Energy & Infrastructure M&A 2025 Comparisons

The US energy and infrastructure (E&I) sector has followed the general US market through overall decreased M&A activity levels this year due to interest rate uncertainty, geopolitical tensions, tariffs, trade restrictions, and a shifting regulatory landscape. Q2 of 2025 saw the fewest deals since Q3 2019.

Nevertheless, infrastructure assets’ long-term returns and higher barriers to entry continue to make them relatively resilient to inflation and attractive to investors. Increases in energy and digital infrastructure demand, the proliferation of data centres, and upgrades in electrical grids and key infrastructure shield this sector from extreme market fluctuations.

Despite the slower market, the E&I landscape has seen growth through large-scale transactions and investments in digital infrastructure, renewables, fossil fuels, and energy security, including Constellation’s USD26.6 billion acquisition of Calpine creating the largest clean energy provider in the US, and ALLETE, Inc’s USD6.2 billion acquisition by Canada Pension Plan Investment Board and Global Infrastructure Parties, expected to bring reliable electric utilities to Minnesota. Although oil and gas deals declined this year, deal value increased compared to 2024, mainly due to a few mega deals.

State and companies’ sustainability commitments drive investments in energy transition and the development of new renewables technologies in the face of recent executive actions that ease permitting processes for fossil fuel projects.

The sector is focused on generative AI, with companies now branding themselves as “AI-driven”. The AI boom has boosted data centre activity and is driving the rising energy demand, with power usage expected to increase 25% between 2025 and 2030, creating investment opportunities in conventional energy sources and new renewable technologies.

The renewables industry has seen a rise of early-stage companies. Heightened energy demand has created a gap between existing technologies and cost-effective energy sources. Many hyperscalers have committed to carbon-zero policies and seek reliance on renewable energy sources.

The administration’s new policies have reshaped the E&I M&A landscape, particularly the energy sector. The federal government is prioritising domestic fossil fuels and streamlining approvals for related projects, making oil, gas, hydroelectric and nuclear assets attractive to investors. This has accelerated deal timelines, encouraging consolidation and capital deployment in traditional energy infrastructure. Further, the Inflation Reduction Act (IRA) renewables tax incentives imposed by the “One Big Beautiful Bill Act” (the “OBBB”) as of July 2025, restrictions on solar panel imports and permitting freezes for onshore and offshore wind projects have cooled investor enthusiasm for clean energy deals in the longer term, while increasing short-term interest in developing these projects before the rollback of IRA tax credits takes effect. This is particularly true for the US offshore wind market, with the administration implementing policies halting development, including stop-work orders for projects mid-construction. This has led to a pivot in M&A activity, with buyers reassessing valuations, renegotiating deal terms, and looking toward fossil-heavy portfolios.

Strategic buyers outpace financial sponsor buyers in the number of E&I deals, reflecting a preference for smaller strategic deals over large-scale projects. However, the rising number of high-ticket deals this past year demonstrates that companies and investors are adapting to policy uncertainties while capitalising on emerging opportunities.

The US has seen an increase in E&I M&A value compared to 2024, due to a few large-scale deals, including T-Mobile and KKR’s joint venture to acquire MetroNet for USD9.8 billion and Brookfield’s USD9.1 billion acquisition of Shell’s Colonial Enterprises. Most recently, a consortium of investors including MGX and BlackRock signed a deal to purchase Aligned Data Centers for USD40 billion in the largest global data centre deal to date.

Several large infrastructure projects are under way in the US, with larger infrastructure projects focusing on transportation, such as the Los Angeles Metro 28 by ’28 Initiative, the Texas Central High-Speed Railway and the JFK Airport expansion. The estimated cost of the largest renewable energy project, the SunZia Wind and Transmission Project in Arizona and New Mexico, is USD11 billion.

In the US, business formation and operation are regulated at the state level. Delaware remains the most popular state for forming companies due to:

• access to the Delaware Court of Chancery and its business law specialisation and case law;
• incorporation or formation at minimal cost without any minimum capital requirement; and
• the predictability of incorporation outcomes and flexible governance statutes under the Delaware General Corporation Law (DGCL).

Popular entity types are:

• limited liability companies (LLCs);
• general and limited partnerships; and
• corporations.

While corporations are generally the main entity type in the US, LLCs are the dominant project-level entity form for E&I transactions in the US due to:

• limited liability for equity-holders and sponsors;
• pass-through tax treatment, facilitating after-tax return optimisation and investment by infrastructure and tax equity participants;
• contractual flexibility; and
• accommodation of non-recourse project finance, including holdco and back-leverage structures, dividend blocks, and lender step-in rights.

E&I early-stage companies face unique financing challenges, including:

• the capital-intensive nature of development;
• long permitting and interconnection timelines;
• reliance on contracted cash flows (offtake agreements, tolling agreements, user-free concessions);
• regulatory barriers and public-utility oversight; and
• complex federal and state incentive requirements.

Sources of early-stage capital include:

• angel investors and family offices interested in diversifying their investments and maximising the long-term gains potential of early-stage energy companies;
• government-sponsored funds and other government programmes/grants – public policy tools providing financial support to innovative companies;
• foreign investors – including high net worth foreign residents or institutional funds with foreign partners or sponsors seeking lucrative opportunities in the US;
• accelerators – energy programmes providing services to founders;
• VC funds specialising in infrastructure and clean energy;
• private equity infrastructure funds (more likely in mature early-stage companies); or
• project-level development financing or pre-NTP (before a notice to proceed) capital from investors or lenders.

Private or Public?

A US-based E&I company is more likely to remain private than opt for an initial public offering (IPO), given the costs and resources needed to operate as a public company. Consequently, a private sale may be preferred due to the simpler process and faster liquidity.

If a US company decides to go public, it will likely choose a US exchange, particularly if its shareholders are primarily domestic. US exchanges offer significant market liquidity and are integral to global financial activities, making them attractive for capital raising and trading. When companies do choose to list on foreign exchanges, complex issues arise, including conflicts of law and regulatory compliance challenges.

