Category: Mergers & Acquisitions

Competition Currents | March 2025

United States
  A. 1.FTC secures $5.68M HSR gun-jumping penalty from 2021 deal.On Jan. 7, 2025, the FTC, in conjunction with the Department of Justice (DOJ) Antitrust Division, settled allegations that sister companies Verdun Oil Company II LLC and XCL Resources Holdings, LLC exercised unlawful, premature control of EP Energy LLC while acquiring EP in 2021. This alleged “gun-jumping” violation involved Verdun and XCL exercising various consent rights under the merger agreement and coordinating sales and strategic planning with EP during the interim period before closing. In settling, the parties agreed to pay a total civil penalty of $5.68 million, appoint or retain an antitrust compliance officer, provide annual antitrust trainings, use a “clean team” agreement in future transactions involving a competing product, and be subject to compliance reporting for a decade.
Further information about this settlement and the factual background can be found in our January GT Alert.  2.2025 HSR thresholds took effect Feb. 21, 2025. On Jan. 10, 2025, the FTC approved updated jurisdictional thresholds and filing fees for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. These revisions are made annually, with the size-of-transaction threshold for reporting proposed mergers and acquisitions under the Clayton Act increasing from $119.5 million to $126.4 million for 2025. These changes took effect on Feb. 21, 2025. The adjustments are based on changes in the gross national product and consumer price index as mandated by the HSR Act and the 2023 Consolidated Appropriations Act.  3.FTC releases staff report on AI partnerships & investments. In January 2025, the FTC issued a report under former Commissioner Khan examining several partnerships among participants in the AI technology chain. Broadly, participants in the AI chain include (1) providers of specialized (and scarce) semiconductor chips used to provide the computational power to train and refine generative AI models, as well as generate the actual output (be it text, images, or data); (2) cloud service providers that enable access to computing infrastructure; (3) AI developers; and (4) AI application creators. The report highlights several areas of concern with respect to such partnerships, including traditional antitrust concerns around competitor access to important resources, increased switching costs for participants, and the exchange of sensitive technical and business information.
Current FTC Chairman Andrew Ferguson—then commissioner—issued a concurring and dissenting statement (joined by Commissioner Holyoak) shortly after the report’s release. While signaling areas of disagreement and discouraging the Commission from “running headlong to regulate AI,” the dissent does not appear to depart significantly from FTC views with respect to a focus on Big Tech when it comes to AI. According to Ferguson, “AI may [] be the most significant challenge to Big Tech firms’ dominance since they achieved that dominance.” He cautioned, however, that the Commission must strike a delicate balance, safeguarding against regulation that hinders U.S. AI technology development while ensuring that “Big Tech incumbents do not control AI innovators.”  4.FTC secures settlement with private equity firm in antitrust “roll-up” case. On Jan. 17, 2025, the FTC settled a second administrative case against private equity firm Welsh, Carson, Anderson, and Stowe and its affiliates for allegedly monopolizing certain local Texas anesthesiology markets through an anticompetitive “roll up” strategy. In May 2024, a federal judge dismissed Welsh Carson from a similar FTC action, but held that Welsh Carson’s conduct could be challenged in federal court in the future if the FTC can allege specific facts that it controls a company actively engaged in ongoing violations or is otherwise directly involved in another attempt to violate the law, “beyond mere speculation and conjecture,” and could still pursue an in-house administrative case against the private equity firm. 
The FTC settled its in-house case, discussed in a May 2024 GT Alert, in a consent order designed to both limit Welsh Carson’s investment in this space and identify future investment strategies in this or an adjacent space, which in the view of the Commission would risk becoming another anticompetitive “roll up.” The order requires Welsh Carson to:

freeze its investment in USAP at current levels and reduce its board representation to a single, non-chair seat; 
obtain prior approval for any future investments in anesthesia nationwide, as well as prior approval for certain acquisitions by any majority-owned Welsh Carson anesthesia group nationwide; and 
provide 30-days advance notice for certain transactions involving other hospital-based physician practices nationwide.

