Geopolitics, Regulation and M&A: How Global Dynamics Are Shaping Local Transactions

The current M&A environment is being rebuilt around geopolitics. Strategic rivalry between major powers, wars that reshape energy and commodity flows, pressure on supply chains and a wave of new regulations have turned deals into instruments of economic security as much as corporate strategy. Rather than acting in the background, geopolitics now directly affects which transactions are possible, how they are structured, and what level of risk boards are prepared to accept. Recent years have seen heightened tensions linked to US-China trade and technology frictions, the war in Ukraine and conflict in the Middle East, all of which have reoriented capital flows and deal priorities in key sectors.

From Globalisation to Fragmentation: The New Strategic Context

For two decades, cross-border M&A largely rode the wave of globalisation. The baseline assumption was that markets would continue to integrate and that efficiency and scale were the dominant deal rationales. Today, boards are working with a different paradigm. Policymakers in Washington, Brussels, Beijing and other capitals increasingly view foreign investment through the lens of national security, technological sovereignty and resilience. Strategy documents and public speeches openly connect industrial policy, export controls and foreign investment screening to geopolitical competition.

This shift has practical consequences for dealmakers. First, it is no longer enough to model synergies, integration costs and macro-economic scenarios. Teams must also model political risk: how a proposed buyer will be perceived by host-state authorities, whether the target’s assets are considered “sensitive” and how a future deterioration in bilateral relations could impact licences, data flows or access to infrastructure. Second, the old assumption that approvals were a timing issue rather than a genuine closing risk is no longer safe. In some cases, political vetoes or unworkable remedies effectively redefine which transactions are feasible.

Antitrust, Industrial Policy and the Rise of Multi-Regime Scrutiny

As geopolitical tensions rise, traditional competition policy has also become more assertive. Surveys of dealmakers show that antitrust enforcement is seen as the single most significant regulatory constraint on M&A in advanced markets, ahead even of foreign investment controls. Authorities in the US, EU and several Asian jurisdictions are placing greater emphasis on dynamic competition, innovation effects and digital ecosystems, particularly in technology and platform markets. This can create friction with industrial policy goals, where governments simultaneously encourage the emergence of “national champions” or regional leaders in strategic sectors such as renewable energy, defence or artificial intelligence.

The result is a complex multi-regime approval matrix. A large cross-border deal may require parallel reviews by competition authorities and FDI units in several jurisdictions, in addition to sector-specific regulators for telecoms, financial services, energy or media. Timelines have lengthened and the probability of divergent outcomes has increased. While most transactions are still ultimately cleared, it is now common to see remedies that reshape commercial logic, from forced divestments and access obligations to limits on data sharing and governance arrangements that ring-fence sensitive operations in local subsidiaries.

Data, Cybersecurity and the Politics of Information

Digital transformation has created a new regulatory frontier at the intersection of privacy, cybersecurity and geopolitics. Law firms and advisory reports consistently highlight data protection and cyber risk as top external threats shaping the disputes and transaction landscape. For M&A, this manifests in two ways. First, the target’s data assets and security posture have become central to valuation. Weaknesses in cyber controls can translate into price chips, escrow arrangements or post-closing indemnities. Second, transfers of data across borders or to foreign owners may trigger regulatory scrutiny, particularly in jurisdictions with stringent localisation rules or concerns about extraterritorial access by foreign governments.

From a geopolitical perspective, data is increasingly treated as a strategic resource. Rules on cross-border data flows, cloud service localisation and critical information infrastructure amplify the political dimension of deals in sectors ranging from fintech and healthtech to e-commerce and logistics. Parties must therefore integrate regulatory mapping and technical due diligence early in the deal cycle, and in some cases design hybrid structures in which sensitive datasets are held by locally controlled entities with ring-fenced governance.

Local Transactions in a Geopolitical World

The cumulative effect of these trends is that even ostensibly “local” deals are rarely insulated from global dynamics. A domestic acquisition in energy, telecoms or critical manufacturing may involve suppliers, customers or financing structures that are deeply international. Sanctions regimes, export controls and secondary measures can all limit the pool of acceptable buyers or investors, even where all parties are formally domestic. In addition, local regulators increasingly benchmark their decisions against global developments, whether in antitrust theory, FDI practice or sustainability standards.

For boards and investment committees, this means that transaction feasibility can no longer be assessed solely by reference to national law and competition metrics. The origin of capital, the ultimate controller, the technology stack, the location of data and the geopolitical positioning of key jurisdictions have all become key variables. In several recent cases, buyers have had to reconfigure consortia, dilute control, or accept sophisticated governance arrangements to mitigate perceived geopolitical risks and secure regulatory comfort.

Strategic Implications for Dealmakers

In response, sophisticated acquirers are adapting their approach to origination, due diligence and execution. Geopolitical scenario planning is increasingly embedded in corporate strategy and capital allocation. Deal teams work closely with political-risk specialists and regulatory counsel to map potential red lines and design filing strategies that anticipate concerns rather than simply reacting to them. Contractual protections such as reverse break-up fees, long-stop dates linked to regulatory milestones, risk-sharing arrangements over remedies and flex in transaction perimeter are becoming more prevalent in cross-border deals.

At the same time, the new environment creates opportunities. As some buyers retreat from certain jurisdictions or sectors due to political constraints, others with more favourable profiles can step in and capture assets at attractive valuations. Local and regional players, sovereign investors and specialist funds with strong regulatory credibility may find themselves in a privileged position to act as “safe” buyers for politically sensitive assets. For corporates, programmatic acquisition strategies focused on smaller, more frequent deals can spread regulatory risk and avoid the scrutiny attracted by megadeals, while still delivering strategic transformation over time.

Geopolitics and regulation have moved from the periphery to the centre of M&A decision-making. National security reviews, stricter antitrust enforcement, data and cybersecurity rules and a broader shift from globalization toward fragmentation have reshaped what is feasible, how transactions are structured and which buyers can prevail. Yet the overall picture is not one of paralysis. Capital continues to move, strategic consolidation proceeds and cross-border deals are still closed in large numbers. The key difference is that success now depends on a more granular understanding of political, regulatory and societal expectations in each jurisdiction touched by a transaction.