Auction Process

Sellers frequently employ auction processes for higher prices and optimal terms.

During an auction, sellers provide potential buyers with a confidential information memorandum, and potential buyers submit initial indications of interest thereafter. A limited set of potential buyers is invited into the next phase of the auction to receive additional due diligence materials and submit a markup of an auction draft transaction agreement with their final bid, typically four to eight weeks after the initial indications of interest. The signing of the transaction agreement generally follows shortly after the seller receives the final bids and selects the winning bidder.

Typical Transaction Structures

Typical transaction structures for the sale of a privately held E&I company with multiple investors include mergers, asset purchases or stock purchases; see 4.15 Privately Held Companies. Companies may also sell a controlling interest while offering investors the choice to remain as minority shareholders.

Recently, spin-offs (where a parent company distributes subsidiary stock to its shareholders and transfers the assets and liabilities of the divested business) have gained traction as a mechanism for investors and management to maximise enterprise value.

Spin-off transactions are intricate and protracted due to complexities in disentangling the management, operations, assets and liabilities of multiple entities, while complying with Securities and Exchange Commission (SEC) regulations.

Although spin-offs are not particularly popular among E&I companies, 2026 expects an increase in corporate divestments of assets. Particularly in the power and mining sectors, divestments are likely to follow strategic assessments of companies’ market segments, to maximise efficiency while capitalising on potential buyers’ desire to capture growth.

A distribution of appreciated property by a corporation to its shareholders would ordinarily trigger taxable gain to the corporation and its shareholders. However, if the requirements for a spin-off under US federal income tax law are satisfied, a corporation’s spin-off of a subsidiary (the “SpinCo”) may qualify as a reorganisation under Section 355 of the US Internal Revenue Code (the “Code”), resulting in tax-free treatment at the level of the corporation and its shareholders. Key requirements to be treated as a tax-free reorganisation under Section 355 include:

• Control – the parent company must:
1. be in “control” of the SpinCo immediately before distributing the SpinCo’s stock to its shareholders; and
2. distribute control of the SpinCo as part of such distribution.
• Valid corporate business purpose – the spin-off must be motivated by a valid corporate business purpose rather than a shareholder purpose or tax avoidance, and the parent company generally obtains an investment bank opinion to support such corporate business purpose. Examples include:
1. compliance with laws and regulations;
2. improving the company’s ability to borrow or raise capital; and
3. improving the operations of the separated businesses.
• Five-year active trade or business – the business must have been an active trade or business (ATB) for at least five years preceding the spin-off, and the ATB must not have been acquired within this period.
• No device – the spin-off must not be used “principally as a device for the distribution of earnings and profits” of the parent company or SpinCo; in other words, companies may not use spin-offs to distribute corporate earnings tax-free in a transaction that would otherwise be taxed as a dividend for US federal income tax purposes.

When a spin-off is followed by a business combination, it is often structured as a Morris Trust or a Reverse Morris Trust transaction. These arrangements involve the parent company spinning off a business and subsequently merging itself or the SpinCo with a third party.

• Morris Trust transaction: the parent company transfers all assets – except those intended to be merged with the third party – to the SpinCo. The remaining parent company merges with the third party.
• Reverse Morris Trust transaction: the assets to be combined with the third party are transferred to the SpinCo. The SpinCo then merges with the third party.

Both transaction types can be structured to be tax free if specific conditions are met, including that the third party must be smaller than the SpinCo, ensuring that the parent company’s shareholders maintain a majority stake in the merged entity.

Key considerations for a spin-off include identifying the assets and liabilities to be allocated and preparing audited financial statements for the business to be spun off. Transaction agreements are also needed to effect the separation of the divested business from the retained business and to set out post-separation covenants and relevant SEC filings – including a Form 10 registration statement and information statement.

Depending on the transaction complexity and the potential US tax leakage should the transaction not qualify as a tax-free spin-off, a company planning a spin-off transaction may submit a letter-ruling request to the IRS to confirm the spin-off qualifies as a tax-free reorganisation under Section 355 of the Code. The IRS usually takes six months to grant a ruling, but the company may request to fast-track the process.

Most acquisitions in the US are negotiated transactions and do not involve the buyer building a stake in the target beforehand.

Stakebuilding Strategies

Stakebuilding is permitted in the US and US federal law does not mandate that an acquiror make a bid for the target upon reaching a threshold. Therefore, an acquiror may usually purchase a publicly traded target’s shares on the open market, as long as it does not hold “inside” information contravening insider trading rules.

US securities laws generally require an acquiror to file a notification on Schedule 13D, requiring disclosure of the acquiror’s ownership stake and intentions with respect to the target, within five business days of acquiring beneficial ownership of over 5% in a target company. Acquisitions in excess of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) threshold (USD126.4 million in 2025) require antitrust filings. 

Additionally, several states have “anti-takeover” statutes encouraging acquirors to negotiate with management and discouraging certain hostile activities. Delaware’s business combination statute prevents acquirors from entering into business combinations with a target for a period of three years if they exceed a specific ownership threshold (15%), unless they received prior board of directors’ approval or a super-majority shareholder vote.

Material Shareholding Disclosure Threshold

Under Sections 13(d) and 13(g) of the US Securities Exchange Act of 1934 (the “Exchange Act”), persons or groups who own or acquire beneficial ownership of over 5% of certain classes of equity securities registered under the Exchange Act are required to file beneficial ownership reports with the SEC. If Section 13(d) is triggered, a person must file a Schedule 13D unless they are eligible to use Schedule 13G. The shorter-form Schedule 13G is available to passive investors meeting certain requirements.

A beneficial owner of a security includes any person who, directly or indirectly, has or shares:

• the power to vote or to direct the voting of the security; or
• the power to dispose or direct the disposition of the security. 

