Anticipated Impact of America’s New Merger Rules: Extended Processing Time by Months
Introducing new regulations for mergers and acquisitions may significantly extend the duration of the deal-making procedure, potentially adding several months to the process.
Antitrust lawyer Kara Kuritz, in a conversation with Seeking Alpha on Sunday, July 9, shared an alternative viewpoint regarding the proposed revisions to the Hart-Scott-Rodino filing process by the Federal Trade Commission and the Department of Justice.
These suggested revisions mark a significant milestone in the 45-year history of the HSR filing process, as they require companies and investment firms to provide additional information that regulators still need to seek.
According to Kuritz, who specializes in HSR Act matters at the antitrust division of the DOJ, the performance of these proposed rules could significantly extend the HSR filing process, which usually takes about a week or two to prepare. The new rules are expected to add months of additional time to the process. Kuritz further emphasized that complying with these rules would pose challenges for significant investment funds. Most of the extra time is expected to be spent in the initial stages, earlier to the submission of the filing to the regulatory agencies.
As per the report, the DOJ and FTC will request companies to provide information regarding the transaction’s rationale and specific details about investment vehicles. Additionally, they will seek details about products and services, including information related to supply agreements.
In an interview with Seeking Alpha, Kuritz mentioned that the agencies now propose including such information in all reportable deals. However, this proposal poses a significant burden for discounts unlikely to raise any competition concerns.
According to a recent article by PYMNTS, Lina Khan, the chair of the FTC, has acknowledged that much has changed since the introduction of the HSR Act. These changes include the increased complexity and volume of mergers taking place.
Lina Khan expressed that the information gathered through the HSR form needs to be more qualified for their teams to determine, within 30 days, whether a proposed deal may violate the antitrust laws.
These changes are occurring at a challenging time when securing funding for deals has become increasingly difficult. As highlighted in a previous report, global mergers and acquisitions volumes experienced a decline of 48% year over year in the first quarter of this year, reaching the lowest level in over a decade.
Multiple factors contributed to this decline, including rising interest rates, elevated inflation, geopolitical tensions worldwide, concerns about a potential recession, and recent banking crises. The repercussions of the failures of Silicon Valley Bank and Signature Bank in the U.S. and the Credit Suisse crisis in Europe disrupted the market. Consequently, many companies suspended ongoing deals due to worries about widespread uncertainty while seeking funding.
