Mergers & Acquisitions – Page 4

New Thresholds for Merger Filings in the UAE: An Overview

In February 2024, we shared an update on the UAE’s competition landscape in which we summarised the changes brought by Federal Decree-Law No. 36 of 2023 on the Regulation of Competition (the New Law).
Notably, in the update we highlighted that the New Law did not specify the thresholds that would require a potential transaction to be notified to the Ministry of Economy (the MOE) so that the MOE can provide the required clearance.
Published in the Official Gazette on 30 January 2025, the UAE Cabinet of Ministers issued Ministerial Decree No. 3 of 2025 (the Decree) provides the actual thresholds that will be applied.
Notification Thresholds
Under the Decree, there are two thresholds which, if reached by a potential transaction, would trigger a mandatory merger control filing with the MOE. The thresholds set by the Decree are:

Turnover Threshold: where, during the last financial year, total annual sales of the parties to a transaction in the “relevant market” in the UAE exceeds AED 300 million (approximately $81.7 million); or
Market Share Threshold: where, during the last financial year, the total market share of the parties to the transaction exceeds 40 percent of the total sales in the “relevant market” in the UAE.

A “relevant market” is defined under the New Law as comprising of two elements:

relevant product market: products and services that, by virtue of their price, characteristics and intended use, are considered interchangeable to meet particular consumer needs; and
relevant geographic market: the physical or digital place where supply and demand for products or services come together and where competition conditions are similar.

Dominant Position Threshold
Whilst holding a “dominant position” is not prohibited under the New Law nor under the Decree, if a company is found to hold a dominant position they are restricted from carrying out practices that may result in anticompetitive harm. The Decree has now established the threshold for determining whether a company holds a “dominant position” in the market.
Consequently, a “dominant position” is found to exist where a business holds a market share exceeding 40 percent of total sales in the “relevant market” (this is whether acting by itself or with other businesses).
The introduction of the turnover thresholds is a welcomed and important update to the UAE’s competition framework. The result will most likely be more filings made with the MOE for UAE-centric transactions which brings the UAE’s competition landscape into alignment with international practices.
As a final observation, it should be noted that the New Law’s implementing regulations are still awaited, and it remains to be seen what further changes may be made to this landscape.

HSR Overhaul Takes Effect: A New Era For Dealmakers

On 10 February 2025, the Federal Trade Commission’s (FTC) overhaul of the rules implementing the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (HSR) became effective. The new rules now apply to all reportable transactions. As explained in our prior alert, the new HSR rules (Rules) transform the premerger notification process, requiring parties to provide several new categories of documents and information in their filings. For many transactions, the new Rules will significantly increase the cost and time required to prepare HSR filings. While there are several pathways through which the Rules could be challenged, they are likely here to stay for the foreseeable future. This alert discusses the outlook for the new Rules and provides updates on how they are being implemented.
REGULATORY FREEZE ISSUED BY PRESIDENT TRUMP
On 20 January 2025, President Trump issued a regulatory freeze ordering all executive departments and agencies to consider postponing for 60 days the effective date of any final rules that were published in the Federal Register but had not yet taken effect. Similar requests have been made by recent administrations and have usually been followed by the agencies. Here, the FTC commissioners did not vote to toll the effective date of the new Rules, and the Rules went live on 10 February 2025.
WILL THE NEW HSR RULES SURVIVE?
Now that the Rules are live, there are three main pathways through which they could be struck down or modified: (1) agency action, (2) litigation, or (3) an act of Congress. Although it is difficult to predict outcomes as the Trump administration floods the zone, it seems unlikely that the Rules will be nullified through these channels, at least for the foreseeable future.
Agency Action
The FTC commissioners could vote to rescind or modify the new Rules, then go through a lengthy, formal rulemaking process to change them. This seems unlikely for several reasons.

First, the FTC approved the final Rules by a unanimous, bipartisan 5-0 vote, following efforts to address concerns from the Republican commissioners and commenters to the proposed rules NPRM. In a concurring statement accompanying the announcement of the final Rules, Republican Commissioner (and current FTC Chair) Andrew Ferguson called the Rules “a lawful improvement over the status quo,” adding that while “[t]he Final Rule is not perfect, nor is it the rule I would have written if the decision were mine alone … it addresses important shortcomings … and is ‘necessary and appropriate’ to enable the Antitrust Agencies to determine whether proposed mergers may violate the antitrust laws.” Voting to rescind or significantly alter the Rules would involve backtracking on such public statements.
Second, on 11 February 2025, Chair Ferguson took to social media to give a resounding endorsement of the new Rules, noting on X that “updates were long overdue,” and that the new Rules are a “win-win” that will “ensure that parties provide the appropriate information so law enforcement can fulfill Congress’s mandate and prevent unlawful deals from slipping through the cracks.” These statements make an about-face by the FTC even less likely. Along similar lines, in a memorandum to FTC staff issued on 18 February 2025, Chair Ferguson stated unambiguously that the agencies’ 2023 Merger Guidelines will remain in place, representing “the framework for [the FTC’s] agency’s merger-review analysis.” He characterized the guidelines as “a restatement of prior iterations … and a reflection of what can be found in case law” and emphasized the importance of stability and reliance, warning that “if merger guidelines change with every new administration, they will become largely worthless to businesses and the courts.”
Third, former Chair Lina Khan has not yet exited the FTC, leaving a continuing 3-2 Democrat majority that is unlikely to undo its own regulations. Even after Commissioner Khan leaves, there will be a 2-2 Democrat-Republican deadlock that could hamstring votes on any new rulemaking until her replacement is confirmed.