A Schedule 13D must be filed five business days after acquiring beneficial ownership of over 5% of the outstanding shares of a class of voting equity securities or losing Schedule 13G eligibility, and Schedule 13D amendments must be filed within two business days after the triggering event.

US federal securities laws and Delaware laws applicable to tender offers do not require an acquiror that obtains a given threshold of the target company’s shares to make an offer for the remaining shares of the target company. However, certain other states have adopted “control share cash-out” statutes, whereby once an acquiror obtains control, the other target company shareholders may make a demand on the acquiror to purchase their shares at a fair price.

One-Step Merger

A merger is a combination of two entities by operation of law. The target’s shares are converted into the merger consideration (which may be cash, securities or property) pursuant to a merger agreement detailing the acquisition’s terms and conditions; this is approved by the acquiror’s and target’s boards of directors and adopted by the target shareholders at a shareholders’ meeting.

After the proxy process, which can take two to three months (depending on the SEC’s review and comments to the proxy statement; see 4.13 Securities Regulator’s or Stock Exchange Process) and assuming shareholder approval, the acquiror can complete the merger fairly quickly. Typically, such transactions close on the day the shareholders approve the transaction or the following day.

Two-Step Merger (With Tender Offer)

A tender offer is a direct offer to the shareholders of the target company to purchase their shares. Some target shareholders may resist tendering their shares into the tender offer. For a bidder to acquire all the shares of the target, a tender offer normally requires multiple steps, whereby, following the initial purchase of shares in the tender, the remaining shareholders of the target must be “squeezed out” through a second-step statutory merger.

Because a tender offer is made directly to shareholders, no target board approval is required, although most friendly tender offers are made with board approval. Most hostile transactions involve a tender offer because the acquiror can bypass the target’s board of directors and management. Nevertheless, other SEC rules require the board of directors of the target company to state its position regarding the tender offer.

For acquisitions involving a private target, the consideration is often all-cash payments; however, particularly if a buyer is publicly traded, consideration could also consist of a mix of cash and stock, or all stock. Minimum price requirements generally do not apply in an acquisition, but certain federal securities or state corporate laws could require an acquiror to pay the same price to all the company’s shareholders.

Where there is a gap regarding valuation of the target company, parties may structure the purchase price to pay a lower price for the target company upfront but make additional earn-out payments after certain business milestones are attained. Alternatively, the buyer may offer some of its stock as part of the consideration so target company shareholders’ pre-acquisition can indirectly benefit from the target company’s post-acquisition success.

Generally, tender offers will be conditioned upon:

• the tender of a minimum number of target company shares;
• receipt of applicable regulatory approvals and expiry of applicable waiting periods;
• there being no injunction, government order or law prohibiting the transaction; and
• there being no material adverse change with respect to the target company.

Additionally, hostile tender offers often require:

• removal of anti-takeover defences;
• receipt of financing needed to effect the transaction; and
• absence of a competing third-party tender offer.

However, the conditions must be based on objective criteria and not subject to the sole control of the bidder, and must apply to the entire tender offer.

See 4.3 Transaction Structures and 4.10 Types of Deal Protection Measures.

In transactions involving publicly traded companies, representations and warranties by the target company are typically included and, along with typical business representations, often involve compliance with federal securities laws, including making required filings with the SEC and, on occasion, the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). Usually, such representations and warranties do not survive past closing as the selling entity often ceases to exist after the transaction, and the logistics of obtaining indemnification from potentially thousands of different shareholders are not feasible.

Tender offers are generally conditioned on the target company’s shareholders tendering a minimum number of shares, usually sufficient to squeeze out the remaining shareholders; see 4.8 Squeeze-Out Mechanisms. The percentage required is based on state law and the target’s governing documents; usually at least 50% of the shares plus one additional share.

In Delaware, a squeeze-out can be effected without shareholder approval following successful completion of a tender offer for at least a majority of the outstanding shares, provided the merger meets procedural conditions pursuant to Section 251(h) of the DGCL. The typical threshold for short-form mergers is 90% and this is the threshold set by New York and for non-DGCL Section 251(h) squeeze-outs in Delaware. In friendly transactions outside of Delaware, a “top-up” stock option may be granted by the target company, pursuant to which the target company would issue up to 19.9% of its outstanding shares to help the acquiror reach the short-form squeeze-out threshold.

If, after the tender offer, the acquiror owns less than the minimum number of shares necessary to complete a short-form merger or does not meet the requirements of DGCL Section 251(h) as mentioned above, a long-form merger would be subject to shareholder approval. Since the acquiror should own the requisite number of the target company’s shares, such approval should be assured; see 4.7 Minimum Acceptance Conditions. However, the acquiror would need to comply with state law procedures regarding a shareholders’ meeting and SEC requirements regarding proxy statements.

Historically, certain transactions in the US featured financing condition precedents (CPs). However, standalone financing CPs are now rare. Parties typically negotiate respective covenants for consummating the financing and provide for termination rights and/or reverse termination fees payable by the buyer upon a financing failure. A target can receive evidence of committed debt financing for the buyer at signing and may seek specific performance or another equitable remedy enforcing the buyer’s obligation to close the transaction, if debt financing has been funded and other CPs have been satisfied.

In the US, parties to a transaction may agree to various “deal protection” terms, including the following.

• “No-shop” clauses: these restrict the target company’s management and board of directors from soliciting other bids or providing confidential information to third-party bidders subject to directors’ fiduciary duties. These clauses do however permit the target company to entertain unsolicited superior proposals.
• Break fees: these are payable to the acquiror if the target board’s recommendation is withdrawn or the transaction is not approved by the target shareholders due to another transaction proposed by an interloper. A break fee may also be payable by the acquiror if it fails to close the acquisition, typically due to a financing or regulatory failure (“reverse” break fees).
• Board or “force the vote” commitments: these require the board of directors to submit the transaction to the target’s shareholders for a vote, even if the board no longer recommends that shareholders vote in favour of the transaction.
• Right to match (or top) other offers: the bidder may change the terms of its proposal to “match” or “top” a third-party proposal.