The Commission voted 5-0 to accept the consent agreement for public comment.   5.Federal court denies Commission’s bid to block Tempur Sealy’s $4B Mattress Firm deal. On Jan. 31, a Texas federal court denied the FTC’s challenge to preliminarily enjoin Tempur Sealy International Inc.’s planned $4 billion purchase of Mattress Firm Group Inc. The parties thereafter closed the merger, and the FTC then withdrew the matter from in-house adjudication, effectively ending its challenge. The FTC challenged the deal in July 2024, asserting that the combination of the world’s largest mattress supplier, Tempur Sealy, with the largest retail mattress chain in the United States, Mattress Firm, would give the new firm the ability and incentive to suppress competition and raise prices for mattresses by blocking rival suppliers from selling in Mattress Firm stores.
In September, Tempur Sealy offered to sell 178 stores and seven distribution centers to Mattress Warehouse, in an effort to alleviate the FTC’s concerns. The companies offered to preserve 43% of premium “slots” in Mattress Firm stores for rival manufacturers, up from a previous offer of 28%. The FTC countered that the court should not give weight to this “unenforceable promise” that Tempur Sealy could break at any time. The judge did state that “the proposed acquisition won’t substantially harm competition … [b]ut even if assumed to the contrary, Defendants’ commitments to divest certain stores and to maintain going-forward slot allocations resolves any lingering concern.”  6.Daniel Guarnera named FTC Bureau of Competition director. On Feb. 10, Chairman Ferguson appointed Daniel Guarnera as director of the Bureau of Competition. Guarnera previously served as chief of the Civil Conduct Task Force at the DOJ Antitrust Division. During his tenure, the task force filed monopolization suits against certain Big Tech companies, as well as multiple cases involving agriculture and labor markets. Prior to that role, he was a trial attorney with the Antitrust Division during the first Trump administration. He also served as special counsel to U.S. Senate Judiciary Committee Chairman Charles Grassley during the confirmation of President Trump’s Supreme Court appointee, Justice Neil Gorsuch.
The Commission voted 4-0 to approve Guarnera’s appointment as director of the Bureau of Competition, with Chairman Ferguson stating “[h]e has tremendous experience litigating antitrust cases in critical markets, including agriculture and Big Tech” and “using the antitrust laws to promote competition in labor and healthcare markets—two of my top priorities.”  7.FTC chair clarifies 2023 merger review guidelines remain in effect. On Feb. 18, 2025, FTC Chairman Ferguson issued a public statement to FTC staff stating if “there is any ambiguity, let me be clear: the FTC’s and DOJ’s joint 2023 Merger Guidelines are in effect and are the framework for this agency’s merger-review analysis.” Ferguson explained that FTC should “prize stability and disfavor wholesale recission,” to provide predictability for businesses, enforcement agencies, and the courts. In Ferguson’s view, the guidelines reiterate prior policy statements, guidelines, and decisional case law.   8.FTC launches inquiry on tech censorship. On Feb. 20, 2025, the FTC launched a public inquiry into how technology platforms deny or degrade users’ access to services based on the content of their speech or affiliations. The Commission’s press release said, in announcing the inquiry, “Censorship by technology platforms is not just un-American, it is potentially illegal. Tech firms can employ confusing or unpredictable internal procedures that cut users off, sometimes with no ability to appeal the decision. Such actions taken by tech platforms may harm consumers, affect competition, may have resulted from a lack of competition, or may have been the product of anti-competitive conduct.” The FTC is requesting public comment on how consumers may have been harmed by technology platforms that “limited their ability to share ideas or affiliations freely and openly.” Comments are open until May 21, 2025.  B. Department of Justice (DOJ) Civil Antitrust DivisionDOJ sues to block Hewlett Packard Enterprise’s proposed $14 billion acquisition of rival Juniper Networks.
On Jan. 30, 2025, the DOJ Antitrust Division sued to block Hewlett Packard Enterprise Co.’s proposed $14 billion acquisition of wireless local area network (WLAN) technology provider Juniper Networks Inc. The Division alleges that HPE and Juniper are the second- and third- largest providers, respectively, of enterprise-grade WLAN solutions in the United States and that the deal would “eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice.” The Division says that the proposed transaction between HPE and Juniper would further consolidate an already highly concentrated market.
“HPE and Juniper are successful companies. But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market. The threat this merger poses is not theoretical. Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers,” Acting Assistant Attorney General Omeed A. Assefi said. The Division asserted that Juniper has been a “disruptive force that has grown rapidly from a minor player to among the three largest enterprise-grade WLAN suppliers in the U.S.,” and that its innovation has decreased costs and put competitive pressure on HPE that HPE seeks to alleviate by acquiring Juniper.  C. U.S. Litigation
  1.Goldstein v. National Collegiate Athletic Association, Case No. 3:25-00027 (M.D. Ga. Feb. 20, 2025). On Feb. 20, 2025, the Honorable Judge Tilman E. Self III denied a college baseball player’s request for a temporary restraining order that would have prevented the National Collegiate Athletic Association (NCAA) from barring the student from the 2025 baseball season. The plaintiff filed a suit earlier this month that joins other similar suits seeking to invalidate the NCAA’s eligibility rule which gives college athletes no more than five years to play four seasons of college sports. In denying the temporary restraining order, Judge Tilman scheduled a follow-up hearing to allow for a more fulsome evidentiary hearing on a longer injunction.  2.State of Arkansas v. Syngenta Crop Protection AG, Case No. 4:22-cv-01287 (E.D. Ark. Feb. 18, 2025). Federal Judge Brian S. Miller denied two large pesticide manufacturers’ motion to dismiss the State of Arkansas’ lawsuit alleging that the manufacturers conspired to prevent generic pesticides from gaining market entry. In the lawsuit, Arkansas alleges that these manufactures entered into “loyalty programs,” which pay distributers and retailers incentives if they limit or refuse to sell generic crop-protection products whose patents have expired. In allowing the lawsuit to proceed, Judge Miller noted that the State has sufficiently alleged that these loyalty programs foreclose generic competitors from entering the market successfully.  3.Earth’s Healing Inc. v. Shenzhen Smoore Technology Co., Case No. 3:25-cv-01428 (N.D. Cal. Feb. 11, 2025). A Chinese-based vape manufacturing company and its U.S.-based distributors were sued in a putative class action, alleging that the defendants conspired to keep the price of marijuana vaping pens and cartridges high by limiting competition among distributors. The complaint alleges that Shenzhen Smoore Technology forced its distributors to enter into a horizontal conspiracy not to solicit each other’s retail customers and report any distributor who violated this non-solicitation policy. The proposed class includes any licensed cannabis business in the 24 states that have legalized marijuana for recreational use that have sold Shenzhen’s products since November 2016.  4.Alliance of Automotive Innovation v. Campbell, Case No. 1:20-CV-12090 (D. Mass. Feb. 11, 2025). On Feb. 11, 2025, the Honorable Judge Denise L. Casper dismissed a lawsuit an automakers’ advocacy group brought that sought to block the State of Massachusetts’s “right-to-repair,” which allows customers and mechanics open access to vehicles’ “telematics” systems. These systems are used to electronically track a vehicle’s location, speed, fuel efficiency, and other metrics. The automakers claimed that applying this state law to automobiles violates the National Traffic and Motor Vehicle Safety Act and the Clean Air Act and raises the risk of impairing the cybersecurity protections installed in these systems. Judge Casper’s order dismissing the case was filed under seal, and the has automakers have already indicated an intent to appeal the decision to the U.S. Court of Appeals for the First Circuit. 
The Netherlands
  A. Dutch Competition Authority (ACM) Dutch commitments decision spotlights ACM’s enforcement policy.
The Authority for Consumers and Markets (ACM) recently closed a cartel investigation into three chiropractic trade associations without imposing sanctions. The investigation concluded after the associations promised not to prohibit their members from offering discounts and free examinations. This decision was intended to promote competition, but critics raised concerns about transparency and the fair treatment of other companies that may have received harsher penalties for similar violations. Critics also pointed out that the ACM appears more reluctant to penalize the healthcare sector, leading to additional questions about its policy’s fairness and consistency.  B. Dutch Court Decision Rotterdam District Court confirms egg purchasing cartel violation.
The Rotterdam District Court confirmed the findings of the ACM against three egg-product manufacturers who were fined for price-fixing, supplier allocation, and sharing competitively sensitive information in the egg-purchasing market. In 2021, the ACM sent a statement of objections, concluding that the three companies had violated the cartel prohibition provisions of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and Article 6(1) of the Dutch Competition Act. Coordinating purchasing prices leads to such a significant restriction of competition (“by object” violation) that the ACM was not required to analyze the effects of the practice. The court acknowledged the companies’ objections to the amount of the fines and, since the proceedings exceeded the reasonable timeframe by a few weeks, all fines were reduced by EUR 5,000. The court set the fines at EUR 995,000, EUR 7,655,000, and EUR 15,736,500. 
Poland
  A. UOKiK president tightens the noose on price fixing agreements.
The president of the Office of Competition and Consumer Protection continues to focus on alleged price-fixing agreements, in particular those maintaining minimum prices (so-called RPMs) in online sales. Recent proceedings indicate an increased level of scrutiny on pricing practices, particularly around online distribution.  1.Fines imposed on pet-food distributor, Empire Brands. The UOKiK president has imposed a fine on Empire Brands, a pet food distributor, for engaging in resale price maintenance practices in online sales channels (online stores and digital marketplaces). Resellers were required to set prices that were at least equal to those Empire Brands offered in its own online store. According to the UOKIK president, the company penalized resellers by sending warnings, altering payment terms, restricting access to promotions, and terminating business relationships. Following the investigation, the UOKiK president imposed a fine of approximately PLN 353,000 (approximately EUR 84,000/USD 87,000) on Empire Brands. In addition, the UOKIK president also penalized the company’s managers, who received individual fines of PLN 82,000 (approximately EUR 20,000/USD 20,000) and PLN 39,000 (approximately EUR 9,000/USD 10,000), respectively.  2.Charges brought against sanitary equipment distributor, Oltens. UOKiK president also announced charges against Oltens, a distributor of sanitary equipment, for allegedly fixing online resale prices. The UOKiK president suspects that Oltens has entered into a price-fixing agreement with independent resellers of its products. The company allegedly imposed minimum resale prices for online sales, preventing retailers from offering lower prices (including within promotional campaigns). According to the UOKIK president, Oltens may have ensured compliance by actively monitoring resellers and intervening against those who deviated from set prices, including by refusing to supply or terminating cooperation agreements. The proceedings are pending.  3.Trend of enforcement. The Oltens and Empire Brands cases add to a growing list of resale price maintenance investigations the UOKiK president has conducted. In recent years, the competition authority has taken similar actions against multiple companies. For example, in 2024, Dahua Technology was fined PLN 3.7 million (approximately EUR 900,000/USD 900,000) for restricting the pricing policies of its distributors, and Kia Polska was fined PLN 3.5 million (approximately EUR 800,000/USD 900,000) for imposing minimum resale prices on its dealers. The UOKiK president considers RPMs to be particularly harmful to competition, given their capacity to restrict freedom of establishing prices, therefore negatively affecting market competitiveness and consumer interests. Infringing companies may be subject to significant financial penalties, which can be up to 10% of their annual turnover. The UOKiK president may also impose individual fines on managers of up to PLN 2 million. Moreover, anticompetitive contractual provisions would be void, and affected entities can seek damages in civil courts. 
Italy
  A. Italian Competition Authority (ICA)  1.Mulpor and IBCM fined for repeatedly failing to comply with ICA ruling. In January 2025, ICA fined Mulpor Company S.r.l. and International Business Convention Management Ltd. (IBCM) EUR 3.5 million for repeated non-compliance with a 2019 prohibition decision on unfair trading. In ICA’s view, the two companies sent allegedly deceptive communications to businesses and micro-companies, under the pretext of requesting business data verification, while in fact leading recipients to enter into multi-year contracts for advertising services. ICA considered these communications, resembling those that led to earlier fines in 2019 and 2021, to be disguised as updates to a database called the “International Fairs Directory.” But by signing the forms, business and micro-companies committed to a three-year advertising contract.
ICA concluded that these communications were deceptive, causing recipients to unknowingly subscribe to unwanted services. IBCM also allegedly used undue pressure by threatening legal actions to collect payments for the unsolicited services.  2.Radiotaxi 3570 fined for repeatedly failing to comply with ICA ruling. ICA imposed an approximately EUR 140,000 fine on Radiotaxi 3570 for repeated non-compliance with a June 2018 ruling, which found certain agreements in Rome’s taxi service market to be anticompetitive. According to ICA, the company failed to eliminate allegedly restrictive non-compete clauses in its statutes and regulations that ICA believed hindered competition. Radiotaxi 3570 did not comply with the measures ICA required, including submitting a written report outlining corrective actions, nor did it pay the imposed fines. ICA is considering imposing further penalties, including daily fines, and may consider suspending the company’s operations for up to 30 days in the event of persistent non-compliance.  3.Redetermination of Imballaggi Piemontesi S.r.l.’s cartel penalty. In 2019, Imballaggi Piemontesi S.r.l. was fined more than EUR 6 million for its participation in an anti-competitive cartel in the industry that produces and markets corrugated cardboard sheets. In 2023, after a Council of State ICA judgment– which involved a EU Court of Justice referral for a preliminary ruling on that matter (C-588/24) – ICA had to reassess the fine imposed on Imballaggi Piemontesi S.r.l. on the basis, inter alia, of the effective involvement in the cartel.
The company argued for a reduced penalty, but ICA determined that its participation was to be considered “full” in any case. As a result, ICA maintained the fine at EUR 6 million, which was equal to 10% of the company’s total turnover, within the legal limit. 
European Union
  A. European Commission Commission sends Lufthansa supplementary statement of objections.
The European Commission has issued a supplementary statement of objections to Lufthansa, ordering the airline to restore Condor’s access to Lufthansa’s feed traffic to and from Frankfurt Airport as agreed in June 2024. This step follows an investigation into potential competition restrictions by Lufthansa’s transatlantic joint venture with other airlines. The European Commission has preliminarily assessed that this joint venture restricts competition on the Frankfurt-New York route and that interim measures are needed to prevent harm to competition on this market.
Previously, Lufthansa and Condor had special prorate agreements (SPAs) allowing Condor to access Lufthansa’s short-haul network to feed its long-haul flights. In 2020, Lufthansa notified Condor of the termination of their SPAs. The European Commission expressed preliminary concerns that without these agreements, Condor could struggle to operate sustainably on the Frankfurt-New York route, further undermining the competitive market structure. To ensure the effectiveness of any future decision, Lufthansa must reinstate the previous agreements. This case falls under Articles 101 of the TFEU and 53 of the EEA Agreement, which prohibit agreements that restrict competition.  B. ECJ Decisions
  1.CJEU addresses preliminary questions on the restrictive nature of technical specifications. The Court of Justice of the European Union (CJEU) ruled on the interpretation of Article 42 of the EU’s Public Procurement Directive (Directive 2014/24/EU) regarding technical specifications for public procurement. The case involves a dispute between DYKA Plastics, which produces plastic drainage pipes, and Fluvius, the Belgian grid operator for electricity and natural gas in all municipalities in Flanders. Fluvius required that only drainage pipes made of stoneware and concrete can be used. DYKA argued that this requirement violates the principles of procurement, leading to four preliminary questions addressed to the CJEU.
The CJEU ruled that technical specifications must describe the characteristics of the works, supplies, or services, and that contracting authorities may not make specific mentions of materials—like references to stoneware or concrete—that favor or eliminate certain companies. The CJEU also explained that unless the use of a specific material is unavoidable, references to that material must be accompanied by the words “or equivalent.” In conclusion, the CJEU stated that eliminating companies or products through incompatible technical specifications necessarily conflicts with the obligation to provide equal access to procurement procedures and not to restrict competition per Article 42 of Directive 2014/24.  2.Beevers Kaas BV v. Albert Heijn België NV raises preliminary questions about parallel obligation. The case involves a dispute between Beevers Kaas, the exclusive distributor of branded dairy products in Belgium and Luxembourg, and Albert Heijn, a distributor in other markets. Beevers Kaas alleges that Albert Heijn violated exclusivity arrangements by selling in Belgium, while Albert Heijn argues that it cannot be prohibited from actively selling and that the exclusivity agreement offers insufficient protection. The case was referred to the CJEU to address the application of Article 4(b)(i) of the former EU Vertical Block Exemption Regulation (Regulation (EU) 330/2010 – old VBER), which has since been replaced.
First, the CJEU asked whether the “parallel obligation” requirement (where a supplier granting exclusivity to one buyer in a territory must also restrict other buyers from actively selling in that territory) may be fulfilled merely by observing that other buyers are not actively selling in the exclusive territory. Advocate General Medina’s January 2025 opinion states that the mere observation that other purchasers are not actively selling in the area is insufficient.
Second, the CJEU was asked to clarify whether proof of compliance with the “parallel obligation” must be maintained throughout the entire applicable period, or only when other purchasers show their intent to sell actively. According to Advocate General Medina, the supplier must generally demonstrate that the parallel obligation is fulfilled for all its other buyers within the EEA during the entire period for which it claims the benefit of the block exemption. 
Japan
  A. JFTC orders mechanical parking garage manufacturers to pay a surcharge of approximately JPY 520 million for bid-rigging allegations. In December 2024, the Japan Fair Trade Commission (JFTC) issued cease-and-desist orders to five manufacturers of mechanical parking garages and other facilities for bid-rigging allegations. The JFTC also ordered four manufacturers to pay a surcharge of approximately JPY 520 million in total.
According to the JFTC, the manufacturers repeatedly engaged in bid-rigging to determine which companies would receive orders from major general contractors, and at what price. The manufacturers are suspected to have engaged in bid-rigging, but one of them is also suspected of avoiding JFTC orders under the leniency program. The JFTC sent the proposed disciplinary measures to the manufacturers and will issue an order after receiving feedback from each.  B .JFTC issues cease-and-desist orders to a cloud services company for the first time. In December 2024, the JFTC issued a cease-and-desist order to MC Data Plus, Inc., a company providing cloud services regarding labor management, for unfair trade practices that allegedly prevented customers from switching to other companies’ services. The order comes after the JFTC conducted an on-site inspection of MC Data Plus in October 2023.
According to the JFTC, starting in 2020, MC Data Plus refused to provide its clients with information on their employees, which the client registers on the cloud, in a form compatible with other labor safety services, due to the protection of personal information. The JFTC determined that such an act falls under the category of “interference with transactions (unjustly interfering with a transaction between its competitor),” which Japanese antimonopoly law prohibits.
This is the first time that a cease-and-desist order has been issued in connection with transactions regarding cloud services. MC Data Plus has filed a lawsuit to have the order revoked and has also filed a petition to suspend the order’s execution. 
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.