Litigation
On 10 January 2025, the US Chamber of Commerce (Chamber) and a coalition of business groups sued the FTC and then-Chair Khan in federal district court alleging that the Rules violate the Administrative Procedure Act (APA) and should be struck down. The Chamber’s main allegations are that (1) the FTC exceeded its statutory authority under the HSR Act by requiring information that is beyond “necessary and appropriate” to enable the agencies to determine, during the initial 30-day waiting period, whether a transaction may harm competition; (2) the FTC failed to engage in proper cost-benefit analysis; and (3) the agency failed to identify a problem with the prior rules that would justify a departure from the status quo. While the Chamber’s claims are well-argued and the case is before a Trump-appointed judge, the FTC took great pains in the several-hundred-page final Rule to lay a foundation to anticipate and fend off an APA challenge. So far, the Chamber has not sought a temporary restraining order or preliminary injunction to halt the Rules while the litigation is pending, and the docket has been quiet.
Act of Congress
The Congressional Review Act (CRA) requires agencies to submit final rules to Congress and the Government Accountability Office before they take effect. Once a rule is submitted, any member can introduce a joint resolution disapproving the rule. A simple majority vote in both houses of Congress is required to move the measure to the president’s desk. If the president signs off (subject to veto by a two-thirds majority vote in both chambers), the rule is nullified, and the agency is prohibited from reissuing the same or a substantially similar regulation. The CRA has a look-back mechanism that allows Congress to review the new Rules even though they have already gone into effect. On 11 February 2025, Congressman Scott Fitzgerald (R-WI) introduced a CRA resolution of disapproval to repeal the new Rules. It is unclear whether the resolution will see the light of day given other legislative priorities and Congress’s narrow window of opportunity under a unified Republican government. Moreover, the CRA has seldom been successfully used to void regulations. Members have introduced over 200 joint resolutions of disapproval for more than 125 rules since the CRA’s enactment in 1996 and only 19 rules have been overturned.
IS THERE A SILVER LINING FOR DEALMAKERS?
On the bright side, the rollout of the new Rules has been accompanied by steady guidance and engagement from the FTC Premerger Notification Office (PNO), a departure from its general approach under the Biden administration. Moreover, early termination of the 30-calendar-day HSR waiting period is back on the table. It is also worth noting that the PNO received a deluge of filings just before the new Rules took effect. According to Chair Ferguson, the PNO “typically sees between 35 and 50 transactions per week. But during the last week under the old notification rules, the PNO received 394 filings accounting for about 200 transactions.”
WHAT SHOULD I DO NOW?
The new Rules are in effect, govern all HSR filings, and are unlikely to be nullified for the foreseeable future. As such, dealmakers should:

Continue to work with counsel to understand the new requirements.
Consider budget, timing, and the potential for increased visibility into business operations.
Consider the new regime in determining deal timetables and negotiating transaction agreements, particularly for deals involving horizontal overlaps or vertical supply relationships, which trigger additional filing requirements.
Conduct internal training for relevant personnel regarding document creation best practices and implement document-management protocols to limit exposure and filing burdens.

Victoria S. Duarte contributed to this article.

Nevada Bill Would Expressly Allow Directors To Approve Documents In “Preliminary Form”

Almost one year ago, Chancellor Kathaleen St. J. McCormick ruled that a board of directors of a Delaware corporation must at a “bare minimum” approve an “essentially complete” version of the merger agreement. Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. Feb. 29, 2024). See What Exactly Must A Board Approve When It Approves A Merger?
Within months, the Delaware legislature responded by adding Section 147 to the Delaware General Corporation Law. That statute establishes a final or “substantially final” standard for board approval (emphasis added):
Whenever this chapter expressly requires the board of directors to approve or take other action with respect to any agreement, instrument or document, such agreement, instrument or document may be approved by the board of directors in final form or in substantially final form. If the board of directors shall have acted to approve or take other action with respect to an agreement, instrument or document that is required by this chapter to be filed with the Secretary of State or referenced in any certificate so filed, the board of directors may, at any time after providing such approval or taking such other action and prior to the effectiveness of such filing with the Secretary of State, adopt a resolution ratifying the agreement, instrument or document. A ratification under this section shall be deemed to be effective as of the time of the original approval or other action by the board of directors and to satisfy any requirement under this chapter that the board of directors approve or take other action with respect to such agreement, instrument or document in a specific manner or sequence. Ratification under this section shall not be deemed to be the exclusive means of ratifying an agreement, instrument or document approved by the board of directors pursuant to this section, but shall be in addition to any ratification or validation that may be available under §§ 204 and 205 of this title or under the common law.

Now, the Nevada legislature ins considering adoption of a seemingly looser standard (emphasis added):
Whenever this title expressly requires the board of directors to approve or take other action with respect to any agreement, instrument, certificate or other document, including, without limitation, any agreement, instrument, certificate or other document required to be filed with the Secretary of State, the directors may approve, adopt or otherwise act upon such agreement, instrument, certificate or other document in final form or such preliminary form as the directors deem appropriate in their business judgment.