See also 4.12 Irrevocable Commitments.

State law imposes fiduciary duties on a target company’s board of directors to limit the use of certain deal-protection terms and make it challenging to “lock-in” a transaction.

Unless the deal signs and closes simultaneously, the transaction will also involve interim operating covenants to maintain the target business between signing and closing and to deliver it at closing without material impairment.

These are not applicable in the USA.

Before announcing a transaction, the acquiror may wish to execute agreements with the target company’s board of directors and senior management to ensure they will tender their shares or vote in favour of a proposed merger. If the target company has significant shareholders, effective ways to “lock up” the deal include requiring such shareholders to sell their stock to the acquiror or to vote their stock in favour of the merger, or to tender their stock into the offer.

Delaware courts have struck down lock-up agreements that preclude the target company’s shareholders from availing themselves of attractive subsequent offers. Further, any commitments by directors will be subject to review considering the directors’ duties.

Merger Transactions

To solicit the shareholder vote required to approve a merger, the target must prepare and file a detailed “proxy statement” with the SEC. The proxy statement may not be disseminated to shareholders until the SEC staff have commented on it, and all such comments have been resolved. Upon finalisation, the target then mails the proxy statement to its shareholders and files it with the SEC. State law, the target’s constitutional documents and rules of the stock exchange on which the target is listed will dictate the minimum time between the mailing of the proxy materials and the date of the target shareholders’ meeting to approve the merger; 20 business days is typical.

Tender Offers and Exchange Offers

SEC rules for tender offers require that the acquiror file a Schedule TO (including an offer to purchase and related documents, such as a letter of transmittal). Since a tender offer is an offer made directly to the shareholders, no board of directors’ approval is required, although most friendly tender offers are made with board approval.

SEC rules require the target’s board of directors to state its position regarding the tender offer. The SEC will review and comment on any materials regarding the tender offer. The acquiror must address these comments (including filing amendments to the tender offer materials). If the SEC comment process leads to material amendments to the tender offer materials, the acquiror may have to extend the offer period and/or disseminate new documents to the target’s shareholders.

See 4.13 Securities Regulator’s or Stock Exchange Process.

A buyer can acquire a private company through an equity purchase, asset purchase or statutory merger, depending on factors like tax implications, required consents and deal timing.

• Equity purchases: The buyer acquires the target’s shares from selling shareholders (typically for cash, though equity or mixed consideration may be used).
• Asset purchases: These transactions involve acquiring specific assets and liabilities directly from the company, either in the form of a sale of all or substantially all of its assets or, depending on the agreed perimeter of the transaction, in the form of a partial sale of specific assets or a business division. While equity consideration instead of cash is less common due to risks like valuation volatility and limited tradability, it remains an option.
• Statutory mergers: Governed by state law, these mergers automatically transfer all assets and liabilities to the surviving entity by operation of law upon filing a certificate of merger. They usually require only majority shareholder approval and can simplify the transfer of permits and contracts if the target company is the surviving company, making them an efficient alternative to asset purchases.

Mergers are typically employed in private transactions when the equity is widely held. On the other hand, in the context of closely held private companies, parties usually follow an equity purchase structure.

Given the nature of infrastructure businesses, regulatory considerations also need to be at the forefront of any acquisition process.

Regulatory Bodies and Authorisations

FinCEN

The Financial Crimes Enforcement Network (“FinCEN”) implemented an interim final rule in March 2025 reducing the beneficial ownership information (BOI) reporting obligations established by the Corporate Transparency Act (CTA). The interim rule now:

• requires solely foreign entities with US business registrations to submit BOI reports to FinCEN;
• completely exempts domestic entities from CTA reporting obligations, including any duty to amend previously filed reports;
• excludes US persons from beneficial owner reporting requirements;
• relieves foreign reporting companies whose beneficial owners consist exclusively of US persons from BOI reporting; and
• requires foreign reporting companies without qualifying exemptions to submit BOI reports according to expanded timeframes (ie, entities registered prior to the interim rule’s publication have 30 days from publication to file, whereas those registered on or following publication must file within 30 days after receiving effective registration notification).

FinCEN will refrain from imposing reporting penalties or fines on US citizens or domestic reporting companies.

Depending on the anticipated sector and action of the company, specific permits, regulatory authorisations and/or similar approvals may be required with respect to those actions and/or operations.

FERC

For example, the US Federal Energy Regulatory Commission (FERC) regulates certain operations of electric, natural gas and oil pipeline companies.

• Natural gas transportation: Companies wanting to build or modify an existing interstate natural gas pipeline must apply to FERC for authorisation to construct and operate the pipeline, which may take well over a year to complete. Additionally, natural gas pipelines must file rate schedules and notify FERC of any subsequent changes in rates and charges.
• Electric energy: Companies that are public utilities under the Federal Power Act (eg, selling power at wholesale or providing transmission of electricity in interstate commerce) must file with FERC for acceptance of all rates and charges for any jurisdictional service. Additionally, prior FERC authorisation is required for certain events (eg, change of control or issuance or assumption of securities).
• Oil transportation: FERC regulates the rates and practices of oil pipeline companies engaged in interstate transportation.

Additionally, state commission regulations may apply to activities such as utility operations, rates and terms of retail service, and siting of facilities within their jurisdictions.

Other sectors

Other segments also require specific filings.

