As usual, triggers for automatic merger and acquisition review have been revised.
As the recovery from the economic turmoil of the late oughts gathers steam, the federal government has performed its annual ritual of gazing into its crystal ball, furrowing its regulatory brow, and announcing the thresholds it will use for automatic federal review of mergers and acquisitions for the coming year.
The FCC, of course, can choose to review, or not to review many, if not most, communications-related transactions in detail before issuing an approval. On the other hand, Congress long ago deemed that the Department of Justice and the Federal Trade Commission must review transactions that cross certain dollar amount thresholds. The dollar amounts of those thresholds for the rest of 2014 have now been announced. They are set to take effect as of February 24, 2014. Readers considering a merger or acquisition should bear in mind that the administration automatically will be sending at least two agencies to take a closer look at transactions where either:
- the total value of the transaction exceeds $303,400,000; or
- the total value of the transaction exceeds $75.9 million and one party to the deal has total assets of at least $15.2 million (or, if a manufacturer, has $15.2 million in annual net sales) and the other party has net sales or total assets of at least $151.7 million
The new thresholds also affect the filing fees that parties to a deal have to pay the government for the pleasure of going through the review process. (Fees are split between the FTC and the Department of Justice.) For most of 2014, any deal subject to review and valued at less than $151.7 million will pay a $45,000 fee. (Used to be that deals coming in at a mere $100 million got to pay that.) For deals valued at more than $151.7 million but less than $758.6 million, the review fee will be $125,000. And if you’re proposing a deal valued at more than $758.6 million, get set to fork over a tidy $280,000.
When negotiating deals, all parties would be well-advised to bear these thresholds in mind. Once those lines are crossed, the prospect of additional (and considerable) time, expense and hassle to navigate the federal review process is a virtual certainty.