AB 239. I have not found any Delaware cases that apply the “substantially final” standard. However, this standard would appear to require the court to compare the final form of a document with the form approved by the board. That comparison would identify any differences, but the court would still need to answer the question of whether those differences are “substantial”. This approach is consistent with Delaware’s general approach to corporate law as it invites litigation over the meaning of “substantially”. Invariably, the result will be a mountain of fact-specific and nuanced decisions from the courts.
Nevada’s standard in contrast would defer to the directors’ business judgment. Presumably, that would allow directors to approve a preliminary form of a document or agreement even when the final form differs substantially from the form approved by the directors. Nevada’s proposed standard is much less likely to foment litigation because plaintiffs will have to overcome the much more difficult hurdle of establishing that the approval of a preliminary form was not a proper exercise of the board’s business judgment.

Ch-ch-ch-ch-changes… for the UK Competition and Markets Authority

By repeating “ch-ch-ch-ch-changes” in his famous song, David Bowie was reportedly trying to mirror the stuttered steps of growth. January 2025 was a month full of changes for the UK Competition and Markets Authority (CMA). As with any changes, it is difficult to predict their effect precisely, only time will tell. Although we do not have a crystal ball, however, our longstanding and in-depth experience in UK competition law gives us unique insights on what to expect and most importantly how to adapt. In this update, we will cover some of these key changes including:

The entry into force of the Digital Markets, Competition and Consumers Act (DMCCA) and related updated guidance.
An anticipated reform of the UK concurrency regime to extend to consumer protection.
The exercise by the CMA of its new DMCCA powers to designate companies with Strategic Market Status (SMS).
Last but not least, perhaps the changes that grabbed the headlines the most: the CMA has a new interim Chairperson and the UK government’s “steer” to the CMA’s CEO.

The underlying theme of all these changes is a drive towards growth… In the CMA’s own words, the “new regime provides a unique opportunity to encourage the benefits of investment and innovation from the largest digital firms, while ensuring a level playing-field for the many start-ups and scale-ups across the UK tech sector.” Hopefully, not a stuttered growth, only time will tell.
DMCCA and New Guidance
With the entry into force of the DMCCA on 1 January 2025, the CMA published updated guidance on its merger control and antitrust procedures. We have previously written our summary of the DMCCA and the main changes introduced to the updated CMA guidance, compared to the previous guidance, to reflect the DMCCA is available is available in this rider.
Concurrency Regime
The CMA also published a report entitled a ‘review of the competition concurrency arrangements’ which sets outs its findings and recommendations following its consultation seeking opinions on the effectiveness of the current competition concurrency arrangements. These arrangements have so far referred to the concurrent powers of the CMA and various sector regulators to apply UK competition law in their respective sectors – e.g. the CMA and Ofcom in the electronic communications sector. With the DMCCA, the concurrency arrangements now extend also to consumer protection law. Therefore, the CMA’s report recommends that: “In light of the reforms in the DMCC Act [DMCCA], we think there is merit in a more in-depth review of the effectiveness of existing consumer concurrency arrangements, and how the CMA works with the sector regulators to fulfil their consumer protection roles in the regulated sectors.”
SMS Designations
The CMA has already launched three investigations under the DMCCA for new SMS designations:

The first will consider whether Google has SMS in the provision of search and search advertising services.
The second and third will consider whether Google and Apple have SMS in their respective ‘mobile ecosystems’ which include app stores, the operating systems and browsers that operate on mobile devices.

The CMA’s CEO said the probes will have a “significant impact” not just on companies selected for designation but “also the stakeholders,” and therefore it is necessary to have a “lot of engagement.” Moreover, the CMA has also provisionally found in the on-going cloud services market investigation that it intends to recommend to the CMA board to designate Amazon Web Services (AWS) and Microsoft with SMS in the provision of cloud services.
New CMA Chairperson
After an unsatisfactory meeting in Downing Street, with the UK government citing a fundamental ‘difference of approach’ in how best to drive growth and investment, the then chair of the CMA, Marcus Bokkerink, resigned and Doug Gurr – a former head of Amazon UK and Amazon China – was appointed as Interim Chair, sparking controversy. In a letter to the Financial Times, Doug Gurr confirmed an immediate review of the CMA’s work, so as to ensure that it makes “[g]ood decisions, clear decisions, rapid decisions — that’s what you tell us you need and that’s on us to deliver.”
This change at the helm of the CMA coincided with news that the authority had overspent on its budget, resulting in the launch of a redundancy program that is expected to affect up to 10% of its workforce. However, the CMA has confirmed that the Digital Markets Unit (DMU) in charge of enforcing the new SMS regime introduced by the DMCCA will be ring-fenced, as well as the unit in charge of mergers, meaning cuts in other parts of the authority staff.
Both Doug Gurr and Sarah Cardell, the CMA’s current CEO, emphasised that the change in direction will not impact the core of the CMA’s work (i.e., antitrust, cartels and consumer protection). However, it cannot be excluded that the substantial reduction in the CMA’s workforce (outside the DMU and mergers), and the prioritisation of smarter and faster merger reviews, will affect the capacity of these other functions.
The Government’s “steer” to the CMA’s CEO
Pressure from the government to be less risk averse and more pragmatic has spurred the CMA to pledge to “drive growth and investment” and speed up its decisions. Sarah Cardell has stated that the regulator would judge mergers to make sure they “enhance business and investor confidence” whilst also ensuring to protect “effective competition for the benefit of UK businesses and consumers”. Jonathan Reynolds (Secretary of State for Business and Trade) has suggested the UK in fact has too many regulators and has called on the competition watchdog to be “more agile”.
The government’s draft “strategic steer” for the CMA further enhances the upheaval in the competition sphere.
The government sends a clear message, that is, the CMA’s approach must in fact reflect the need to enhance the UK as hotspot for international investment. The CMA’s approach must contribute to the “overriding national priority” of economic growth.
Additionally, this draft instructs the CMA to take into account the actions of other regulators…globally. The CMA, “where appropriate, [should] seek to ensure parallel regulatory action is timely, coherent and avoids duplication”.
Sarah Cardell has hence stated that, “[w]e have today set out a programme of rapid, meaningful changes to our mergers process, which will enhance business and investor confidence and enable us to continue protecting effective competition for the benefit of UK businesses and consumers.”
The CMA has said that it would complete a pre-notification phase on its investigations within 40 working days. This is a drastic reduction from the current 65 working days (approximately). Additionally, the CMA plans to reduce the timings for a “straightforward phase 1” investigation to 25 working days from 35 working days. Sarah Cardell stated, “[w]e know speed of decision making is vital to reduce uncertainty and costs for businesses”. This move also stems from comments made by Sir Keir Starmer who has stated previously that the government would “make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does”.
There appears to be further changes in the near future. The CMA’s review of remedies will be starting in March 2025 and this brings about the chance for large changes. The review will include looking at an increased openness to behavioural remedies, the role of “relevant customer benefits” to offset anti-competitive effects and the scope for remedies to play a role in “locking-in” pro-competitive efficiencies (as already shown in the recent Vodafone/Three conditional approval decision).
Conclusion
The dust is still settling from the events of January and yet there may be more changes to come. It is unclear whether Doug Gurr will be confirmed as the permanent Chair (there still needs to be a process, of course). The 10% workforce reduction is likely to curtail activity outside merger control and digital market regulation. The drive towards growth could mean a more lenient approach to mergers, especially when it comes to considering behavioural remedies. Additionally, it remains unclear whether the CMA will open new SMS investigations beyond those already commenced against Apple and Google, although the provisional findings in the CMA cloud services market investigation indicate that the CMA is minded doing so.

