US Private Equity Could Face Extra Scrutiny Under New Merger Review Rules

Advisers to private equity firms are expressing concerns about the potential impact of new merger notification rules proposed by US antitrust agencies. They believe that these rules could particularly affect serial dealmakers, causing significant delays in completing transactions, as reported by the Financial Times.

According to antitrust experts, proposed changes to the Hart-Scott-Rodino (HSR) form could require buyout groups to provide additional information during the initial stages of a transaction, potentially resulting in more deals being rejected.

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“This is breathtaking and astonishing in its reach and potential impact to deals,” said James Langston, a partner at Cleary Gottlieb in New York. “There’s nothing about the existing process that was broken.”

The overhaul of the Hart-Scott-Rodino Act, also known as HSR, is the first in over 40 years and has been eagerly awaited by dealmakers, according to FT. The proposal mandates that companies submit more comprehensive information to the FTC and the DoJ regarding the parties involved, their respective markets, and business operations before undergoing an initial 30-day assessment period.

According to antitrust lawyers, this level of scrutiny was typically only required during the second stage of the approval process when agencies request additional information on deals that raise further concerns.