FTC and DOJ Unveil Major Changes to Hart-Scott-Rodino (HSR) Act: What Dealmakers Need to Know
Author: Destiny Aigbe
October 29, 2024
In a significant move, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have jointly endorsed the first major revisions to the Hart-Scott-Rodino (HSR) Act’s premerger notification requirements in over 40 years. This sweeping update, expected to take effect in mid-January 2025, brings notable changes that will impact the complexity, timing, and cost of M&A filings.
Key Changes Introduced by the Final Rule
The Final Rule, approved on October 10, 2024, categorizes transactions into three distinct types, each with tailored disclosure requirements:
- Transactions with minimal competitive concerns: Such as compensation agreements, requiring fewer disclosures.
- Non-competitive overlap transactions: Exempt from some disclosure requirements if there is no competitive or supply relationship.
- Competitive overlap transactions: These demand extensive disclosures, particularly from buyers, including strategic rationales, product details, customer information, and any involvement in government contracts over $100 million.
Adjustments in Filing Process and Timing
- Return of Early Termination: The FTC is reintroducing early termination requests for low-competition transactions.
- Requirement for Detailed Transaction Terms: Filings will no longer be accepted on preliminary agreements. Material terms are now essential for compliance.
New Disclosure Obligations
Merging parties must now include:
- Strategic rationale documents, product development details, customer data, and recent acquisitions.
- Defense and intelligence contracts valued over $100 million for transactions involving competitive overlap.
- Detailed records of subsidies from foreign entities and translations of all non-English documents.
- Comprehensive documentation of directors’ external responsibilities and investment connections in relevant industries.
Practical Implications for Dealmakers
The expanded HSR Act requirements call for earlier preparation and extensive antitrust counsel. The additional disclosures will require more time, possibly impacting deal timelines. Anticipating these changes, dealmakers are encouraged to adjust transaction agreements to account for potential delays and additional complexities in the HSR Act filing process.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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