SEC Division of Corporation Finance Expands Confidential Review Accommodations for Draft Registration Statements

On March 3, 2025, the staff of the Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Division) announced that it enhanced certain existing accommodations under the Jumpstart Our Business Startups Act, which was enacted in April 2012 and which accommodations were expanded in 2012 and 2017, that allow for confidential SEC review of certain draft registration statements by expanding the availability of certain general accommodations and by including additional accommodations for companies that have gone public but have not yet achieved “Well-Known Seasoned Issuer” (WKSI) status.1
Following Monday’s announcement, issuers will now be able to submit all of the following draft registration statements for nonpublic review:

a registration statement under the Securities Act of 1933, as amended, for an initial public offering of securities or for any subsequent public offering of securities, regardless of how much time has passed since the initial public offering (rather than only up to one year later, as had previously been the case);
a registration statement on Form 10, 20-F or 40-F for the initial registration of any class of securities under either Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange Act) or any subsequent registration statement for the registration of a class of securities under either Section 12(b) or Section 12(g) of the Exchange Act, regardless of how much time has passed since the issuer became subject to the reporting requirements of the Exchange Act; or
a registration statement for a de-SPAC transaction where the SPAC survives the business combination as the public company and the co-registrant target would otherwise be independently eligible to submit a draft registration statement.2

The new guidance is particularly significant for public companies that have been public for more than a year but have not yet achieved WKSI status, as it permits such companies to continue to confidentially submit draft registration statements indefinitely. As a result, non-WKSI’s may now avoid suffering the market pressure associated with filing a registration statement publicly and effectively pre-announce a transaction before launch, as was previously required. Moreover, reporting companies may now exclude the name of the underwriter(s) from their initial draft registration statement submissions so long as the company provides such name(s) in subsequent submissions and public filings. Finally, pursuant to the 2017 expansion of accommodations, issuers that confidentially submit a draft registration statement subsequent to their initial registration statement must make such registration statement and nonpublic draft submission publicly available on the EDGAR system at least two business days prior to any requested effective time and date; under the new guidance, however, the staff will now consider reasonable requests to expedite that two-business day period.
In issuing this new guidance, the Division underscored that “further expansion of these accommodations can facilitate capital formation, without diminishing investor protection.”

1 A WKSI is an issuer that meets all of the following obligations at some point during a 60-day period preceding the date the issuer satisfied its obligation to update its shelf registration statement: (i) the issuer is eligible to register a primary offering of its securities on Form S-3 or Form F-3; (ii) as of some date within 60 days of its eligibility determination date, the issuer has an outstanding minimum $700 million in worldwide market value of voting and non-voting equity held by non-affiliates (i.e., public float)– or – has issued at least $1 billion aggregate amount of non-convertible securities other than common equity, in primary offerings for cash in the last three years; and (iii) the issuer is not an ineligible issuer (i.e., an issuer that has not filed all required reports under Section 13 or 15(d) of the Exchange Act in the preceding 12 months; a blank check company; an issuer in an offering of penny stock; or the like). The benefit of WKSI status is automatic effectiveness of registration statements on Form S-3 or F-3, without any SEC review.
2 In essence, this accommodation puts the traditional de-SPAC structure on even footing with alternative de-SPAC structures that already allow confidential submission (i.e., where the target company or a newly formed company is the registrant).

SEC Staff Significantly Shifts Guidance on Impact of Lock-Up Agreements on Business Combinations (Rule 145(a))

KEY TAKEAWAYS

On March 6, 2025, the Staff of the SEC (the “Staff”) changed its guidance regarding the use of “lock-up agreements” and written consents on Rule 145(a) transactions (i.e., certain mergers and other business combination transactions).[1]
The Staff will no longer object to the registration of securities on Form S-4 (or Form F-4) where locked-up target company insiders deliver written consents approving the transaction before the registration statement is filed, subject to specific conditions.
This represents a significant shift of the Staff’s prior position, which had been that the Staff would object to subsequent registration on Form S-4 (or Form F-4) if lock-up agreements and written consents had been delivered before filing (typically at the signing of the merger agreement).
The updated guidance also requires that all security holders entitled to vote on the transaction receive a prospectus.

ANALYSIS
Background
In the context of business combination transactions covered by Rule 145(a) under the Securities Act of 1933, as amended (the “Securities Act”), the acquiring company typically seeks “lock-up agreements” from management and principal security holders of the target company committing them to vote in favor of the transaction. The execution of such agreements in a stock-for-stock merger may constitute an investment decision under the Securities Act, potentially triggering registration requirements. From a practitioner’s perspective, the Staff’s position was problematic because such insiders typically are involved in the transaction and highly knowledgeable about the parties and also because acquirors often want contractual assurance that those insiders will support the transaction in their capacity as stockholders.
Prior Guidance
Previously, the Staff had taken the position that if persons entering into lock-up agreements also delivered written consents approving the transaction before the registration statement on Form S‑4 (or Form F-4) was filed, the Staff would object to the subsequent registration. This objection was based on the rationale that offers and sales had “already been made and completed privately, and once begun privately, the transaction must end privately.”[2] In addition, prior to this update, the guidance did not expressly state that the prospectus be delivered to all security holders entitled to vote on the transaction.
Updated Position
The updated guidance, dated March 6, 2025, reflects a significant shift in the Staff’s approach. The Staff will now not object to the subsequent registration where target company insiders who entered into lock-up agreement have also delivered written consents, provided that:

such insiders will receive securities of the acquiring company only in an offering made pursuant to a valid Securities Act exemption; and
the securities registered on Form S-4 (or Form F-4) will be offered and sold only to those who did not deliver such written consents.

This change allows stock-for-stock mergers and similar transactions to proceed with a combination of exempt offerings (for insiders who provided consents) and registered offerings (for other security holders).
The update also adds a prospectus-delivery requirement to the list of conditions that must be met when lock-up agreements are used.
Conditions for No-Objection When Lock-Up Agreements Are Used
The Staff continues to recognize the legitimate business reasons for seeking lock-up agreements in Rule 145(a) transactions and will not object to the registration of offers and sales where lock-up agreements have been signed and the following four conditions are met, the fourth of which is entirely new:

the lock-up agreements involve only “target company insiders;”[3]
the locked-up persons collectively own less than 100% of the voting equity securities of the target company;
votes will be solicited from security holders of the target company who have not signed lock-up agreements, if such votes are needed to approve the Rule 145(a) transaction under state or foreign law; and
the acquiring company delivers a prospectus to all security holders of the target company entitled to vote on the Rule 145(a) transaction in accordance with its obligations under the Securities Act.

