Connecticut: A Corporate/M&A Overview

Connecticut is experiencing a budget surplus and is led by a pro-business governor promoting growth and attracting companies. Fairfield County and southwestern Connecticut are leading areas for new enterprises. In addition, investment advisers and private investment funds continue to launch in the state. At a practice level, our business law clients – in Connecticut and nationally – are acutely aware of broad trends affecting deal activity and operations.

Macro Market Conditions

The following trends are at the top of clients’ minds.

• Inflation and its impact on inputs for companies (particularly the costs of imported goods) and customer behavior.
• Geopolitical instability from US-led military action against Iran, including escalation risk in the broader Middle East, retaliatory cyber activity, disruption of energy markets and shipping lanes, and resulting volatility in commodity prices, supply chains and cost of capital.
• The unpredictable tariff environment, which challenges certain industries, existing portfolio companies and potential acquisition targets, impairing supply chains and confident planning.
• Uncertainty regarding timing of Fed interest rate cuts during 2026 and their effect on:
• (i) portfolio company cash flow and performance; and
• (ii) buyout models.
• M&A multiples may be adversely affected by the above and/or turbulence in equity capital markets.

Regulatory and Governmental Trends

While some recent regulatory developments have been favorable for investment clients, other governmental and regulatory developments have created uncertainty.

Relaxed and/or other favorable developments

Corporate Transparency Act

The Financial Crimes Enforcement Network (FinCEN), a bureau within the US Treasury, promulgates regulations implementing the Corporate Transparency Act (CTA). The CTA imposes beneficial ownership reporting to “discourage the use of shell corporations as a tool to disguise and move illicit funds”. Companies and clients had expended substantial resources to comply with the expansive CTA rules and filing requirements for domestic entities.

However, in March 2025, FinCEN adopted a substantially narrowed interim final rule limiting beneficial ownership disclosure under the CTA to entities previously defined as “foreign reporting companies”, and stated that it would suspend enforcement against US citizens and domestic reporting companies.

FinCEN is expected to promulgate a final rule in 2026. Some legislative efforts to codify the domestic exemption (or repeal the CTA) are under consideration.

Bright-line test for general solicitations from accredited investors in capital raising

In March 2025, the Securities and Exchange Commission (SEC) issued a no-action letter expected to facilitate fundraising in private capital markets under Regulation D Rule 506(c).

Rule 506(c) allows private placements to accredited investors so long as the issuer takes “reasonable steps to verify” each purchaser’s accredited investor status. Issuers, counsel and investors have experienced discomfort in determining how to take such steps without intruding into an investor’s personal affairs.

To dispel this uncertainty, in the no-action letter, counsel proposed a straightforward test: that an issuer will be deemed to have taken “reasonable steps to verify” whether an investor would be deemed accredited based on minimum investment amount – USD200,000 for natural persons and USD1 million for entities. The SEC staff indicated that it would not recommend enforcement if such minimum amounts applied and the issuer also obtained certain other representations (and was not aware that the investor was not accredited or had obtained third-party financing).

This SEC staff guidance could alleviate issuer and counsel concern about the otherwise vague and intrusive “reasonable steps to verify” requirement.

Antitrust

The Federal Trade Commission (FTC) has resumed granting early termination of the pre-merger waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. This allows more expedited deal timelines.

Governmental and regulatory developments giving rise to uncertainty

Tax treatment of carried interest

Current favorable tax treatment of carried interest may again attract popular and congressional attention. In May 2026, Yale University’s Budget Lab concluded that changing carried interest taxation could generate over USD100 billion in new federal revenue over the next decade – dramatically higher than prior estimates of USD10–20 billion. These revised figures, based on newly available IRS partnership data, have reinvigorated press coverage and may alter the political calculus around reform. Sponsors and fund managers should anticipate possible renewed legislative action and consider impacts on fund economics, waterfall provisions and management company structures.

Adoption of state “mini-HSR” regimes

In 2025, Washington and Colorado adopted the Uniform Law Commission’s Antitrust Premerger Notification Act (APNA), effective July and August 2025. California followed in February 2026, with a new law effective 1 January 2027. These statutes apply to transactions across all industries and require parties to submit a copy of their federal HSR filing to the applicable state attorney general if any of these minimum contacts tests are satisfied:

• a party has its principal place of business in the state;
• a party has annual net sales in the state of at least 20% of the federal HSR size-of-transaction filing threshold (currently USD26.78 million based on the 2026 HSR threshold); or
• Washington only – the transaction involves certain healthcare providers or provider organizations conducting business in Washington.

The APNA statutes do not impose a separate state waiting period or grant new approval rights, but provide state attorneys general with early access to transaction information. Additional states are considering similar legislation.

Beyond these broad-based regimes, a growing number of states have enacted or are considering sector-specific pre-merger notification statutes targeting healthcare transactions and private equity roll-ups. State attorneys general have also become substantially more active in independently reviewing and challenging transactions.

CFIUS

In February 2026, the US Treasury, which chairs the Committee on Foreign Investment in the United States (CFIUS), published a Request for Information (RFI) seeking comment on a “Known Investor Program” and on streamlining the foreign investment review process. The RFI was issued in furtherance of President Trump’s America First Investment Policy, which directed CFIUS to increase efficiencies to facilitate investment from US allies and partners. Under the proposed Program, foreign investors meeting specified eligibility criteria – including a track record of at least three prior CFIUS filings within three years, no material compliance violations, and verifiable distance from designated “Adversary Countries” – would be able to pre-clear certain information through a dedicated portal.

While this may be a welcome development, many clients are likely to adopt a “wait and see” approach to filing for business combinations where a CFIUS filing is optional and not mandatory.

Cross-border investment: Canada and Mexico

We have noted cooler interest in cross-border deals among clients historically interested in acquisition targets in Mexico and/or Canada. As relationships with Canada and Mexico undergo sustained dramatic and constantly revised changes, investor comfort has dropped due to concerns about regulatory review (both in the United States and in Mexico and Canada), predictability of the tariff and tax environment and changed perceptions of these countries’ relationships.

California’s Fair Investment Practices by Venture Capital Companies Act

On 1 March 2026, the California Fair Investment Practices by Venture Capital Companies Act (the “California Act”) became effective. The California Act is a reporting regime. Clients should be aware that compliance can be required of entities with few ties to California that might not consider themselves venture capital companies. The California Act applies to a party which:

• primarily engages in the business of investing in, or providing financing to, start-up, early-stage or emerging growth companies;
• meets the definition of a “Venture Capital Company” (which includes not only “venture capital funds,” as defined under the Investment Advisers Act of 1940, and “venture capital operating companies,” as defined under ERISA, but also any company that has made at least one investment in the prior calendar year with direct contractual rights to substantially participate in management (a “venture capital investment”) and at least 50% of whose assets, valued at cost, consist of such investments); and
• meets at least one of the following tests – is headquartered in California; has a significant presence or operational office in California; makes venture capital investments in businesses located in or having significant operations in California; or solicits or receives investments from a person who is a California resident.