• Offshore wind development on the Outer Continental Shelf: The Bureau of Ocean Energy Management (BOEM) administers the federal leasing process and reviews and approves construction and operations plans for offshore wind projects. The Bureau of Safety and Environmental Enforcement (BSEE) provides regulatory oversight for safety, environmental compliance, and operational integrity during both construction phases and operations of offshore wind facilities.
• Air, water and wetlands impacts: The Environmental Protection Agency (EPA) and state agencies issue permits under the Clean Air Act for air quality compliance. The Army Corps of Engineers issues permits under the Clean Water Act and under the Rivers and Harbors Act. States issue water quality certifications under the Clean Water Act to ensure compliance with state water quality standards.
• Federal lands and species protection: The Bureau of Land Management and US Forest Service issue rights of way and land-use approvals on federal lands for E&I projects. The Fish and Wildlife Service and the National Oceanic and Atmospheric Administration conduct consultations pursuant to the Endangered Species Act and the Marine Mammal Protection Act to ensure compliance with federal species protection requirements.

Where federal approvals, lands or waters, or funding are involved, a co-ordinated environmental review under the National Environmental Policy Act (NEPA) is required. Project developers must comply with state and local approval requirements, including zoning permits or variances, construction permits, and use permits for land, air, water and hazardous substances/waste.

“Covered projects” under the Fixing America’s Surface Transportation Act permitting reforms (FAST-41) benefit from improved co-ordination, transparency and timeliness. Earlier this year the US Department of Interior, Department of Energy and Department of Transportation issued interim final rules and guidance documents largely rescinding their existing NEPA regulations, and included procedures that restrict the time limits for Environmental Assessments and Environmental Impact Statements (EISs) to one and two years, respectively.

Permitting Timelines and Project Risks

State-regulated renewable projects may receive primary siting approvals quickly, while multi-jurisdictional projects require multi-year, co-ordinated environmental review and permitting. Major linear infrastructure projects, including transmission lines and pipelines, often require several years to a decade for permitting and construction. Utility-scale greenfield renewables on federal land are subject to additional time for federal environmental review, especially where EISs are required.

Project Considerations and Investment Drivers

Developers should factor in risks such as interconnection backlogs, transmission constraints, local siting opposition and equipment supply issues, which have materially affected project economics and investment decisions. Developers consequently routinely build substantial schedule contingencies into project timelines to address regulatory uncertainty and approval processes.

Policy Developments and Tax Incentives

IRA tax credit incentives and monetisation provisions that survived the rollbacks imposed by the OBBB continue to drive substantial investment activity, particularly in areas outside of the solar and wind space. While the US Department of the Treasury is expected to continue to issue guidance regarding IRA incentives (eg, the domestic content bonus), other regulatory packages are expected to be prioritised in order to implement key tax provisions of the OBBB. For example, guidance will be needed to assist taxpayers in navigating complicated new foreign entity of concern (FEOC) rules, which deny tax credits to projects with certain direct, indirect or supply chain ties to “unfavourable” jurisdictions, including China.

Companies Involving Foreign Investors

For companies that involve a foreign investor, the Committee on Foreign Investment in the United States (CFIUS) is responsible for addressing any potential national security concerns; see 5.4 National Security Review/Export Control.

Federal securities laws are administered and enforced by the SEC. Alleged violations of state corporate law are addressed by state courts. State securities (“blue sky”) laws also apply depending on the state. If a US publicly traded entity is involved in the transaction, stock exchange rules may apply. Generally, the SEC’s rules and regulations and various federal laws, alongside applicable state corporate law, regulate the M&A space for a publicly traded entity. Additional regulators may include the Commodity Futures Trading Commission (CFTC), which regulates the derivatives market in the United States, and FERC, which regulates wholesale electricity markets and interstate transmission of electricity, natural gas and oil.

As mentioned above, the state law of the target company’s jurisdiction also governs certain acquisition aspects. State law may impose substantive requirements of fairness on the transaction and may enable the target company to adopt anti-takeover defences, including implementing shareholder rights plans (also known as “poison pills”).

US federal antitrust laws are enforced by the Antitrust Division of the Department of Justice (DOJ) and by the Federal Trade Commission (FTC).

There are several sectors (eg, airlines and broadcast communications) in which the US government restricts foreign ownership or attaches special regulatory requirements for foreign owners. Waivers or licences allowing foreign owners to exceed standard limits are sometimes available. There are also situations in which foreign ownership is not limited but is subject to regulatory requirements. The US government also has four separate national security-based processes for regulating foreign investment. See 5.4 National Security Review/Export Control.

Inbound Foreign Investments

Generally, four different US bodies are responsible for addressing national security concerns arising from inbound foreign investments: 

• CFIUS;
• the Defense Counterintelligence and Security Agency (DCSA);
• the Directorate of Defense Trade Controls (DDTC); and
• the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (“Team Telecom”).

A single transaction can implicate more than one regime.

CFIUS

CFIUS is a panel that identifies and addresses national security risks arising from a variety of foreign investments in US businesses and real estate. The CFIUS process includes a joint filing by the parties to a transaction, followed by additional questions from CFIUS. CFIUS has jurisdiction over any acquisition of control of a US business and certain non-controlling investments involving critical technologies, critical infrastructure or sensitive personal data (“TID Businesses”). Investments in TID Businesses can be subject to mandatory pre-closing CFIUS filings.

If CFIUS has jurisdiction over a transaction, it may call in the transaction for review any time after closing. CFIUS offers a “safe harbour” against further review if it has cleared an acquisition of control or a non-controlling investment (though regarding the latter, incremental acquisitions that increase the investor’s rights can be subject to a new CFIUS case).

DCSA

One of the DCSA’s responsibilities is to mitigate foreign ownership, control or influence (FOCI) of US businesses that hold facility security clearances and other uncleared defence contractors and subcontractors. The DCSA does not approve transactions, but failure to receive FOCI mitigation could lead to the DCSA terminating a contractor’s facility clearance or covered contract.

DDTC

The DDTC regulates foreign ownership or control of manufacturers, service providers, exporters and brokers whose activities are governed by the International Traffic in Arms Regulations (ITAR). The DDTC requires pre- and post-closing notifications of new or changed foreign ownership or control of ITAR registrants. The DDTC cannot block a transaction, but non-compliance with ITAR can cause revocation of a company’s registration.