Practice Implications
This updated guidance provides greater flexibility for structuring business combination transactions covered by Rule 145(a) where target company insiders have provided lock-up agreements and written consents prior to the filing of the registration statement on Form S-4 (or Form F-4). Key practice considerations include:

Two-Track Offering Structure: Companies can now more confidently implement a two-track structure, with exempt offerings for insiders who provide lock-up agreements and written consents and registered offerings for other security holders.
Increased Deal Certainty and Timing Advantages: The updated guidance may provide increased deal certainty and enable shorter transaction timelines by allowing written consents from insiders to be obtained before a Form S-4 (or Form F-4) filing without jeopardizing the ability to register offers and sales to other security holders. This is particularly important in transactions where insiders collectively own a sufficient number of shares to approve the transaction and can act by written consent. Although a prospectus (and, if required, information statement) would still have to be delivered to non-consenting stockholders, the parties can avoid the time associated with holding a stockholders’ meeting. Moreover, from the acquiror’s perspective, it can reduce or effectively eliminate the risk of an interloper or other failure to obtain target stockholder approval.
Disclosure Requirements: The acquiror should ensure that the registration statement clearly discloses the two-track structure, including that insiders who delivered written consents will receive securities through an exempt offering.
Valid Exemption Required: The parties will need to carefully analyze and document the exemption being relied upon for the offers and sales to insiders who provided written consents, as this remains a condition for non-objection by the Staff.
Prospectus Delivery: The acquiring company must still deliver a prospectus to all security holders of the target company entitled to vote on the transaction, including those receiving securities in an exempt offering.

Conclusion
The Staff’s updated guidance provides welcome flexibility for structuring M&A transactions in accordance with Rule 145(a) where insiders have provided lock-up agreements and written consents in connection with the signing of the merger agreement and otherwise prior to the filing of a registration statement. Companies contemplating such transactions should work closely with legal counsel to ensure compliance with all applicable law, including the Securities Act, and rules, regulations and guidance, including that set forth in the updated C&DI Questions 225.10 and 239.13.

[1] SEC Compliance and Disclosure Interpretations, Questions 225.10 and 239.13, updated March 6, 2025.
[2] SEC C&DI Questions 225.10 and 239.13, dated November 26, 2008 (i.e., prior to March 6, 2025).
[3] The term “target company insiders” is defined in Questions 225.10 and 239.13 as executive officers, directors, affiliates, founders and their family members, and holders of 5% or more of the voting equity securities of the target company.

Antitrust Under Trump: Initial Policies and Actions

As the Trump administration’s approach to antitrust takes shape through political appointments, policy statements, speeches, and enforcement actions, our team is tracking new developments and will provide important updates on issues pertinent to clients. This client alert is not intended to be a comprehensive review of specific actions or cases, but rather an at-a-glance review of relevant policies as they are being created.

In Depth

NOMINATIONS AND CONFIRMATIONS
Appointment of Federal Trade Commission (FTC) Chairman 

President Donald Trump appointed FTC Commissioner Andrew Ferguson as the new chairman of the FTC on January 20, 2025.
Ferguson views antitrust enforcement as a facilitator of innovation and believes that because markets are not self-correcting, government intervention on behalf of human flourishing and the protection of workers is necessary.
Despite his intention to “reverse” former Chair Lina Khan’s war on mergers and anti-business agenda, Ferguson has expressed concern with the market power of Big Tech and other large companies being leveraged to gain social or political control.

Confirmation Hearing for AAG Nominee Gail Slater

President Donald Trump nominated Gail Slater as the Assistant Attorney General (AAG) of the US Department of Justice’s (DOJ) Antitrust Division on December 4, 2024.
On February 12, 2025, Slater appeared before the Senate Judiciary Committee for her nomination hearing. The committee advanced her nomination on February 27 with a vote of 20-2.
Slater has expressed a desire to continue enforcement actions against Big Tech and to return to using merger remedies in the form of consent decrees and settlements to address competitive harm.

Confirmation Hearing for FTC Commissioner Nominee Mark Meador

President Trump appointed Mark Meador to the FTC on December 10, 2024.
On February 25, 2025, Meador appeared before the Senate Committee on Commerce, Science, and Transportation for his confirmation hearing.
He echoes Slater’s view that pursuit of Big Tech should remain a priority for the agencies, as should combatting noncompete agreements that overly burden workers and prevent employees from leaving to work for a competitor.

GENERAL UPDATES
Musk Supports Consolidating Antitrust Enforcement Agencies

Responding to a comment by Sen. Mike Lee (R-Utah), who expressed hope that the new administration would consider consolidating the FTC and DOJ, Elon Musk said, “Sounds logical,” appearing to agree with the idea.
Lee referenced the One Agency Act, a bill he proposed in 2021 that would strip the FTC of its antitrust authority and transfer it to the DOJ. When discussing the bill, Lee has compared the current two-agency system to having two presidents.

Agencies Keep 2023 Merger Guidelines 

FTC Chairman Ferguson and Omeed Assefi, Acting Assistant Attorney General of the DOJ’s Antitrust Division, announced on February 18, 2025, that the FTC and DOJ will continue to use the 2023 Merger Guidelines as the framework for their merger review process.
Ferguson cited the time and expense associated with creating new guidelines, as well as his desire to create stability for the parties and the agencies, as the rationale for adhering to the 2023 Guidelines. He did note that “no Guidelines are perfect” and indicated portions could be revisited later.

Ferguson Supports New Hart-Scott-Rodino (HSR) Rules

FTC Chairman Ferguson expressed his support for the new HSR rules, stating that “updates were long overdue” and would “prevent unlawful deals from slipping through the cracks.”
He has previously stated his approval of the new rules, calling them a “lawful improvement over the status quo” in his concurring statement accompanying the rules’ announcement.

Holyoak Sets Out FTC Goals for New Administration

In remarks at the GCR Live conference on January 30, 2025, FTC Commissioner Melissa Holyoak outlined three areas of focus for antitrust under the Trump administration. She explained that the FTC will focus on (i) making the merger review process better and more predictable, (ii) ensuring that antitrust concerns will not impede artificial intelligence innovation, and (iii) fighting against Big Tech censorship.
In later remarks, Holyoak said that she expects the return of early termination, improving staff communication and transparency with the parties in the merger review process, bringing back remedies as a method of resolving merger issues – as well as continuing enforcement actions against Big Tech – and abandoning FTC rulemaking authority.

Meador Targets Anticompetitive Effects of Vertical Mergers

At his confirmation hearing on February 25, 2025, FTC Commissioner nominee Meador indicated that he would address the consumer welfare issues raised by vertical mergers. He noted that vertical integration can allow for increased prices, a reduction in quality, and market foreclosure. He went onto say that he would address these concerns where they arise.

FTC Will Continue to Fight Anticompetitive Behavior in Labor Markets

FTC Chairman Ferguson has emphasized a continuing priority of protecting workers using antitrust laws.
He cited no-poach, wage-fixing, and noncompete agreements, as well as deceptive or misleading hiring practices, as examples of conduct the FTC will fight against to combat labor monopsonies and general harm to workers.
The FTC will approach these issues based on individual cases, not rulemaking (like the Biden administration’s noncompete ban).

Agencies Indicate Return of Merger Remedies

Statements from FTC Commissioner Holyoak and AAG nominee Slater indicate that both the FTC and DOJ will become more open to evaluating merger remedies under the new administration.
Holyoak has stated that the agencies should consider remedies like divestitures when such remedies can successfully preserve competition lost by a merger. Similarly, Slater has stated that when merger remedies are “done right,” they can remove competitive harm from a merger.

FTC Issues Policy to Avoid Staff Participation in the American Bar Association (ABA) Antitrust Section Activities

In response to the ABA’s criticism of the new Trump administration’s recent actions, on February 14, 2025, FTC Chairman Ferguson prohibited FTC political appointees from holding leadership positions in the ABA, participating in or attending ABA events, and renewing ABA memberships.
Ferguson pointed to several historical examples of what he asserts have been ABA political partisanship and leftist advocacy to support his decision, as well as views on the ABA’s loyalty to the interests of Big Tech.

Ferguson Intends to Pursue Diversity, Equity, and Inclusion (DEI), Environmental, Social, and Governance (ESG) Collaborations as Section One Violations

In a document laying out his policy priorities created prior to his appointment to chairman, FTC Chairman Ferguson explained he intends the FTC to “investigate and prosecute collusion on DEI, ESG, advertiser boycotts, etc.,” suggesting the agency may focus its investigations on companies participating in industry groups or other collaborative ventures intended to address social issues or manage industry risks associated with environmental, labor, or diversity issues.

Uncertainty Prevails Over Future FTC Enforcement of the Robinson-Patman Act

FTC Commissioner nominee Meador has written favorably of federal enforcement of the Robinson-Patman Act, a statute prohibiting discriminatory pricing which was largely ignored until the last years of the Biden administration.
Meador suggested that the law should be enforced, particularly in the grocery and consumer packaged goods industries. Ferguson and Holyoak have written in recent FTC dissents that the FTC’s resources would be better served by enforcing the law in appropriate cases where the alleged price discrimination harms competition (e.g., involving actors with market power using price discrimination to monopolize).
Until Meador is confirmed, it is uncertain whether and how Robinson-Patman will be enforced.