New HSR Premerger Notification Requirements Take Effect

The new Hart-Scott-Rodino (HSR) Premerger Notification and Report Form (the “Form”) went into effect on February 10, 2025.
The new Form institutes several changes to the HSR process, including slightly expanding the category of individuals required to provide responsive documents (traditionally referenced as 4(c) documents), as well as broadening the requirement for when a draft presentation must be included in the 4(c) documents.
As to the latter, the new requirement is that a draft presentation, shared with a single member of an organization’s board of directors, must be included in the filing, even if a final version of the presentation is also included. However, whether the draft needs to be included depends on whether the recipient received the presentation in their capacity as a board member or in some other capacity, such as the CEO of an organization. In addition, the Federal Trade Commission’s (FTC’s) guidance provides that when board members have access to a collaborative drafting tool or document, the various drafts need not be provided, but a statement of noncompliance must accompany the filing.
Those attorneys who may have been looking forward to hearing live guidance from the FTC on the new HSR process may be disappointed, as the new chair issued a directive prohibiting FTC political appointees from speaking at or attending any American Bar Association (ABA) conference or event and barring the use of FTC funds for any ABA membership, participation, or event attendance. Presumably, the dictate will also scuttle the traditional agency update with the FTC Bureau Directors at the ABA Antitrust Law Spring Meeting.

DOJ Gun-Jumping Complaint Highlights Importance of Careful Preparation of Interim Operating Covenants to Avoid HSR Act Violations

A recent civil complaint from the U.S. Department of Justice (DOJ) highlights the importance of carefully planning interim operating covenants in M&A deals and structuring the process to prevent buyers from gaining control of targets too soon—before the mandatory waiting period under the Hart-Scott-Rodino Act (HSR Act) is up. This is commonly referred to as “gun-jumping.”
On January 7, 2025, the DOJ filed a complaint for civil penalties and equitable relief for violations of the HSR Act against Verdun Oil Company II LLC (Verdun), XCL Resources Holdings, LLC (XCL), and EP Energy LLC (EP Energy) for gun-jumping in Verdun’s and XCL’s $1.4 billion acquisition of EP Energy, a crude oil production company operating in Utah and Texas. The DOJ alleges that between the execution of the transaction’s purchase agreement in July 2021 and October 2021, when the purchase agreement was amended to restore EP Energy’s operational independence, EP Energy allowed Verdun and XCL, Verdun’s sister company, (i) to exert premature operational and decision-making control over significant aspects of EP Energy’s day-to-day business, (ii) to assume financial risks within EP Energy’s business, (iii) to obtain competitively sensitive information, (iv) to engage directly with customers and vendors in contract negotiations, and (v) to coordinate anti-competitive pricing and supply chain disruptions, all prior to the expiration of the waiting period obligations under the HSR Act.
Even though EP Energy, Verdun, and XCL filed the required pre-merger HSR filings with the Federal Trade Commission and the DOJ, the complaint alleges that the purchase agreement granted the buyers too much control during the waiting period because of consent rights that placed key aspects of EP Energy’s business under their control. The purchase agreement also allegedly required buyers’ express approval to conduct development operations, which prevented EP Energy from continuing its oil well-development activities and production plans, and to hire field-level employees and contractors necessary for drilling and production in its ordinary-course operations. The purchase agreement also allegedly made the buyers responsible for any financial risk and liabilities tied to the restrictions, further suggesting they were gaining effective control over the company.
In addition, XCL and Verdun allegedly took an active “boots on the ground” approach to taking over EP Energy’s operations prior to the closing of the transaction and the expiration of the HSR waiting period, allegedly coordinating with EP Energy on customer contracts, relationships, and deliveries, in addition to coordinating on pricing terms offered to customers. In assuming the operational control of EP Energy, the buyers were allegedly granted access to confidential and competitively sensitive information to include details on customer contracts, pricing, production volumes, and vendor contracts.
As a result of these allegations, XCL, Verdun, and EP Energy are facing civil fines in excess of $5.6 million.
When structuring a deal, it’s important to account for the HSR clearance timeline and closely monitor the activities between the buyer and the target. All parties involved need to know what’s okay to do before the deal closes, especially when it comes to making decisions and taking control of operations. For example, deal teams should avoid having buyers negotiate on behalf of the target with customers or vendors, and be very careful with handling sensitive competitive information to prevent anti-competitive concerns. That info should be shared carefully, using “clean team” safeguards or data rooms to keep it under control.
While these tips are general best practices for any transaction, deal teams should address and tailor HSR, anti-competition, and purchase agreement interim operating covenant considerations on a deal-by-deal and client-by-client basis.
Resources:

U.S. Department of Justice, Press Release, Oil Companies to Pay Record Civil Penalty for Violating Antitrust Pre-Transaction Notification Requirements (Jan. 7, 2025), https://www.justice.gov/archives/opa/pr/oil-companies-pay-record-civil-penalty-violating-antitrust-pre-transaction-notification.
United States v. XCL Resources Holdings, LLC, No. 25-cv-00041 (D.D.C. Jan. 7, 2025).

A Clearly Rattled Delaware Contemplates Significant Changes To Its Corporations Code

On Monday, Delaware State Senator Bryan Townsend introduced Senate Bill 21 which would, among other things, statutorily define “controlling stockholder” and substantially change the rules governing the “cleansing” of controlling stockholder transactions. Professor Ann Lipton provides a summary of these changes here and Professor Stephen Bainbridge provides his own take on the amendments here. Among other things, Professor Lipton observes:
Collectively, the changes represent a wholesale repudiation of Delaware’s common law approach to lawmaking; instead, they most closely resemble the MBCA’s rule-bound approach.

Actually, I believe that Delaware is moving in the direction of Nevada’s statutory based approach whereby the rules of the road are established primarily by the legislature and not the courts. In fact, this is often cited as a reason to reincorporate in Nevada:
After considering various alternatives, the evaluation committee concluded that Nevada’s statute-focused approach would likely foster more predictability than Delaware’s less predictable common law approach, and that that predictability could be a competitive advantage for the Company in a time of rapid business transformation.

Information Statement filed by Dropbox, Inc. on February 10, 2025.
I do disagree with both Professor Lipton and Dropbox insofar as they characterize Delaware as having a “common law approach”. A distinctive feature of the Court of Chancery is that it is a court of equity, something relatively rare in jurisprudence. A court of equity is results oriented because it is focused on “doing equity”. In fact, this has been the historical understanding that equity (ἐπιεικές*) serves as a correction (ἐπανόρθωμα) of the law. Aristotle, Nicomachean Ethics Book V, Section 10. Thus, it has been my own view that while the Court of Chancery has been an historical draw for Delaware, the Court’s broad power to do equity is ultimately proving to undermine Delaware’s preeminence. SB 21 and the Delaware legislature’s assertion of statutory law implicitly recognize this fact.

New York Proposes Expansion of Disclosure Requirements for Material Health Care Transactions

Governor Kathy Hochul released the proposed Fiscal Year 2026 New York State Executive Budget on January 21, 2025 (FY 26 Executive Budget). The FY 26 Executive Budget contains an amendment to Article 45-A of New York’s Public Health Law (hereinafter, the Disclosure of Material Transactions Law), which has been in effect since August 1, 2023. The law currently requires parties to a “material transaction” to provide 30 days pre-closing as well as post-closing notice to the New York State Department of Health (DOH). Since the law has taken effect, DOH has received notice of 9 material transactions, the details of which are listed on its website. If enacted, the amendment will change the reporting parties’ notice requirement, extend waiting periods, and increase DOH’s oversight of material health care transactions.
Existing Pre-Closing Notice Requirements
The Disclosure of Material Transactions Law currently requires a written notice to be submitted to DOH at least 30 days prior to the proposed material transaction’s closing. A transaction will be considered “material” if any of the below occur, whether in a single transaction or through a series of related transactions during a rolling 12-month period that results in a health care entity increasing its gross in-state revenues by $25 million or more:

A merger with a health care entity;
An acquisition of one or more health care entities, including, but not limited to, the assignment, sale, or other conveyance of assets, voting securities, membership, or partnership interest or the transfer of control (which is presumed if any person, directly or indirectly, owns, controls, or holds with the power to vote, 10% or more of the voting securities of a health care entity);
An affiliation or contract formed between a health care entity and another person; or
The formation of a partnership, joint venture, accountable care organization, parent organization, or management service organization for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers.

The law requires all “health care entities”, defined under Article 45-A of New York’s Public Health Law to include physician practices or groups, management services organizations or similar entities that provide all or substantially all administrative or management services under contract with at least one physician practice, provider-sponsored organizations, health insurance plans, and any other health care facilities, organizations, or plans that provide health care services in New York (except for insurers or pharmacy benefit managers regulated by the New York State Department of Financial Services), to submit the notice to DOH. Such notice must include:

The names of the parties to the transaction and their current addresses;
Copies of any definitive agreements governing the terms of the material transaction, including pre- and post-closing conditions;
Identification of all locations where each party provides health care services and the revenue generated in the state from such locations;
Any plans to reduce or eliminate services and/or participation in specific plan networks;
The closing date of the transaction;
A brief description of the nature and purpose of the proposed transaction;
The anticipated impact of the material transaction on cost, quality, access, health equity, and competition in the markets the transaction will impact, which may be supported by data and a formal market impact analysis; and
Any commitments by the health care entity to address anticipated impacts.

