Often our clients are unaware of the Hart-Scott-Rodino Act (“HSR”) filing requirement that may apply to the planned sale of their business. Originally passed in 1976, HSR was intended to strengthen antitrust protections by requiring notice of large transactions. When HSR requirements apply, the parties must make a filing with the Federal Trade Commission’s Premerger Notification Office and wait for a specified period to close. While we do not offer legal advice, as M&A Bankers it is our job to manage the entire sale process, including planning and coordinating with client counsel regarding the need for, and timing of, a potential HSR filing.
In general, HSR provides that the filing must be made if the transaction would “affect commerce” and meets certain criteria related to the size of the transaction and the parties involved. Assuming the “affect commerce” test is met, then:
- If the price to be paid in a transaction is less than $119.5m, no filing is required.
- If the price to be paid is over $478m and no exemption applies, the filing must be made, and the deal may not close until the waiting period passes.
- Between $119.5m and $478m, the filing must be made and the waiting period complied with only if one of the parties to the transaction has annual revenue or assets of $239m or more and the other party has revenue or assets of $23.9m or more.
Of note, these limits are adjusted periodically. If you are required to file, it cannot be submitted until a purchase agreement has been executed. The waiting period is 30 days, although cash transactions have a 15-day waiting period. In cases where your M&A counsel is a boutique, they may need to retain outside counsel to prepare the HSR filing. If your M&A counsel is part of a larger firm, they will most likely have HSR counsel in-house.
Have a great day everyone.
Managing Director, Aerospace