Nonprofit Health Care Mergers – Introduction: With Complexity Comes Opportunity

In the evolving health care landscape, mergers between nonprofit health care organizations are becoming increasingly common. Mergers are often driven by a combination of economic factors, the need to improve quality and efficiency of care, and the desire to create value for patients and communities. As the first post in our nonprofit merger series, we will explore why nonprofit health care entities may consider a merger, analyze the economic pressures influencing such decisions, and discuss the structures of nonprofit transactions, including the differences between member substitutions and true mergers. Forthcoming posts in this series will examine the unique due diligence concerns, regulatory approvals, and financing arrangements involved in nonprofit health care mergers.
The Economic Drivers of Nonprofit Health Care Mergers
1. Cost Efficiency and Scale Economies
It is not unusual to find multiple nonprofit health care organizations serving the same or similar patient community in a given market or region. Although competition within a for-profit industry may be seen as beneficial for consumers, most nonprofit health care organizations are competing for the same sources of government funding and/or charitable donations for their capital needs, which can weaken or inhibit the impact of their work both individually and in the aggregate.
As a result, overlapping nonprofits may realize significant economies of scale and make a substantially greater impact by joining forces and centralizing their efforts through a merger. By combining their operations, two organizations can reduce duplicative costs in areas such as administration, technology, and supply chain management. For example, by consolidating back-office functions such as human resources, billing, and procurement, a merged entity can lower its operational expenses and redirect those savings into improving patient care and expanding services. For smaller entities in particular, the cost of implementing advanced medical technology or transitioning to new electronic health record (EHR) systems can be prohibitive. By merging, organizations may be better equipped to absorb these costs and ensure their long-term financial sustainability.
2. Increased Bargaining Power with Payers and Third Parties
Another economic factor is the increased leverage that a larger health care organization has when negotiating with insurance companies and other payors. Together, a merged organization can exercise more market power and negotiate better reimbursement rates than any of the parties could on their own. Higher reimbursement can significantly improve the financial outlook for a nonprofit health care organization, which must carefully balance its mission with its financial health. Before proceeding with a merger, the parties will often engage a third-party consultant to analyze their current payor arrangements and identify opportunities for improvement.
3. Access to Capital
Nonprofit health care organizations, unlike their for-profit counterparts, do not have access to equity markets to raise capital. Mergers can offer a solution to this challenge. By merging, two organizations can improve their creditworthiness, making it easier to obtain loans and other forms of debt financing for future expansion, facility improvements, or technology upgrades. This is particularly important as health care organizations seek to invest in value-based care models that require significant upfront investment in care coordination, population health management, and IT infrastructure. Lending arrangements for nonprofits are typically quite challenging due to concerns about maintaining tax status, use of funds, and restrictions associated with both. It is not uncommon for organizations to restructure their lending arrangements and partners during a merger process or immediately thereafter.
Improving Delivery of Care
1. Enhancing Quality of Care
One of the key motivations for a nonprofit merger is to improve quality and continuity of care. Smaller health care organizations, particularly those in rural areas, may struggle to provide specialized services or maintain high clinical practice standards due to more limited resources. A merger allows the parties to pool their resources and share best practices to build a more efficient and effective care delivery system, thereby improving patient outcomes and practitioner recruitment efforts.
Additionally, mergers can help organizations streamline care pathways. For instance, a health care system with multiple facilities may create better-integrated care models, improving coordination between primary care, specialty care, and hospital services. This enhances patient outcomes by reducing duplication of services, minimizing delays in care, and ensuring that patients receive the appropriate care in the most efficient setting.
2. Expanding Access to Care
For many nonprofit health care organizations, expanding access to care — especially for underserved populations — is a central part of their mission. Mergers can help organizations achieve this goal by expanding their geographic reach and the range of services that they can provide. For example, a small community hospital may merge with a larger regional health system to provide its patients with access to specialized services that were previously unavailable locally, such as oncology or cardiology.
Furthermore, mergers may enable organizations to better address social determinants of health, which is increasingly recognized as critical to improving population health. For example, a Federally Qualified Health Center (FQHC) with a strong primary care practice may consider merging with a nonprofit community-based behavior health clinic to create an integrated preventative care network specific to the medical and behavioral health needs of its community. The larger, more financially stable merged organization may then be able to invest additional resources in community health initiatives, such as housing support and food security programs.
3. Investing in Innovation
Health care providers, and particularly nonprofits, may find it difficult to keep up with the rapid pace of innovation in the health care sector. Merged organizations are often better positioned to invest in these innovations, particularly in areas like telemedicine, data analytics, precision medicine, and value-based care models. By combining resources and patient base data, nonprofit health care organizations can become more responsive to the health care needs of their patient community, contributing to improved clinical outcomes and, in turn, a more financially stable future.
Value Creation Beyond Economics and Care Delivery
1. Mission Alignment
Nonprofit health care organizations are mission-driven, with the goal of serving their communities and improving health outcomes. When two nonprofit organizations merge, they typically seek to align their missions and values. This alignment is essential for ensuring the new entity remains focused on its core objective — whether that is serving a particular patient population, improving community health, or promoting medical research and education.
This often creates a situation where the two parties to the proposed merger are forced to negotiate a revised set of bylaws better suited for the combined entity post-closing. Important in this negotiation is understanding the terms around board structure, committees, executive officers, and general governance post-closing. It is not uncommon to see an expanded board or some combination of the two boards along with a realignment in officer positions. This is often an area of significant negotiation during the merger process.
2. Organizational Culture and Leadership Stability
In the nonprofit health care sector, where mission and values are paramount, ensuring that the two organizations’ cultures are compatible is essential. A well-executed merger offers a unique opportunity to bring fresh perspectives into leadership while preserving and building upon the parties’ existing strengths. By integrating their boards and leadership teams, merged organizations may foster the environment for more innovative and effective strategies for fulfilling a unified mission.
Structures of Nonprofit Health Care Transactions
Nonprofit health care mergers utilize unique transaction structures, primarily because they do not have shareholders and are organized for charitable purposes. Two common structures for combining nonprofit health care organizations include a member substitution and a true merger per state law.
1. Member Substitution
In a member substitution transaction, one nonprofit organization becomes the controlling member of another nonprofit without the two organizations dissolving or fully integrating into a single entity. The sole member (usually the parent organization) gains the authority to appoint the board members of the other organization and effectively controls its governance and operations. Note that a member substitution may not be viable in some states where nonprofit entities are not required or permitted to have members.

Benefits: Member substitution is often viewed as a less disruptive approach compared to a true merger. With a member substitution, the controlled entity retains its legal identity, which can help preserve relationships with donors, the community, and key stakeholders. This structure can also be advantageous for organizations wanting to maintain some degree of autonomy, particularly if they have a strong local presence or identity. Also important is that this structure still maintains separation of liabilities between each entity, i.e., liabilities of the nonprofit relinquishing control do not become the liabilities of the controlling member. A merger between a large health system and a smaller, local hospital may elect this structure in order to minimize disruption to the controlled entity’s local operations.
Challenges: The drawback of a member substitution is that it may not achieve the full benefits of integration, such as cost savings or streamlined operations. There may also be governance challenges if the controlled entity’s leadership or board resists the level of oversight imposed by the parent organization. Administratively, a member substitution can also be challenging because of the multiple levels of board governance.

2. True Merger
In a true merger, two or more nonprofit health care organizations combine into a single legal entity. The merged organization typically has a unified governance structure, leadership team, and operational model. This type of merger represents full integration and can provide the most significant opportunities for cost savings, operational efficiencies, and strategic growth.

Benefits: A true merger allows for complete consolidation of assets, liabilities, and operations. The merged organization can realize the maximum potential for economies of scale, enhanced bargaining power, and operational integration. Additionally, a true merger simplifies governance by creating a single board of directors and a unified executive leadership team.
Challenges: A true merger is more complex and may require regulatory approvals, including from the state attorney general or other regulatory bodies overseeing nonprofit or health care entities. The process can be time-consuming and may involve significant costs associated with legal, financial, and operational integration. A true merger also means that the surviving entity inherits the liabilities of the merged entity, which can result in unforeseen liability and risks for the surviving entity.

Conclusion
Mergers among nonprofit health care organizations are driven by a combination of economic pressures, the need to improve care delivery, and the desire to create long-term value for patients and communities. Whether through a member substitution or a true merger, these transactions can help organizations achieve financial stability, enhance quality of care, and expand access to services. However, nonprofit mergers require careful planning, particularly around governance, cultural integration, and mission alignment, to ensure that the merged organization remains focused on its charitable objectives and continues to serve its community effectively.
For nonprofit health care organizations considering a merger, it is essential to weigh both the financial and operational benefits, as well as the impact on the mission, before moving forward. With the right strategic approach, a merger can both strengthen the financial position of the parties and enhance their ability to serve their patients and communities.