Team Telecom

Team Telecom is a panel that conducts national security- and law enforcement-related reviews of foreign applications for telecommunications licences granted by the Federal Communications Commission (FCC). Team Telecom can recommend that the FCC deny or terminate a licence or limit the granting or transfer of a licence.

Outbound US Investments

The Outbound Investment Security Program (OIP) regulates certain US-led investments in businesses engaged in developing or producing semiconductors, AI, and/or quantum computing technology.

Additionally, the OIP (effective from January 2025) either prohibits or requires notification of US-led investments directly or indirectly supporting certain activities by entities in or controlled from China that relate to semiconductors and microelectronics, quantum computing, and/or AI. While the regime is nominally focused on US investments in Chinese entities, the scope of the regulations is broader and can include non-US investors in which US persons are participating in making the investment decisions, as well as non-Chinese investment targets with substantial, affiliated operations in China.

EAR and ITAR

The primary US export control regimes are the Export Administration Regulations (EAR), which govern most commercial items (including those with civilian and military applications), and ITAR, which governs defence-related products, technical data and services. All manufacturers, exporters and distributors of these defence items are required by ITAR to be registered with the DDTC. Export controls cover various items for E&I projects, including nuclear-related materials and technologies, encryption technology protecting systems or customer data, and advanced materials used in such projects.

Export licences

Export licences may be required before a US business can export or make available dual-use or defence-related products and technologies to a foreign entity, including a foreign acquiror with whom the relevant technology is shared (one type of “deemed export”).

In the US, the main antitrust regulations applicable to business combinations are:

• the Clayton Antitrust Act (the “Clayton Act”), including the HSR Act);
• the Sherman Antitrust Act (the “Sherman Act”); and
• the Federal Trade Commission Act (the “FTC Act”).

The HSR Act prescribes a pre-merger notification procedure for certain business combinations, while the Sherman and FTC Acts prohibit certain anti-competitive conduct. The Clayton Act prohibits (among other things) anti-competitive transactions. The Sherman Act is enforced by the DOJ, while the FTC Act is enforced by the FTC. The Clayton Act is enforced concurrently by both agencies.

The HSR Act requires mandatory pre-closing waiting periods for deals valued at more than USD126.4 million in 2025 (adjusted annually), unless otherwise exempted. The agencies can take one of three courses of action when concluding their investigation:

• let the parties close their transaction within a year;
• require parties to enter into consent agreements as a condition to clearance, including remedies requiring divestiture of businesses’ commitments to undertake certain actions; or
• seek to block the deal in a US federal court.

The agencies can also review business transactions that are not subject to notification under the HSR Act, as well as business combinations that have already been consummated.

Recent Developments in US Merger Control

In 2022 the DOJ and FTC updated their joint Merger Guidelines to address today’s complexities. The agencies under the current administration have kept these Merger Guidelines. The Merger Guidelines seek to expand potential theories of harm and shift the burden to merging parties, which could result in more extended reviews for certain technology mergers and increased interest from the agencies in a broader set of deals. Reviews could also be impacted by allegations of collusion on climate or other ESG factors under scrutiny in the current administration.

New changes to the HSR filings came into effect on 10 February 2025, significantly increasing the burden of disclosure requirements on filing parties through more expansive production of documents, narratives on market dynamics and information on the board membership of the acquiring person’s officers and directors.

Employee benefit and executive compensation issues can significantly impact M&A transactions in the E&I sector, considering applicable federal, state and local laws.

Employment and Labour

Buyers must evaluate worker classification and verify employees’ proper visa status. The Worker Adjustment and Retraining Notification (WARN) Act and similar state statutes may require advance notice of layoffs or plant closures, or provide salary in lieu of notice.

Given the operational nature of E&I assets, buyers should prioritise compliance with health, safety and environmental labour laws, reviewing any historical audits, investigations or claims reported to regulatory authorities. This is particularly critical for projects involving construction, power generation, transmission infrastructure or industrial facilities.

The US does not have statutory works council requirements. However, buyers should determine whether employees are unionised, as collective bargaining agreements may impose consultation or notice obligations regarding workforce changes. Union representation is common in E&I operations, particularly in utilities, construction and maintenance workforces.

US employment is typically “at will”. Parties should review employment arrangements to determine any broad-based severance programmes or change in control severance rights and post-employment restrictive covenants (the enforceability of which is determined on a state-by-state basis).

Equity-Based and Incentive Compensation

Buyers must review employee equity-based compensation plans and change-in-control impacts on outstanding equity-based awards. Treatment of equity-based awards involves consideration of contractual award terms, applicable securities laws, commercial priorities and limitations, and acquiror shareholder dilution.

Employee Benefits

Buyers should be aware of the Employee Retirement Income Security Act (ERISA), which governs certain employee benefit plans and their treatment in transactions.

Retirement plans

Buyers should evaluate benefit plan compliance, including 401(k) and non-qualified deferred compensation plans, and determine treatment of plans, including whether termination is required prior to a change in control.

For defined benefit plans, actuarial assistance may be needed to assess the plan’s funded position. The Pension Benefit Guarantee Corporation may become involved if either party has a significantly underfunded pension plan. 

Where the buyer has a collectively bargained workforce, attention is needed regarding participation in multi-employer pension plans sponsored by unions, and whether the transaction structure triggers withdrawal liability.

Health plans

Buyers must determine whether health plans are self-insured and assess stop-loss coverage. Parties must understand the Consolidated Omnibus Budget Reconciliation Act (COBRA) and similar state law obligations for providing health insurance continuation coverage. Certain states may require payout of accrued leave or other benefits. Buyers must also consider the terminability of retiree medical liability and apportionment of plan liability.

Golden Parachute Excise Taxes

Section 280G (and the companion Section 4999) of the Code applies to certain “golden parachute” payments and benefits to certain employees in connection with certain change-of-control transactions. If triggered, excise taxes may be imposed on key executives, and the company may lose corporate deductions.

