Foreign direct investment screening was a decisive factor in the strategic support provided by Relians to a prominent U.S. investment fund based in Washington, D.C., which sought to acquire a French industrial company operating in the defense sector. This company specialized in the production of axles for military vehicles—components integral to land defense systems used by both French and allied armed forces. Given the sensitive nature of the transaction, Relians was mandated to oversee a mission of critical importance: securing regulatory approval for a cross-border acquisition governed by France’s strict foreign direct investment screening framework.
This lobbying and institutional advocacy mission revolved around assisting a foreign acquirer in navigating the legal and political complexities of acquiring an entity classified as strategic by the French State. The transaction was subject to prior approval under France’s foreign direct investment screening regime (commonly referred to as IEF – Investissements Étrangers en France), which requires the Minister of the Economy to authorize foreign investments in sectors linked to national sovereignty, public order, or national defense.
Understanding the Context: The Stakes of Foreign Direct Investment Screening
France maintains one of the most robust and institutionalized foreign direct investment screening frameworks in Europe. Enshrined in Article L.151-3 of the French Monetary and Financial Code, this regime is designed to protect national interests by imposing prior authorization on foreign takeovers of businesses involved in critical activities. These include the defense industry, cybersecurity, energy, artificial intelligence, and other technologies deemed essential to national resilience.
In this particular case, several elements underscored the sensitivity of the transaction:
- The target company was directly involved in the defense supply chain, manufacturing essential mechanical components for military platforms;
- The buyer was a non-EU investor, thereby triggering mandatory foreign direct investment screening under French law;
- The seller operated under strict financial deadlines, requiring the transaction to close before the fiscal year-end, thus compressing the regulatory timeline for authorization.
As a result, success hinged on a dual challenge: obtaining foreign direct investment screening clearance within a highly constrained timeframe while also maintaining strict alignment with national security and sovereignty requirements.
Our Mission: Navigating the Complexities of Foreign Direct Investment Screening
Relians was entrusted by the seller to take the lead on the entire authorization process, acting as the primary strategic advisor and institutional interface. Our mission required not only expert knowledge of foreign direct investment screening in France but also an ability to build trust with regulators, articulate clear value propositions, and mitigate any perceived security risks.
We structured our approach around two inseparable pillars: (1) a detailed regulatory strategy that anticipated institutional concerns, and (2) an operational roadmap that ensured coherence between all stakeholders, including the foreign investor, the French seller, and the competent authorities.
Our engagement began with a comprehensive review of the target company’s operations to determine how and why its activities would fall under the scope of foreign direct investment screening. This entailed:
A technological audit of the axles being produced, including their military specifications and dual-use potential;
An evaluation of the company’s contractual engagements with French public institutions and defense-related clients;
A mapping of its export channels and operational dependencies that could trigger sovereignty concerns.
This detailed risk assessment allowed us to construct a regulatory narrative that was both honest and proactive, demonstrating that the transaction—while involving a foreign investor—would not compromise France’s strategic autonomy. This narrative was key to expediting the foreign direct investment screening process and avoiding protracted delays stemming from incomplete or misaligned submissions.
- Institutional Coordination: Facilitating Trust in the Foreign Direct Investment Screening Process
Once the documentation was complete, Relians assumed the role of institutional liaison. We coordinated all communications between the transaction parties and the various public bodies involved in France’s foreign direct investment screening process. These included:
The Ministry of the Economy, which holds final authority over foreign investment authorizations;
The Treasury Directorate (DG Trésor), which conducts preliminary risk assessments;
The French domestic intelligence agency (DGSI), which evaluates national security implications;
The Ministry of Armed Forces, which assesses strategic impacts on defense capabilities.
Through structured and transparent dialogue, Relians ensured that regulators received coherent, accurate, and timely information. Our team also worked closely with legal and operational advisors to ensure that the transaction structure conformed to the legal expectations of France’s foreign direct investment screening authorities.
We paid particular attention to aligning the messaging between buyer and seller. In the context of foreign direct investment screening, inconsistent communication can significantly damage credibility and delay approvals. We thus orchestrated unified responses to all inquiries, ensuring that all communications reinforced the message that the transaction supported—not undermined—French national interests.
Outcomes: Accelerated Clearance and Strategic Alignment
As a result of our precise and anticipatory approach, the transaction obtained foreign direct investment screening authorization in record time. The clearance was granted without formal objections or rejections, demonstrating that even complex acquisitions in the defense sector can be successfully navigated when supported by a robust institutional strategy.
This favorable outcome yielded multiple benefits:
The French company continued its operations uninterrupted, preserving its industrial and technological base;
The foreign acquirer gained access to a high-value strategic asset without triggering opposition from the French State;
The French government preserved its control over a sensitive sector while allowing beneficial foreign capital inflow under a tightly managed framework.
A Reference Case in Foreign Direct Investment Screening
This transaction serves as a reference point for how foreign direct investment screening can be managed effectively—even in the most sensitive sectors. Far from being a regulatory barrier, France’s foreign direct investment screening mechanism can serve as a framework for building institutional trust, reinforcing transparency, and enabling strategic investments aligned with national interests.
At Relians, we view foreign direct investment screening not merely as a legal hurdle but as an opportunity to shape the institutional conditions under which strategic operations can be executed. Our experience demonstrates that when companies engage proactively with regulators—backed by institutional insight and structured advocacy—they can unlock significant value while maintaining full compliance.
Leveraging Foreign Direct Investment Screening as a Strategic Advantage
As geopolitical tensions rise and economic security becomes a national imperative, foreign direct investment screening will continue to expand in scope and importance. Governments around the world—including France, the United States, and EU Member States—are strengthening their mechanisms for vetting foreign investors in sensitive sectors. In this evolving context, investors, companies, and legal advisors must treat foreign direct investment screening as a core component of their transaction planning.
Relians stands at the intersection of regulatory strategy and institutional diplomacy. We guide our clients through the full lifecycle of foreign direct investment screening—providing risk assessments, developing communication strategies, coordinating institutional dialogue, and ensuring regulatory compliance.
This case confirms that success in foreign direct investment screening depends not only on understanding the law but on mastering the political, institutional, and operational dimensions that shape its application. In the end, our mission is to turn complexity into clarity—and risk into strategic opportunity.
