US Government Shutdown Causes Delays In Private Equity Deals
But not to worry, it’s only for deals of $84 million and above.
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, parties to M&A deals need to get two approvals – from the FTC & the DOJ. This is so the govt can determine if there are any anti-trust implication or whether the deal would be anti-competition.
While these approvals normally happen within a week or so the shutdown, and therefore fewer staff, is causing some approvals to take as long as 30 days.
Will this affect overall stats of M&A deals done in this quarter? Probably not. But then again, on the principle that time kills all deals, there are bound to be some deals that fall through waiting for govt approvals.
What’s more, should the shutdown last 30 days or more, it is possible that the FTC and DOJ’s skeleton staffs could require what is called a second request for information that could delay deal closings even longer, giving the staffs more time — as long as two months — to make a determination, Mr. Weidhaas said.
It does help that raising finance for deals is more tricky now that it’s been for several years. This, too, could impact on number of deals collapsing.
Slowdowns are not limited to the FTC and DOJ. The SEC is also struggling and the impact on IPOs is, apparently, already becoming visible.