This is not applicable in the USA.

Following Delaware case law decisions involving conflicted directors and officers or controlling shareholder transactions, in March 2025, the governor of Delaware enacted several amendments to the DGCL.

The amended Section 144 of the DGCL provides that liability safe harbours can apply in an act or transaction between a corporation and:

• a director or officer or entity where a director or officer has a financial interest, if (i) after the disclosure of such relationship or interest the board or board committee authorises such transaction in good faith and without gross negligence by the affirmative vote of a majority of disinterested directors; or (ii) such act or transaction is approved or ratified by an informed, uncoerced, affirmative vote of a majority of votes cast by the disinterested shareholders (“Disinterested Shareholder Approval”);

• a controlling shareholder or control group or for which a controlling shareholder or control group perceives a financial or other benefit not shared with other shareholders generally, other than a going-private transaction, if (i) after the disclosure of the material facts of the transaction a majority of the disinterested directors on the relevant board committee approves the transaction in good faith and without gross negligence (“Board Committee Approval”); or (ii) such transaction is conditional on obtaining Disinterested Shareholder Approval at the time of submission for approval or ratification, and such approval is obtained; or

• a controlling shareholder, constituting a going-private transaction, if (i) Board Committee Approval is received; and (ii) Disinterested Shareholder Approval is received.

The amendments also limit the scope of the fiduciary duty liability of a controlling shareholder, who can only be liable for damages for:

• a breach of the duty of loyalty to the corporation or other shareholders;
• acts or omissions not in good faith or involving intentional misconduct or a known violation of the law; or
• any transaction from which the person derived an improper personal benefit.

Additionally, the amendments modify rules regarding shareholder inspections of books and records under Section 220 of the DGCL, including requiring that an inspection demand describe with reasonable particularity the shareholder’s purpose; providing an exhaustive list of the “books and records” available for inspection; and allowing the Court of Chancery to order that a corporation produce specific or additional records if this is necessary and essential to fulfil the shareholder’s purpose.

The OBBB has impacted energy and tax policy through repeals and phasing out of IRA programmes and certain energy-related credits. Although the statute phases out or restricts clean-energy incentives pertaining to technologies like solar and wind, other IRA incentives (including regarding battery energy storage systems, nuclear power, carbon capture and critical minerals) remain robust under the new law. The OBBB has imposed new FEOC prohibitions to ensure American energy independence and deny tax credits to projects related to certain unfavourable jurisdictions (eg, China), which will phase in gradually and require substantial diligence by taxpayers seeking to claim IRA incentives in the future. The OBBB also gutted the technology-neutral clean energy production and investment tax credits, repealing credits for wind and solar facilities placed in service after 31 December 2027 if construction begins after the lapse of a one-year “grace period”. These rules provide clarity on emissions-rate eligibility and monetisation mechanics, though markets now operate under new limitations, early phase-outs for wind and solar, and FEOC constraints.

The OBBB also rescinded certain environmental review implementation funds and other climate-related appropriations, complicating the permitting capacity landscape.

Offshore wind permitting has been streamlined through BOEM and BSEE rule-making and process improvements. An executive order issued on 23 July 2025 added a fast track for AI data centre projects and energy and transmission infrastructure, directing:

• the Council on Environmental Quality (CEQ) to expand categorical exclusions;
• the Federal Permitting Improvement Steering Council to provide FAST-41 transparency and possible covered-project status;
• the EPA to expedite permitting; and
• the Department of the Interior (DOI), Department of Energy (DOE) and Department of Defense (DOD) to identify federal sites and authorisations.

The order presumes certain federal financial supports are not “major Federal actions” under NEPA, in the absence of substantial project-specific control, which can accelerate timelines.

The year 2025 has also seen a recalibration of the framework for conventional energy sources through measures including mandated oil and gas leasing, repeals of IRA royalty changes and the methane royalty provision, and Corporate Average Fuel Economy penalty reductions, reflecting a mixed and contested regulatory environment. The result is a challenging landscape in which developers must carefully analyse whether their projects align with current federal priorities, including FEOC and material-assistance tests, earlier credit phasing out, and revenue-sharing and fee changes for renewables on federal lands.

In the US, the buyer will generally carry out legal, financial, commercial and tax due diligence, involving reports from lawyers, accountants and other specialists. The scope of due diligence reviews will vary.

“Reverse diligence” on the buyer may be necessary or advisable, including if equity is the form of consideration, often focusing on foreign government ownership or control; compliance with export control, sanctions, anti-money laundering and anti-corruption regimes; and other relationships with countries of concern.

Some key focus areas for legal due diligence of an E&I company would include:

• asset ownership, real property rights and land access, including easements, rights of way and site-control arrangements;
• environmental and permitting compliance, including federal, state and local permits, licences and authorisations and environmental assessments to identify known or potential contamination;
• grid interconnection and transmission rights, power-market participation requirements and FERC approvals, where applicable;
• energy-market and regulatory compliance, including market-based rate authority, and sector-specific obligations (eg, for oil and gas, pipelines or water infrastructure);
• material project contracts, including power purchase agreements, engineering, procurement and construction agreements, operations and maintenance agreements, fuel supply contracts and equipment warranties;
• which geographies and customers are served, and whether the company is a sole source provider of services in a given area;
• when a development-stage project is expected to be completed;
• previous commitments to certain vendors for hardware, software and/or operations support;
• regulatory authorisations, if any, with respect to the transaction;
• employee benefits, labour and immigration matters, especially in light of recent regulatory developments requiring enhanced due diligence on immigration compliance, state pay transparency and pay equity laws, non-compete restrictions, SEC claw-back policy requirements and ESG-linked compensation prevalent in the energy sector; and
• trade compliance and anti-corruption compliance.

There are generally no statutory or regulatory restrictions in the US preventing legal due diligence on an energy or infrastructure company. However, several sector-specific rules impose confidentiality and access limitations that buyers must navigate.

