed capital to deploy and a maturity wall of capital tied up in older funds to return. It is these fundamentals that are expected to drive sponsor deal activity, in spite of the ongoing global sell-off in equities. PitchBook’s Q1 results for Oceania PE bear this out. Corporates looking to refocus away from noncore operations or requiring cashflow will continue to find healthy competition for carve outs among PE buyers, and an increase on the relatively low value of PE take-privates in Australia in 2024 is predicted. Family-owned companies with succession issues are also expected to provide opportunities for PE buyers. Nevertheless, we expect more secondary transactions, including continuation funds, will be required to grease the cogs in these circumstances.
VC Exits
The rising prevalence of partial exits via secondary sales is shown neatly in the State of Australian Startup Funding 2024 report.3 Whilst those surveyed still rate a trade sale as their most likely exit, secondaries were next and IPOs were considered the least likely. The report notes 59% of surveyed Series B or later founders said they had sold shares to secondary buyers, and 23% of investors said they sold secondaries in 2024. Following the success of secondaries like that of Canva and Employment Hero, secondaries will continue to provide much-needed liquidity to founders and fund investors alike. There is also a recognition of the value of such transactions in advance of an IPO, because they bring in new investors who may be expected to stay invested longer post-float. With valuations settling following their retreat from pandemic highs, PE acquisitions of Australian venture-backed companies rose in 2024 especially from overseas buyers. With the launch of more local growth funds targeting these assets, we expect that trend to increase.
Footnotes
1. President Trump Announces “Reciprocal” Tariffs Beginning 5 April 2025 | HUB | K&L Gates2. Chinese investment in Australia shifts from acquisitions to greenfield – KPMG Australia3. State of Australian Startup Funding 2024 | Insights
Commission Proposes to Provide Flexibility for Manufacturers in Meeting 2025 CO2 Emission Targets for Cars and Vans
As anticipated in the Industrial Action Plan for the European Automotive Sector, the European Commission has proposed a targeted amendment to Regulation (EU) 2019/631 on CO₂ emission performance standards for new vehicles through the submission, on the 1st of April 2025, of a Proposed Regulation “to introduce additional flexibility in the calculation of manufacturers’ compliance with CO₂ emission performance standards for new passenger cars and light commercial vehicles for the calendar years 2025 to 2027.”
Regulation (EU) 2019/631 was recently amended by Regulation (EU) 2023/851, which established new specific CO₂ emissions targets for new passenger cars (category M1) and new light commercial vehicles (category N1) starting in 2025, modifying Point 6.3 of Parts A and B of Annex I of Regulation (EU) 2019/631. Under the current regulatory framework, specific emissions targets, as outlined in Article 4(1)(c) of Regulation (EU) 2019/631, are set annually.
With this new proposal, compliance with these specific emissions targets would instead be measured using an average value over the three-year period (2025, 2026, and 2027), rather than requiring manufacturers to meet distinct annual targets. This aggregated compliance approach would allow manufacturers to offset excessive emissions in one year by outperforming the target in another, providing greater flexibility while still maintaining the 2025 target and keeping the industry on track for future reductions. The automotive manufacturing sector has been a strong advocate for this amendment, citing its importance in ensuring continued investment in the clean transition while managing operational and technological constraints.
Following the proposal by the EU Commission, the file was sent to the EU co-legislators, i.e., the European Parliament and the Council of the European Union, both of which will now proceed to develop their negotiating mandates prior to initiating the interinstitutional negotiations (commonly referred to as the “trilogue”). This process ultimately leads to the adoption of the final legislative text, as agreed upon by both the Council and the Parliament. Upon introducing the proposal, the Commission urged the co-legislators to provide regulatory certainty for the automotive industry and investors.
The Possible Securities Act Implications Of Harvard’s “Nyet” To Government Civil Rights Reform Demands
Last week, the United States General Services Administration, Department of Education, and Department of Health and Human Services sent a letter to Alan M. Garber, the President of Harvard University, and Penny Pritzker, Lead Member of the Harvard Corporation. The letter asserts that “Harvard has in recent years failed to live up to both the intellectual and civil rights conditions that justify federal investment”. The letter outlined an agreement in principle so that Harvard could maintain its “financial relationship with the federal government”. Harvard responded a few days later through its outside counsel with an unequivocal nyet: “Harvard will not accept the government’s terms as an agreement in principle”. Yesterday, President Trump raised the stakes even higher by posting the following:
Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting “Sickness?” he wrote on Truth Social. “Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!
In the midst of this donnybrook, Harvard is offering $750 million in bonds. According to the offering memorandum, the offer and sale has not been registered under the Securities Act of 1933 in reliance upon Section 3(a)(4). That statute exempts:
Any security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual, or any security of a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940.
The exemption does not expressly refer to tax exempt status under the Internal Revenue Code, but the Offering Memorandum does state that the issuer is “exempt from federal income tax pursuant to Section 510(c)(3) of the Internal Revenue Code”. Loss of that tax exemption likely would call into question the availability of the Section 3(a)(4) for future offerings. With respect to the current offering, it is also possible that the Securities and Exchange Commission could question whether any part of the net earnings Harvard inure to the benefit of any person.
The Section 3(a)(4) exemption does not exempt Harvard from liability under Section12(a)(2) or Section 17 of the Securities Act. Thus, it is possible that the SEC may take an interest in the adequacy of disclosures in Harvard’s Offering Memorandum, as was recently suggested on a LinkedIn post by Professor Steven Davidoff Solomon at the University of California, Berkeley School of Law.
Finally, it should be noted that Harvard’s bond offering is not necessarily exempt from state qualification/registration requirements or antifraud provisions. State qualification/registration requirements may also apply to resales of the bonds. Thus, one or more states may decide to take a look at Harvard’s bond offering as well.
May 2025 Visa Bulletin – No Change from April, Except EB-3 India
The State Department has published the May Visa Bulletin. Except for modest progress in two India categories, EB-3 Professionals and EB-3 Other Workers, priority dates do not advance from April.
Below is a summary that includes Final Action Dates and changes from the previous month, but first – some background if you are new to these blog posts. If you are an old hand at the Visa Bulletin, feel free to skip the next paragraph.
The Visa Bulletin is released monthly by the US Department of State (in collaboration with US Citizenship and Immigration Services). If your priority date (that is, the date you got a place on the waiting list) is earlier than the cutoff date listed in the Bulletin for your nationality and category, that means a visa number is available for you that month. That, in turn, means you can submit your DS-260 immigrant visa application (if you’re applying at a US embassy abroad) or your I-485 adjustment of status application (if you are applying with USCIS). If you already submitted that final step and your category then retrogressed, it means the embassy or USCIS can now approve your application because a visa number is again available.
Now for the May VB – Very little progress, but at least no retrogression (or even predictions of retrogression):
As noted above, only India makes gains in May, and only in two categories:
EB-1 halts at February 15, 2022, and EB-2 at January 1, 2013
EB-3 Professionals and EB-3 Other Workers advance 2 weeks to April 15, 2013
No changes for China:
EB-1 remains stuck at November 8, 2022
EB-2 sticks at October 1, 2020
EB-3 Professionals remains at November 1, 2020
EB-3 Other Workers stalls at April 1, 2017
Likewise, no changes in All Other Countries:
EB-1 remains current
EB-2 stalls at June 22, 2023
EB-3 Professionals stays at January 1, 2023
EB-3 Other Workers remains at May 22, 2021
NOTE 1: USCIS will accept I-485 applications in May based on Final Action Dates, not the more favorable Dates for Filing chart.