In an article for McKnight’s Senior Living, Bass, Berry & Sims attorney Luke Smith outlined the potential impact the new Hart-Scott-Rodino (HSR) Act filing rules could have on merger and acquisition (M&A) activity in the senior living industry, and beyond. Because the rules will require additional documentation and Federal Trade Commission (FTC) review of antitrust issues, transactions are expected to take longer and cost more.
“This is going to be a key change … for larger transactions that require HSR. Anything that requires that is going to be much more expensive to do, take a lot more time to do,” said Luke. “I think it’s going to introduce expenses and deal uncertainty. It just makes more uncertainty in the closing, which I think deters deals probably on the margins.”
“I think there’s probably more antitrust risk for deals, even very small deals that don’t require HSR, because in the new form, we’ll require you to disclose small deals that didn’t have to be run before the agencies,” Luke added.
Part of the additional documentation requires an officer of a company to certify that all information is included or risk a penalty for perjury. “That has always been the case, but now there’s a lot more that they have to certify to, because before it was a fairly limited amount. I think there’s a lot more exposure to these individuals personally,” Luke said. “They’re signing off that a whole lot more information is accurate to the best of their knowledge. That, to me, is a lot scarier when it’s a really gigantic amount of information that they’re going to have to really be relying on their lawyers to get right.”
The article, “Changes to Premerger Form ‘New Wrinkle’ in M&A Transactions, Attorney Says,” was published by McKnight’s Senior Living on October 16 and is available online.
Luke will present at a webinar, “New Rules, New Hurdles: How the New HSR Rules Will Impact How You Do Deals,” on October 21. Additional details and registration information about this event can be found here.