Change to Pre-Closing Notice Requirement
The proposed amendment to the Disclosure of Material Transaction Law would modify the timing and content requirements of the required notice to DOH. First, the written pre-closing notice would need to be submitted to DOH at least 60 days prior to the closing of the proposed transaction, as opposed to 30 days under the current law. Second, the written pre-closing notice would require:

A statement as to whether any party to the transaction, or a controlling person or parent company of such party, owns any other health care entity which, in the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and if so,
A statement as to whether a sale-leaseback agreement, mortgage, lease payments, or other payments associated with real estate are a component of the proposed transaction. If so, the parties shall provide the proposed sale-leaseback agreement or mortgage, lease, or real estate documents with the notice.

DOH Preliminary Review
When the Disclosure of Material Transactions Law was initially proposed in the Fiscal Year 2024 Executive Budget (FY 24 Executive Budget), it included not only the notification requirement but also a DOH approval process. Under the FY 24 Executive Budget proposal, each material transaction would be subject to DOH review and approval, including DOH’s consideration of several factors (Review Factors), such as:

If the potential positive impacts of the transaction outweigh any potential negative impacts;
Potential anticompetitive effects of the transaction;
The parties’ financial conditions;
The character and competence of the parties, their officers, and their directors;
The source of funds or assets involved in the transaction; and
The fairness of the exchange.

The amendment to the Disclosure of Material Transactions Law proposed in the FY 26 Executive Budget does not revive the Review Factors. However, it does provide that DOH shall conduct a preliminary review of all proposed transactions and, at its discretion, conduct a full cost and market impact review of the transaction. DOH shall notify the parties of the date the preliminary review is completed, and if DOH requires a full cost and market impact review, it shall notify the parties that such a review is required. The law does not specify a timeframe by which DOH must complete its preliminary review. However, if a full cost and market impact review is required, DOH has the power to delay the transaction until the review’s completion, however, closing cannot be delayed more than 180 days from the completion of the preliminary review. As part of a review, DOH may require the parties to the transaction (including parent and subsidiary companies of the parties) to submit additional documentation and information as necessary. Additionally, DOH may require that the parties to a transaction pay to DOH all actual, reasonable, and direct costs incurred by DOH in reviewing and evaluating the notice. Any information obtained by DOH pursuant to the cost and market impact review may be used by DOH in assessing certificate of need applications submitted by the parties. The proposed amendment to the Disclosure of Material Transactions Law in the FY 2026 Executive Budget does not propose a DOH approval process for material transactions, as initially sought in the FY 24 Executive Budget. However, it does give DOH the power to delay transaction closings until it receives all requested information from the parties.
Five-Year Transaction Reporting Requirement
The proposed amendment would add an annual reporting requirement for five years following the transaction’s closing. Each year on the anniversary of the transaction’s closing, the parties to the material transaction would need to provide a report to DOH so that DOH can assess the impact of the transaction on cost, quality, access, health equity, and competition. In addition, DOH may require any parents or subsidiaries of the parties to the material transaction to submit to DOH within 21 days upon request information needed for DOH to assess the impact of the transaction on cost, quality, access, health equity, and competition.
Implications
The proposed amendment indicates the DOH’s desire to heavily regulate and increase its oversight over health care transactions in New York. Including a cost and market impact review signals that DOH may be trying to move toward a more comprehensive review and approval process similar to the framework implemented in Massachusetts in 2012. For providers and other entities who are currently party to a transaction, or contemplating entering into such a transaction, that would be subject to the Disclosure of Material Transactions Law, it is important to note that these proposed amendments may significantly lengthen the timeline of your transaction. In this case, it may behoove such providers and others to proceed with such transactions sooner rather than later.
We will continue to monitor and report on this proposal and other state legislative efforts to broaden the scope of government review of health care transactions.

