Acquisitions and mergers can impose significant stresses on both buyer and seller. Starting January 2025, the new HSR rules will impose significant additional burdens and risks on deals subject to premerger notification in the United States (see our client alert for more details on those changes). However, companies can prepare for many of those changes before they face the pressure and deadlines of their next transaction. To hit the ground running in 2025, you can – and should - do the following before your next deal:
- Train your deal team on antitrust best practices for
document creation. The new rules expand on both the scope
and nature of documents that must be submitted with Premerger
Notification Form. Whereas the old rules merely required the
submission of transaction-related documents that were prepared by
or for a company's officers and directors, the rule has been
expanded to include documents prepared by or for the supervisory
deal team lead(s), which is defined as any individual "who has
primary responsibility for supervising the strategic assessment of
the deal, and who would not otherwise qualify as a director or
officer." Similarly, the new rules move beyond
transaction-specific documents and now demand ordinary-course
documents plans and reports that are provided to a company's
CEO or board of directors.
This boarder document universe may include inadvertent statements or data that create significant antitrust risk (e.g., "we're the most dominant supplier," "our customers are locked-in," or "this acquisition will protect our price margins"). Before your next transaction, you should 1) identify the broader scope of document custodians under the new rules; 2) review your document retention policies; and 3) provide the authors of that document universe with antitrust training on how to avoid unintended language that may be viewed suspiciously by antitrust enforcers.
- Prepare new narrative responses and datasets.
Previously, filers were only required to provide limited,
transaction-specific narrative responses. Going forward, the new
HSR rules will require several additional narratives, including
descriptions of the parties' ownership structures,
products/services, and supplier relationships. Several of these
narratives can be drafted in advance and modified as necessary for
a given transaction. More importantly, this advance prep can ensure
that these narratives are thoroughly vetted by antitrust counsel to
ensure they are consistent with antitrust enforcers'
expectations and accurately describe the relevant competitive
landscape for your business.
- Rethink your timelines. Frequent filers are
familiar with the usual timelines for compiling the information and
data submitted with the Premerger Notification Form. Depending on
the complexity of the deal, many agreements set filings to be
submitted within 10 business days of execution (or sooner). For the
foreseeable future, those deadlines may be impractical given the
additional information demands and the need for increased review by
counsel. This additional time should be baked into the transaction
timeline from the start, and further incentivizes parties to start
working on HSR earlier in the deal process than was customary under
the old rules.
- Vet your outside advisors and consultants.
Nearly all deals that meet the reporting thresholds involve one or
more third parties, such as bankers and consultants. Many of these
third parties author key documents that are subject to disclosure
under the new rules, and antitrust enforcers have shown an
increased interest in directly requesting third-party materials
during merger investigations. Now is the right time to make sure
that your go-to advisors are preparing for the new rules.
- Reach out to your Reed Smith antitrust contact. We're here to help! Whether it is providing training on document creation, reviewing draft language for narrative responses, or providing new information request checklists – we can ensure your deal teams avoid delays and confusion under the new HSR rules. Contact a member of the Antitrust & Competition team for next steps.
This article is presented for informational purposes only and is not intended to constitute legal advice.