The Personal Side of M&A: Helping Business Owners Turn Vision into Legacy

For many business owners, their company is far more than a financial asset or something they list on a personal financial statement. It’s the product of their years of hard work, risk, and dedication. In many cases, it is even a family legacy. As an M&A lawyer, I have had the privilege of counseling many business owners through one of the most significant chapters in their lives: the sale of their business.
The Emotional Aspect of Selling a Business
Selling a business isn’t simply a transaction; it’s a transition from one phase of life to the next. For entrepreneurs, a company is more than just an income stream. It embodies their vision, the long days and late nights they worked to build it, and the sacrifices they made to keep it growing.
For me, as an M&A lawyer representing the seller’s side, guiding owners through this emotional journey is a more worthwhile experience than the sale itself. While the numbers and legal terms are critical, equally important are the personal goals and aspirations of my clients. For some, selling a business marks the beginning of retirement or a well-earned sabbatical. For others, it’s an opportunity to invest in a new venture and reignite their entrepreneurial spark. Understanding why they are selling and what’s next for them is as essential as negotiating the deal itself.
Aligning Personal Goals with Strategy
Each seller’s situation is unique. Some business owners want to maximize value to secure their family’s future, while others prioritize finding the right buyer to preserve the culture and legacy they’ve built. I view my role as more than just structuring a deal—it’s about helping clients achieve their personal definition of success.
For instance, when an entrepreneur tells me they want to ensure their employees are taken care of following the sale, I weave that commitment into the negotiation process along with the other material deal terms. When an owner envisions using the proceeds to pursue philanthropic endeavors, I help ensure that the practical financial outcome supports that goal.
Celebrating the Entrepreneurial Spirit
Entrepreneurs are remarkable individuals. They start with an idea, take risks others might avoid, and build a legacy that positively impacts their lives and the lives of their employees. I’ve always admired the entrepreneurial spirit and it’s incredibly rewarding to be part of their journey at such a transformative moment.
One of the most fulfilling aspects of my work is seeing business owners realize what they’ve built. In many ways, a successful sale is a celebration of their achievements. It’s an acknowledgment that their vision and effort created something enduring—a business that now has new opportunities for growth under new leadership.
Why the Right Counsel Matters
The sale process can be complex and overwhelming, especially when emotions run high. Having the right M&A counsel means having someone who not only understands the legal and financial nuances, but also appreciates the personal stakes. My approach is to bring clarity, confidence, and care to every step of the process. Sellers need someone who can advocate for their best interests while respecting the legacy they’re entrusting to the next owner.
Final Thoughts
The sale of a business is more than a transaction; it’s the culmination of a dream. Representing sellers has given me a front-row seat to some truly inspiring entrepreneurial stories, and I feel privileged to help business owners achieve their goals—both professional and personal. Whether it’s unlocking new opportunities, securing a family’s future, or ensuring the continued success of a legacy, my mission is to make the process as smooth, successful, and meaningful as possible.

California: AB 1415 and Expanded OHCA Oversight — What Providers, MSOs, and Investors Need to Know

On February 21, 2025, California introduced AB 1415, a bill aimed at expanding the regulatory oversight of the Office of Health Care Affordability (OHCA). As discussed in our previous blog, certain health care entities are required to provide written notice to OHCA of any proposed merger, acquisition, corporate affiliation, or other transaction that will result in a material change to the ownership, operations, or governance structure of a health care entity. AB 1415 seeks to expand the types of entities required to provide notice to OHCA by:

Expanding the definition of a “health care entity” to include management services organizations (MSOs).
Imposing notification requirements on private equity groups, hedge funds, and newly formed business entities involved in certain transactions.
Broadening the definition of “provider” to include health systems and entities that own, operate, or control a provider.

Inclusion of Management Services Organizations
Currently, the OHCA statutes and regulations define a “health care entity” as a payor, provider, or a fully integrated delivery system. AB 1415 would expand this definition to specifically include MSOs within the definition of a health care entity directly regulated by the statute. An MSO is defined in AB 1415 as “an entity that provides administrative services or support for a provider, not including the direct provision of health care services.” The bill specifies that administrative services may include, but are not limited to, functions such as utilization management, billing and collections, customer service, provider rate negotiation, and network development.
This broad definition could capture a broader scope of administrative service providers that have not been traditionally considered an MSO. For example, a business that exclusively provides billing and collections services to health care organizations may be included within the definition of an “MSO,” even though they are not engaged in the management of a health care practice. While these functions align with typical MSO activities, AB 1415’s use of open-ended language in the definition could extend OHCA’s oversight to other intermediaries that support providers but do not exert managerial control over them, such as third-party administrators (TPAs) and health care technology firms.
If interpreted broadly, AB 1415 could impose unintended compliance burdens on entities that offer administrative services without directly influencing health care delivery, potentially increasing regulatory complexity for non-clinical service providers.
Notification Requirements for Private Equity and Hedge Funds
AB 1415 would establish a notification requirement for private equity groups, hedge funds, and newly formed business entities involved in transactions with health care entities. These entities would be required to provide written notice to OHCA before entering into agreements that:

Sell, transfer, lease, or otherwise dispose of a material amount of a health care entity’s assets to another entity.
Transfer control, responsibility, or governance over a material portion of the health care entity’s operations or assets.

Notably, the definition of a “private equity group” in AB 1415 is broader than the definition of that same phrase in the recently proposed SB 351. SB 351 similarly targets private equity and hedge fund involvement with management arrangements of medical and dental practices in California.
If enacted, California would be among the first states to require private equity groups to report such transactions, and the only state to explicitly include hedge funds in its health care transaction review law.
Expanded Definition of “Provider”
AB 1415 proposes expanding the definition of “provider” to include both private and public health care providers, health systems, and any entity that owns, operates, or controls a provider.
The current OHCA statute and regulations apply to nearly all health systems in California, because the definition of a “provider” includes acute care hospitals and several other types of provider organizations that comprise a “health system.” AB 1415 would separate “health systems” into their own category of a “provider,” which would encompass both for-profit and nonprofit health systems, and combinations of hospitals and other physician organizations or health care service plans. It is not entirely clear whether the addition of “health systems” to the definition of “providers” will further expand the scope of OHCA’s applicability.
In addition, by expanding the definition of “provider” to include entities that own, operate, or control a provider, AB 1415 would extend regulatory oversight beyond direct care providers to financial and management entities, including holding companies, parent corporations, and private equity-backed groups.
Takeaways
AB 1415 represents a potential significant expansion of regulatory oversight in California’s health care market. By broadening the scope of health care entities required to notify OHCA of material transactions, the bill seeks to increase transparency, prevent unchecked consolidation, and include oversight extending beyond direct care providers. However, the bill’s proposed broad definitions may capture more entities than intended, increase compliance burdens, and slow down transactions in an already complex regulatory environment.
Stay tuned for further updates as AB 1415 moves through the legislative process. For now, health care providers, investors, and management entities should closely monitor its progress. If passed, the bill will create new compliance obligations that could significantly impact future health care transactions and corporate ownership structures.

LINCARE GOES DOWN!: Home Respiratory Care Company Crushed With TCPA Class Action Certification Ruling After Making Calls to Customers of Predecessor Company

Here’s another big one folks.
One company buys another company and then sends marketing messages to the form company’s customers.
Seems ok, right?
Nope and Lincare just found that out the hard way.
In Morris v. Lincare, Inc. 2025 WL 605616 (M.D. Fl. Feb. 25, 2025) a court certified a TCPA class action involving Lincare’s prerecorded messages to consumers who had consented to receive contact from a predecessor company.
In Morris the class members had all signed express written consent agreements with American HomePatient, Inc. However, Lincare apparently purchased the company and absorbed it various assets–including its contact list.
Lincare began sending prerecorded messages to the Plaintiff after the transition took place and Plaintiff sued arguing it had consented to calls from API, but not from Lincare.
While the Court in Morris did not answer the ultimate substantive question of whether or not the consent was valid it did certify the case as a class action finding that the issue of consent–amongst others–was common across the entire class. As such the court certified the case as a class action.
The result is that Lincare must now face suit over calls made to over 1,800 people and faces millions in potential damages– for doing nothing more than calling people that had consented to receive calls from a company it purchased.
This is an important case for folks considering as part of due diligence for an asset purchase or company acquisition. Troutman Amin, LLP commonly gets brought in a part of diligence reviews for mergers and acquisitions where TCPA issues are apparent. But many M&A teams completely miss TCPA risk– as Morris really highlights the need to pay attention to these issues and to understand the limits on using consent forms naming different entities.
Tired of #biglaw firms billing you like crazy and then trying to get you to settle TCPA class actions for millions?

How the New US Antitrust Enforcement Priorities Are Shaping Up

We still have a limited sample—Andrew Ferguson has only been in the FTC Chair role a month, and Gail Slater, Trump’s nominee to head the DOJ Antitrust Division, is just nearing the end of her confirmation process. That said, each is starting to give indications about where enforcement policies and priorities may shift relative to the outgoing leadership at the antitrust agencies—a continued focus on “Big Tech” adding censorship as a competitive harm, more predictability to promote business certainty, and a case-by-case approach to labor market (e.g., non-compete) enforcement. Here’s what we know so far.
Andrew Ferguson – FTC Chair
Andrew Ferguson became FTC Chair immediately after inauguration on Jan. 20, 2025. He was able to assume the role without a confirmation because he was already a sitting Commissioner confirmed by Congress in the spring of 2024. Before joining the FTC, Ferguson served as a solicitor general of Virginia, chief counsel to Sen. Mitch McConnell, and Republican counsel for the Senate Judiciary Committee. He also worked in private practice after clerking for Judge Karen L. Henderson of the D.C. Circuit and U.S. Supreme Court Justice Clarence Thomas.
As Commissioner, Ferguson authored several strong dissents, critical of what he perceived as overstep by the prior FTC majority. On Feb. 20, Chair Ferguson gave a window into his priorities during an interview with Fox Business. From that several themes emerged.