Energy companies with critical infrastructure may be subject to cybersecurity and critical-infrastructure protection requirements, restricting disclosure of Critical Energy/Electric Infrastructure Information and other security-sensitive materials. Access to such information may require, among other things, a non-disclosure agreement.

Projects involving defence-related facilities, exports, or foreign ownership triggers may require adherence to export-control and national-security restrictions. CFIUS may limit the sharing of sensitive operational data with non-US buyers when the target owns assets located near military bases, ports, border zones, or key communications infrastructure. These reviews can affect diligence scope and sequencing.

Additionally, environmental and safety records maintained by federal or state regulators may contain protected personal information or enforcement-sensitive content, which can only be disclosed through redacted regulatory submissions or controlled-access disclosure. Privileged reports, including internal investigations, root-cause analyses and self-disclosures to the EPA, the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Occupational Safety and Health Administration (OSHA) or state agencies, must be handled carefully to avoid privilege waivers.

For a tender offer, the SEC rules require the acquiror to file a Schedule TO. If the deal is for cash consideration, the Schedule TO is relatively straightforward and, assuming advance preparation, often filed the day of (or shortly following) the announcement of the bid for the target.

For a merger, the parties generally jointly announce the transaction when the definitive merger agreement has been entered into. A publicly traded target company must disclose the material terms of the transaction, in a filing made with the SEC, within four business days of entry into the definitive transaction documents.

The offer and sale of securities to target shareholders as consideration for the acquisition will need to be registered under the US Securities Act of 1933 (the “Securities Act”), unless an exemption applies. A registration statement would include (among other information):

• risk factors;
• business descriptions;
• financial statements;
• management’s discussion and analysis of the financial conditions; and
• transaction-specific information required in a proxy statement or a Schedule TO, as applicable.

In addition, the staff of the SEC must approve (or “declare effective”) the registration statement, and typically make comments before granting such approval. Before the acquiror’s shares may be traded on a US national securities exchange, the acquiror must complete a listing application with the relevant exchange, unless the acquiror’s shares are already listed on the relevant exchange.

In a registered exchange offer or merger where all or part of the merger consideration consists of securities, financial statement issues can add time and expense to the process, if financial statements – of the acquired business and pro forma for the combined company – are necessary. This depends on the magnitude of the transaction to the acquiror, and the requirement that financial statements filed with the SEC be prepared in accordance with GAAP or International Financial Reporting Standards (IFRS) as promulgated by the International Accounting Standards Board, or, failing those, with a reconciliation to GAAP.

Although the transaction agreement must be filed for the merger of a public company, the parties generally need not include transaction agreement schedules, exhibits or attachments (or portions of such documents) that do not contain terms or information that are material to the transaction or to the shareholders’ investment decision; otherwise, they can request confidential treatment for portions of filed transaction documents. Nonetheless, the SEC may subsequently request that such materials be submitted to it confidentially. See 8.1 Making a Bid Public.

The directors of a Delaware corporation owe the core fiduciary duties of care and loyalty to the corporation and its shareholders.

• Duty of care: This requires directors to act in an informed and considered manner (ie, to inform themselves, prior to making a business decision, of all material information reasonably available to them and, based on such information, to act with due care in discharging their duties). Directors are generally liable for a breach of this duty only if they are found to have acted with gross negligence.
• Duty of loyalty: This requires directors to act without self-interest and in the best interests of the corporation and its shareholders (ie, to refrain from fraudulent conduct, self-dealing and actions intended to entrench themselves in office, and not to take personal advantage of business opportunities at the expense of the corporation). Directors found to have breached this duty may be subject to personal liability under Delaware law.

In Delaware, the obligation of good faith underlies the foregoing duties.

While the Delaware approach to directors’ duties emphasises “the primacy of the shareholder”, other states permit, and even require, the board to consider the interests of other constituencies such as employees, customers and suppliers.

Boards of directors may establish special or ad hoc committees, comprised of independent directors, to negotiate the terms of potential business combinations. Such special committees may be formed where the majority of the directors are not independent (or are conflicted), or when a controlling shareholder stands on both sides of the potential transaction or will receive different consideration in the transaction or any side agreement to the detriment of the other shareholders. A proper special committee should select and retain its own independent advisers, and must be fully informed regarding the terms of the transaction and in diligence.

Board’s Role in Negotiations

Boards generally do not play an active role in the negotiations of an M&A transaction, but are expected to make the final decision on whether to approve a sale and recommend the sale and its terms to target shareholders.

Under the business judgement rule, Delaware courts presume that directors have satisfied their fiduciary duties if they have made their decisions in good faith, on the basis of a reasonable investigation and after careful consideration of all material factors reasonably available, in accordance with what they honestly believe to be the best interests of the corporation and its shareholders. In applying the business judgement rule, Delaware courts will only consider whether a rational decision-making process has been demonstrated.

Shareholder Litigation

Shareholder litigation is common in relation to acquisition of public companies in the US; however, it is uncommon for such litigation to completely derail transactions, due in part to:

• federal and state (largely Delaware) court decisions limiting the use of “disclosure only” settlements whereby plaintiffs seek additional information and legal fees; and
• Delaware courts’ continued expansion of steps to be taken to provide for application of the business judgement rule.

Under Delaware law, shareholders who do not vote in favour of a cash merger are generally entitled to an appraisal by the Court of Chancery of the fair value of their shares. While appraisal actions have been common, recent decisions by the Delaware Supreme Court give weight to market-based indicators of value (eg, the target company’s stock price or the deal price) in the absence of showing that the target’s stock trades inefficiently or that there was no robust sale process.

A target company board will generally engage external legal and financial advisers, and may engage external accountants and consultants regarding a potential business transaction. Directors can rely upon outside advisers, and consideration of their advice is important for demonstrating satisfaction of a director’s fiduciary duties. Target company boards generally also request a “fairness opinion” from financial advisers on whether the proposed consideration is fair from a financial standpoint.