Global M&A Trends: Spotlight on Japan

According to a recent KPMG report, the global M&A landscape in 2024 signals a rebound despite challenges like geopolitical tensions, high interest rates, and persistent inflation for much of the year. The dealmaking environment gained momentum in part due to inflation and interest rate pressures starting to ease towards the end of the year, the return of major lenders to acquisition finance markets, and technology advancements, particularly artificial intelligence (AI).
Although 2024 marked a turnaround for global M&A markets, performance was mixed. The KPMG report states that while deal volumes declined by approximately 17%, the total deal value rose, driven by 89 megadeals totaling an impressive $1.034 trillion. However, smaller deals (valued under $500 million) experienced a dip in both value and volume.
Private equity (PE) firms faced hurdles in closing new funds, reflecting challenges in the broader dealmaking environment. However, last September, a pivotal moment arrived when the US Federal Reserve initiated a rate cut. This infused a cautious optimism into the market.
Stable interest rates, cooling inflation, and abundant dry powder sparked a renewed interest in PE markets. Valuation gaps started to narrow, and lenders, both traditional and private credit funds, started offering more favorable financing terms.
Spotlight on Japan
While the Americas attracted around half of the total deal value in 2024, the biggest gains were seen in Japan. Last year was a busy year for Japan-related mergers, thanks in part to private equity funds snapping up businesses being shed by companies that have become increasingly focused on capital efficiency.
According to a JP Morgan report, after three decades of deflation and stagnant growth, recent government and market reforms designed to improve corporate governance and capital management have encouraged corporates to embrace a more transparent, pro-growth agenda. This has led to a wave of dealmaking in Japan.
The volume of mergers and acquisitions linked to Japan was up around 20% in the first half of the year compared to 2023 and was followed by a strong performance in the second half of 2024. Japan-related deals accounted for over 20% of Asia’s entire transaction volumes for 2023, the highest in four years, MARR data showed. Much of this has been driven by increases in shareholder activism and PE activity.
Japan’s recent reforms and renewed focus on growth create opportunities for US companies to expand in a potentially undervalued but stable market, particularly when the yen is hovering at multi-decade lows.
Japan’s M&A activity towards the US is being influenced by economic conditions, currency, and the regulatory environment. While the weak yen makes overseas investments more expensive for Japanese acquirers, a strong US economy compared to Japan’s stagnant growth encourages Japanese companies to pursue acquisitions in the US as a growth strategy.
2025 Outlook: Optimism on the Horizon
Recent coverage in Bloomberg indicates that Japan’s dealmakers are expecting a busier 2025 after more than $230 billion in mergers and acquisitions last year. In 2024, the value of M&A deals that involved a Japanese company rose 44% to more than $230 billion, according to data compiled by Bloomberg. That’s the fastest growth since 2018 and compares with a 38% rise in M&A activity across the Asia-Pacific region.
Much of this increase was due to a jump in foreign PE firms looking for undervalued companies in Japan. According to Pitchbook, PE deals in Japan with foreign PE participation reached an all-time high in 2024, a pace that seems to be continuing. Bain Capital recently announced the acquisition of 300-year-old Tanabe Pharma for $3.4b, which was the largest PE deal ever announced in the Japanese healthcare sector.
While the forecast is positive, dealmaking activity remains susceptible to unexpected disruptions. That said, if current trends remain steady, 2025 could solidify itself as a year of robust growth in M&A markets.

Where Is Corporate Venture Capital Headed In 2025, And Will It Lead To More M&A?

Corporate Venture Capital (CVC) investment is an increasingly used strategic tool that enables large corporations to make minority investments in startups that will complement and expand their existing products or services. This type of investment can be highly beneficial as it can provide strong financial returns, as well as access to innovation, without the time and heavier expense load of in-house research and development (R&D) projects.
While many would think that an eventual merger, acquisition, or other type of M&A transaction would be the end goal of CVC investment, a recent analysis by PitchBook indicates that despite elevated CVC activity over the past 10 years, it has not resulted in much M&A. According to their data, from 2014 to 2024, CVC has made up more than 46% of total VC deal value and 21% of deal count. However, despite having invested a vast amount of capital, very little of this investment has translated to acquisitions.
To put it into perspective, their data shows that since 2000, below 4% of CVC-backed companies were acquired by an existing CVC investor. So, why aren’t more CVCs moving toward acquisitions, especially as their approach typically involves looking for companies who could provide great returns and complement or expand their existing products? The definition of what a strategic return looks like can vary greatly among CVCs. It could be access to new technologies or markets, driving innovation, competitive advantage, a boost to public image, or many other motivating factors. But for only a small fraction of CVCs, a strategic return yields an acquisition.
PitchBook points to several factors that might explain why M&A is not always their “end goal,” such as stage preference. CVC investors tend to focus on later-stage investment. This is due in large part to their interest in companies that have reached a more mature stage of product development and pose a lower risk. While some CVCs focus on earlier-stage investment, the asset class as a whole favors later-stage investment. It is simply more difficult and costly to integrate a company in its later stages into a larger corporation. And for those investing in earlier-stage startups, there are, of course, more risks that go along with acquisitions of these companies, as well as a higher risk of failure.
CVCs might also be motivated by a need for flexibility and options. As a minority stakeholder, they can have great insight into a startup’s innovation, inner workings, and competitive position with minimal risk. As conditions change, they still have the ability to pivot. That becomes much more difficult once they enter into an acquisition. There is also the issue of investing in complementary businesses versus those that you want to integrate into your corporation. Investing in a startup that is complementary to yours that allows access to new technologies or innovations does not necessarily mean it makes sense to then fully integrate it into your organization.
Additionally, the goals of the startup may not be aligned with CVC M&A. CVCs are targeting later stage startups in larger numbers. At this stage, founders often have their sights set on an IPO as opposed to an acquisition, and even if their goal is to be acquired, there is likely more than one interested party, making the competition fierce. An IPO or sale to another buyer could still allow a CVC to realize some significant returns without going through the acquisition process.
While the goal of a startup might not be an acquisition by its corporate investors, there are some significant benefits that come with corporate investment. A study conducted by Global Corporate Venturing showed that startups that had corporate investors saw their risk of bankruptcy cut in half, as well as an increase in exit multiples in the case of an acquisition or IPO. This is likely due in large part to the additional advantages that can accompany corporate investment as opposed to traditional VC investment. These could include access to invaluable knowledge, facilities, distribution channels, or strategic partnerships. Corporate investment can also help to boost the profile of a startup, enhancing its visibility, providing validation, as well as a greater sense of stability.
There are many reasons why the actual number of acquisitions by CVCs is so low. It truly depends on the motivating factors of the company and what makes the most sense based on their short and long-term goals, as well as those of the startup. However, it is clear that CVC investment can come with incredible benefits for startups, and it is showing no signs of slowing down anytime soon.