Focus on Big Tech, Consolidation, & Censorship. During his interview, Chair Ferguson was critical of companies with “economic power” that enabled abuses in “social and political ways, like with censorship.” He said he will look to prevent those conditions and confront abuses of such power in the future. Along these lines, Chair Ferguson expressed opinions that Section 230 of the Communications Decency Act, which provides certain immunity to online platforms for third-party content or its removal, was originally intended to promote nascent business but is now used by large platforms to “mistreat ordinary Americans,” and the courts or Congress should address that. When it came to “Big Tech” specifically, he commented that pending FTC cases will continue and “all of Big Tech is going to remain under the microscope” as the authorities hold “Big Tech’s feet to the fire.” 
Emphasis on Business Certainty—Especially in Merger Reviews. Chair Ferguson made clear that promoting a “vibrant, innovative economy” is a priority and he sees his part in that as providing clarity and certainty to the business community. Consistent with this statement, Ferguson also issued a memo to FTC Staff on Feb. 18 affirming that the joint FTC and DOJ Merger Guidelines issued in 2023 will continue to guide agency merger analysis. During his interview he stated that the guidelines are “not perfect” and they “push the envelope a bit.” However, he wants to hold off on any changes and base them on future working experience because the Guidelines are generally “consistent with older guidelines” and “case law” in his view. If revisions to the Guidelines are needed, he said they will be done in an “iterative transparent revision process” but he would not “rescind them wholesale.” 
Protecting Labor But Still Against the 2024 Non-Compete Ban. Chair Ferguson reiterated his criticism of the FTC’s rule broadly banning non-compete agreements, the validity of which remains the subject of litigation in Ryan LLC v. Federal Trade Commission, No. 24-10951 (5th Cir. Jan. 2, 2025) and Properties of the Villages, Inc. v. Federal Trade Commission, No. 24-13101 (11th Cir. June 21, 2024). (Many commentators have opined they expect the administration to drop its defense of the FTC ban. But even once a third Republican Commissioner is confirmed, defense of the rule in the courts may continue to preserve questions about the FTC’s rulemaking authority for the Supreme Court.) Despite his opposition to the non-compete rule, however, Ferguson said that the FTC’s job is, in part, to “protect workers” because the antitrust laws “protect labor markets.” Favoring case-by-case enforcement, Ferguson emphasized he will be “focusing very intently on attacking anticompetitive conduct that hurts America’s workers” and will look across industries for no poach, no hire, and non-compete agreements that are unlawful under the Sherman Act.

Gail Slater – Nominee to Lead DOJ Antitrust Division
Gail Slater is the President’s nominee for assistant attorney general of the DOJ Antitrust Division. She most recently served as then-Senator JD Vance’s economic policy adviser, and during the last Trump administration she was an advisor on technology issues for the National Economic Council. Slater worked at the FTC for a decade and also worked in-house, including for an internet trade association. On Feb. 12, 2025, the Senate Judiciary Committee held a hearing on Slater’s nomination, giving a first window into what her approach at DOJ might entail.

Tech Focus – Though Current Cases Could be Narrowed. As her background suggests, technology will remain a focus for Slater. She testified that she “will bring a deep understanding of technology markets to the Department as the common thread in my private sector work was technology.” She views antitrust law as playing a key role in fostering innovation and economic freedom. However, she emphasized that enforcement should be a “scalpel” and “requires evidence of anticompetitive conduct and harm to consumers.” Regarding pending DOJ cases against major tech firms, she committed to reviewing the files but noted that “resources are of course a very important consideration in antitrust litigation and taking cases further . . . . It’s very complex civil litigation . . . and costly.” 
AI: Traditional Analysis of Component Concentration But Open to More Merger Remedies Generally. Slater seemed undecided about AI technology’s impact on competition, but she did commit to looking at “concentration in the AI technology stack.” During her testimony she also noted there is a “critical need to prevent the monopolization of digital markets,” though in another statement she signaled that under her leadership the Division may be more open to settlements in merger cases when “effective and robust structural remedies can be implemented without excessively burdening the Antitrust Division’s resources.” 
Censorship as a Monopolization & Collusion Issue. Like Chair Ferguson, Slater also touched on potential enforcement around censorship. She expressed concern that in highly concentrated markets “anybody’s viewpoint can be quickly throttled or suppressed.” However, Slater also suggested that group boycotts may also be pursued; she noted a recent House Judiciary Committee report describing a trade association’s alleged facilitation of national brands (representing an estimated 90% of domestic ad expenditures) selectively withholding advertising dollars from certain companies. 
Non-Competes as a Potential Abuse of Monopoly Power. Slater said she wanted to “depoliticize” the harms from non-compete agreements. She said “this is a growing concern in many parts of the country. It prevents workers from switching jobs easily, which is particularly problematic in highly concentrated markets.”

As the antitrust landscape in the U.S. evolves under new leadership, businesses across industries should stay alert to shifting enforcement priorities and their potential implications.

America First Investment Policy: U.S. Foreign Investment Policy Evolves under Trump 2.0

Last week, the White House issued a National Security Presidential Memorandum (“NSPM”) intended to address current national security threats while preserving an open environment for international investment.
Key Takeaways: The NSPM outlines further restrictions on investment and M&A activity from foreign adversaries while proposing more favorable treatment for U.S. allies and those firms who distance themselves from these adversaries—in particular, the People’s Republic of China (“PRC”). Going forward, investors and other transaction parties should be aware of three key takeaways from the NSPM: 

Further Restrictions on Chinese Investment in the U.S. The NSPM outlines further restrictions on investments (both inbound and outbound) from U.S. adversaries, continuing the policies of Trump 1.0 and the Biden Administration, with a few added wrinkles—namely, explicitly restricting Chinese investment in several key sectors and industries, including technology, critical infrastructure, and healthcare;
New “Fast Track” Process for U.S. Allies. Contemplating a “Fast Track” process for key U.S. allies and recognizing the increasing burdens posed on these allies by the mitigation agreement framework typically relied on by the Committee on Foreign Investment in the United States (“CFIUS”); and
No Greenfield Exception. The NSPM proposes eliminating the “greenfield” exception long relied on by startups and new ventures to bypass CFIUS review for investments in new businesses.

Critically, the NSPM itself does not adopt any regulations or propose a timeline for doing so; we expect CFIUS to potentially initiate a new rulemaking process to implement these objectives in the near term.
Specific Changes to Current CFIUS Framework: The NSPM articulates a multi-pronged approach to foster foreign investment in the United States:

Contours of the New “Fast Track” Process. The NSPM calls for an expedited “fast-track” process, using objective standards to facilitate more investment from allied countries and partner sources in U.S. businesses involved with advanced technology and other important sectors. Several key questions remain. For example, it is unclear how this “Fast Track” would align with the “Excepted Investor” framework for Five Eyes nations, which currently requires entities to satisfy an exhaustive list of criteria—unless CFIUS were to consider some kind of carve-out or preclearance process for these investments. Moreover, it’s possible CFIUS requires transaction parties seeking to utilize this Fast Track process to demonstrate no commercial relationships with U.S. adversaries—something that may be difficult for investment funds with global operations.
Mitigation Agreement Streamlining. The NSPM calls for simplified mitigation agreements that provide clear, actionable steps for compliance, reducing the bureaucratic burden on investors and transaction parties. Although investors from U.S. allies are often frustrated by the breadth and duration of current mitigation agreements, it is not clear if the implementation of the NSPM would provide concrete relief: it is possible a new approach could take the form of simply preventing investors from maintaining relationships with U.S. adversaries (as noted above) and/or outright prohibiting these investments. 
Passive Investments. The NSPM continues to encourage truly passive foreign investments (e.g., those investments that do not include certain governance or key information rights), although these investments could attract scrutiny if from foreign adversaries.

Restrictions on Adversarial Investments: The NSPM also outlines several measures to safeguard U.S. national security from investments from key U.S. adversaries:

Restrictions Governing U.S. Companies and Investors. The Secretary of the Treasury, in consultation with the heads of other executive departments as deemed necessary, is directed to establish new rules to prevent U.S. companies and investors from investing in industries that advance the PRC’s national Military-Civil Fusion strategy and prevent PRC-affiliated persons from buying up critical American businesses and assets. As part of the broader review, the Trump Administration (“Administration”) will consider applying restrictions on certain outbound investment types—including private equity, venture capital, greenfield investments, corporate expansions, and investments in publicly traded securities—in the PRC, especially in high technology sectors such as semiconductors, artificial intelligence, and biotechnology.
Further Review of Real Estate Transactions. The Administration plans to further utilize CFIUS to safeguard specific critical American assets, including strategic technology and infrastructure, as well as farmland and real estate near sensitive government facilities, from investment by foreign adversaries. 
No Greenfield Exception. The Administration is also committed to strengthening CFIUS authority over “greenfield” investments to restrict foreign adversary access to domestic sensitive technologies, including artificial intelligence. Transaction parties should be aware that eliminating this exception would significantly expand CFIUS’ jurisdiction and expose many more transactions to CFIUS review—including angel and early-stage startup investments.

M&A Playbook for Acquiring AI-Powered Companies

As artificial intelligence (AI) continues to transform the business world, acquirors need to prepare for a deep dive when evaluating companies that use AI to enable their businesses or create proprietary AI. Key considerations for buyers targeting AI-driven companies include understanding how AI is being used, assessing the risks associated with AI creation and use, being mindful of protecting proprietary AI technology, ensuring cybersecurity and data privacy, and complying with the regulatory landscape.
Risk Allocation
When acquiring a company that utilizes AI, it is vital to assess the potential risks associated with the AI technologies and their outputs. Buyers should review the target’s third-party contracts to understand how risks are allocated, including warranties, limitations of liability, and indemnification obligations. Buyers should also evaluate potential liabilities by considering where AI-generated content might infringe on copyrights or where AI malfunctions could lead to breaches of commitments or cause harm. Finally, buyers should analyze the target’s insurance coverage to ensure the company has adequate policies in place to cover potential third-party claims related to AI usage.
Protection of Proprietary AI Technology
For companies that have developed proprietary AI technologies, understanding how these assets are protected is essential. Buyers can take steps to mitigate liabilities associated with this area by reviewing the target’s intellectual property strategies. This can include a review of the target’s approach to protecting AI technologies, including patents, copyrights, and trade secrets. Additionally, the target’s security measures should be thoroughly analyzed so the buyer can confirm that reasonable measures are in place to maintain the secrecy of AI models, such as robust information security policies and nondisclosure agreements.
Cybersecurity and Data Privacy
If the target company uses personal or sensitive data in their AI technologies, buyers need to take a closer look at the target’s data protection practices. For example, buyers should assess the target’s compliance with applicable privacy laws and regulations, as well as conduct an evaluation of the target’s compliance measures with respect to data-transfer requirements in applicable jurisdictions. Further, the target’s third-party vendor contracts must include appropriate obligations for data privacy and cybersecurity.
Compliance Support and Regulatory Landscape
Finally, a rapidly evolving regulatory environment around AI requires M&A buyers to ensure that target companies can adapt to new regulations. Buyers can examine the target’s systems for overseeing AI use and addressing regulatory challenges, such as minimizing bias and ensuring transparency. Organizational support is also essential, and the buyer should consider what resources the target company has in place to address compliance issues related to AI that may arise.
Implications for M&A Buyers
As AI continues to advance and integrate into various sectors, M&A buyers need to stay ahead of the game when it comes to the unique challenges of acquiring AI-driven companies. By conducting thorough due diligence in the areas addressed above, buyers can better assess potential liabilities and ensure a smoother integration process. By focusing on and understanding these key areas, buyers not only mitigate risk but also position themselves to capitalize on the strategic advantages of AI technologies. In turn, buyers can make informed decisions that protect their investments and leverage AI for future growth.
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M&A in the EU Market: Essential Factors for Investors to Consider

Investing in Europe: Is it a good time to do so? Opinions differ. The EU financial sector has experienced significant growth in recent years, driven by technological advancements and evolving consumer preferences, but there is also heavy regulation. Despite the downsides of a high degree of regulation, such as increased costs, inflexibility, many internal guidelines, and a higher number of employees, it also has a positive effect on the overall market and economic opportunities.
Financial regulation ensures stability, transparency, and consumer protection. Especially in the financial industry, these are key aspects customers look at, considering the major failures we have seen in the fintech market in recent years. Against this background, the EU financial market presents a unique landscape for mergers and acquisitions (M&A), characterized by stringent regulations, evolving market dynamics, and emerging trends.
Understanding the key considerations for transactions in the financial industry is crucial for investors looking to navigate this complex environment. This article outlines essential factors to review when investing in entities regulated in the European Union. It also highlights the differences from investments in other jurisdictions and industries, discusses the expected timing, and explores current trends in EU FinTech investments.
Investing in the EU financial industry differs from investments in other jurisdictions and industries in several ways, including:
Regulatory Scrutiny: The financial industry is subject to higher regulatory scrutiny compared to other sectors. This means investors must navigate complex regulatory frameworks and ensure compliance with stringent requirements.
Systemic Risk: Financial institutions are interconnected and play a critical role in the economy. As such, they are exposed to systemic risks that can have widespread implications. Investors must assess the target entity’s risk exposure and mitigation strategies.
Capital Requirements: Financial institutions are required to maintain certain capital levels to ensure solvency and stability. Investors must evaluate the target entity’s capital adequacy and its ability to meet regulatory requirements.
Key pre-deal considerations
Conducting thorough due diligence is paramount. It is crucial to ensure that the target entity is appropriately regulated. Investing in an entity that is not regulated but should be can lead to significant legal and financial risks. Supervisory authorities may take enforcement actions against both the entity and the acquirer, including fines, sanctions, and even the revocation of licenses.
Due Diligence
When preparing for and evaluating an acquisition in the financial sector, particularly in the EU, it is important to carefully determine, as part of the due diligence, whether the target complies with the applicable financial supervisory law. In particular, does the target have the license required for its type of business or does it need a license at all?
If a license is required, it is also essential to determine whether the target consistently fulfills the requirements necessary for the license, in particular with regard to risk management, money laundering, reporting, and liquidity and equity. However, on 17 January 2025, it also became necessary to determine whether the requirements for cybersecurity and operational resilience under the Digital Operational Resilience Act are being met, especially with regards to outsourcing.
The legal consequences of noncompliance with the requirements are far-reaching and can not only affect profitability but also lead to a complete ban on business activities, the exclusion of management, severe fines, and a restriction of new business, especially if anti-money laundering (AML) and risk management are not sufficiently set up. Measures taken against a licensed company are always published by the financial supervisory authority, along with the respective deficiencies. This ‘naming and shaming’ leads to a loss of trust in the market, which in turn can lead to a loss of customers.
Does this mean that when it comes to investments, it is better to steer clear of the EU financial sector? With so many regulations, it is challenging to always comply with the numerous requirements, let alone check compliance as part of a due diligence process.
As always, a risk assessment must be convened on the basis of appropriate information. It is neither possible nor necessary to check every single violation and every facet of regulatory compliance in each individual case. This would also exceed any reasonable level of financial investment prior to the transaction. But experienced advice that provides an overview of compliance and potential red flags with regards to the most important parameters and showstoppers is essential.
For example, for many regulations, rectification is possible and sufficient following a notice of noncompliance from the financial supervisory authority. However, a distinction must be made: what are the showstoppers and where can we go along without seeing a major risk.
On that basis, key points to consider in the due diligence process are:
The target’s business model and the necessary licenses in each jurisdiction.
Ongoing proceedings, orders, or enforcements of the competent supervisory authority.
The target’s compliance with key regulatory requirements and whether the necessary structures are in place, particularly with regard to capital requirements, AML compliance, reporting obligations, and risk management.
Deal phase: Owner control proceeding
An owner control proceeding is triggered when an investor intends to acquire a significant stake in a licensed EU entity (i.e., more than 10% of the equity or voting rights in the target entity, alone or together with other parties). This threshold is set to ensure that any significant influence over the management and operations of the entity is subject to regulatory scrutiny. The goal is to maintain the stability and integrity of the financial system by ensuring that only fit and proper persons can exert control over regulated entities.
What happens in an owner control proceeding?
The owner control proceeding involves a comprehensive assessment by the relevant supervisory authorities, such as the European Central Bank, or national competent authorities such as BaFin in Germany. The key requirements include:
Notification: The proposed acquirer must notify the relevant authority of their intention to acquire a qualifying holding. Intention means the obligation to notify may arise already pre-signing (e.g., when the necessary shareholder resolutions to the acquisition are passed). This notification needs to include detailed information about the acquirer, the acquirer’s shareholding structure, the transaction, and the target entity.
Documentation: The acquirer must provide extensive documentation, including financial statements, business plans, and information about the acquirer’s background and reputation. Additionally, financing and origin of the funds used to finance the transaction need to be filed with the competent authority. This will help the authorities assess the financial soundness and integrity of the acquirer.
Fit and proper test: The authorities will conduct a fit and proper test to evaluate the suitability of the acquirer and its managing directors. Documentation to be provided also includes extensive information on the managing directors and board members of the acquirer and its shareholders (e.g., cover letters, certificates of good conduct, and letters of recommendation).
Impact assessment: The acquirer must demonstrate how the acquisition will impact the target entity and its group structure. This includes assessing the potential effects on the entity’s governance, risk management, and overall stability. It is, therefore, necessary to file a three-year business plan for the target company to prove the ongoing financial and economic stability.
Important to navigate smoothly through the process
Navigating the owner control proceeding smoothly requires careful preparation and attention to detail. Here are some key tips:
Early engagement: Engage with the supervisory authorities early in the process. This helps in understanding their expectations and addressing any concerns proactively.
Comprehensive documentation: Ensure all required documents are complete, accurate, up to date, and translated, if necessary. Not all authorities accept English-language documentation. Also, incomplete or inaccurate documentation can lead to massive delays. Some of the necessary documents take time to be obtained, especially if further national authorities are required for such documents.
Clear communication: Maintain clear and transparent communication with the authorities.
Professional advice: Seek early-stage professional advice from legal and financial professionals who focus on regulatory compliance. The process is complex and the risk that authorities will delay or reject the transaction is high. Experienced advice helps to navigate smoothly through the process and understand the key parameters in regulatory proceedings.
What kicks you out?
Several factors can lead to the rejection of an owner control application, especially if the acquirer is unable to demonstrate financial stability and soundness or if the acquirer fails the fit and proper test due to issues related to integrity, competence, or reputation. If the acquisition is deemed to have a negative impact on the target entity’s stability, the application will be denied as well.
Special SPA provisions
The Share Purchase Agreement (SPA) must also take into account the regulatory particularities. Any findings or uncertainties arising from the due diligence can be covered by corresponding representations and warranties, provided that they are not absolute showstoppers.
Successful completion of the ownership control procedure should be included as a closing condition. If the parties agree to a long stop date, it is important to take into account the usual processing times based on experience with the competent supervisory authority.
To the extent necessary, arrangements regarding equity and liquidity must be made with the seller side to ensure that all requirements are met upon closing. This applies, in particular, if equity has previously been secured through financing measures by the parent company.
Depending on the regulation and jurisdiction, managing directors and board members in the target company may also only be able to take up office after the individuals have been approved by the supervisory authority.
Expected timeline
The timeline for completing an M&A transaction in the EU financial market can vary depending on several factors. The main timing issue, which is different from non-regulated deals, is the duration of the owner control proceeding. Even though EU regulators have deadlines within which they need to respond and decide, they usually find ways to stretch these deadlines if necessary, especially by requiring further information.
We typically advise to plan an additional three to nine months for an owner control proceeding, depending on the jurisdiction and individual license, business model, and whether the investor is already active in the financial market or already has other licensed shareholdings in the EU. Other timing aspects are comparable to other deals. Due diligence and decision-making might take longer because of regulatory and equity factors, which might be more extensive, but this depends on the particular deal.
Outlook
Investing in the EU financial market through M&A offers significant opportunities but requires careful consideration of regulatory, financial, and operational factors. By understanding the unique aspects of the financial industry, conducting thorough due diligence, and staying informed of market trends, investors can navigate this complex landscape and achieve successful outcomes.