New HSR Rules Go Live: Your Playbook for Effective M&A

Starting today, February 10, 2025, all merger filings will be subject to new Hart-Scott-Rodino (HSR) rules. The new HSR rules will fundamentally alter the premerger notification process, and substantially increase the burden on filing parties, who will need to provide significantly more information and documents with their initial filings.
Companies can take steps today to make filings under the new rules less burdensome and increase the likelihood of achieving antitrust clearance, such as collecting and regularly updating the “off-the-shelf” information needed for all filings, and engaging in earlier discussions with the legal team to identify potential overlaps and supply relationships and develop key themes around transaction rationales and impacts on competition that will need to be included in the filing.

In Depth

MAJOR CHANGES
The two biggest changes in the new HSR rules are the requirements to (1) submit new business descriptions of transaction rationales, competitive overlaps, and supply relationships; and (2) submit more business documents with the filing, including ordinary course strategic documents presented to the CEO or board of directors.
New Business Descriptions

For all transactions, the merging parties must:

Describe each of the principal categories of their products and services.
Identify and explain each strategic rationale for the transaction discussed or contemplated (including rationales later abandoned).

For transactions with competitive overlaps, the merging parties must:

Identify and describe the current products or services that compete with, or could compete with, the other party – including known planned products or services in development.
Submit data on sales of such products in the most recent year, a description of all categories of customer types by product (e.g., retailer, distributor, commercial, residential), and the top 10 customers for the product, and each customer category identified.

For transactions in which the parties have supply relationships, the merging parties must:

Describe each product or service (1) supplied to the other party or another entity that competes with that party, or (2) purchased or otherwise obtained from the other party or another entity that competes with that party; in both cases, above a de minimis threshold.
Submit data on sales or purchases from the other party and/or another entity that competes with that party, and the top 10 customers or suppliers for each such product or service.

SECURE Act 2.0 Mandatory Automatic Enrollment Requirements for New Retirement Plans Guidance Released

One of the hallmarks of the SECURE 2.0 Act of 2022 (SECURE Act 2.0) legislation was to increase participation in retirement plans. On January 10, 2025, the Treasury Department and the IRS came one step closer when they announced the issuance of proposed regulations requiring automatic enrollment for new Code Section 401(k) and 403(b) retirement plans (Proposed Regulations). As background, the SECURE Act 2.0 added Code Section 414A, which provides that a retirement plan will not be qualified unless it satisfies certain automatic enrollment requirements under Code Section 414(w). These requirements:

Require automatic enrollment of employees with elective deferral contributions of at least 3% and no more than 10% in the first year of participation (with 1% increases between 10-15%)
Permit participants to withdraw their automatic elective deferrals within 90 days of their first elective deferral contributions being made
If no investment election is made, permit the automatic elective deferrals to be invested in qualified default investment alternatives (QDIAs)

The legislation, as originally enacted, provides that the automatic enrollment requirements do not apply to 1) retirement plans established before December 29, 2022; 2) retirement plans that have been in existence for less than three years; 3) governmental plans; 4) SIMPLE 401(k) plans; and 5) retirement plans with fewer than 10 employees. The Proposed Regulations provide additional regulatory guidance and clarification on issues such as eligibility for the automatic enrollment feature, contribution requirements, permissive withdrawals and investment requirements. The Proposed Regulations also incorporate previous IRS automatic enrollment guidance issued last year (provided in Notice 2024-2) with some modifications.
Highlights From the Proposed Regulations

Eligibility – Provides that an employer cannot exclude groups of employees, and the automatic enrollment requirements must apply to all employees eligible to elect to participate in the plan. However, an employer can exclude employees who already have an election on file (whether an election to contribute or to opt out) on the date the plan is required to comply with the automatic enrollment requirements.
Contribution limits – Clarifies how an employee’s “initial period” is determined for purposes of initial contributions. The initial period begins on the date the employee is first eligible to participate in the plan and ends on the last day of the following plan year. This is important for the application of the automatic escalation rule that requires the plan to automatically increase an auto-enrolled participant’s contribution percentage by one percentage point (up to 10%) each plan year following the employee’s initial period.
Plan mergers and spinoff – Generally, incorporates guidance provided in Notice 2024-2 regarding the application of the automatic enrollment requirement to plans that are the result of mergers but expands the guidance to address mergers involving multiple employer plans; incorporates the guidance in Notice 2024-2 regarding spinoffs. Importantly, the merger of two plans established prior to December 29, 2022, into one plan will not create a new plan subject to the automatic enrollment requirements.
New and small business – Provides that the automatic enrollment requirements should start on the first day of the first plan year that begins after the employer has been in existence for three years. Further, the 10-employee requirement is determined by the Consolidated Omnibus Budget Reconciliation Act (COBRA) regulations under Q&A-5, Treasury Regulation Section 54,4980B-2.
Multiple employer plans – Clarifies that if an employer adopts a multiple employer plan, the automatic enrollment requirements apply to the employer as if it adopted a single employer plan (i.e., they apply if adopted after December 29, 2022) regardless of when the multiple employer plan was adopted. This would not affect the employers who adopted the multiple employer plan on or before December 29, 2022.

The Proposed Regulations will not take effect until the first plan year beginning six months after the issuance of final regulations. However, the change in presidential administration (and related changes within the administrative agencies) casts uncertainty on whether these regulations will be finalized without further modifications or withdrawn all together. A plan sponsor should proceed in good faith to apply these rules until they are final.