• Potential for Lengthy Investigations. In sum, the new Merger Guidelines may result in lengthy investigations of, and challenges to, transactions that would not have been investigated or challenged under the Agencies’ previous Guidelines.
Change Two: Significantly More Extensive HSR Filings (Proposed)
The FTC has proposed changes to the Hart-Scott-Rodino (HSR) premerger notification rules, which would significantly increase the time, effort and expense associated with an HSR filing. Here are a few key takeaways from the proposed changes: • Increased Time and Expenses. The FTC estimates that the new rules would increase by 4x-7x the time and expenses associated with an HSR filing. We believe this estimate is low. Filing within 5-10 business days of signing, which transaction agreements typically require, will not be possible without significant pre-signing preparation. • Submission of Narratives. The new rules would require the submission of narratives related to the transaction rationale and the competitive impact of the transaction, requiring the parties to take an affirmative position on the proper antitrust analysis of all filed transactions and expend significant resources on the antitrust analysis that may involve engaging economists and consultants. • Required Documentation. Documents required to be produced for a filing would be vastly expanded to include draft documents and various ordinary course business documents unrelated to the deal, significantly increasing the burden of identifying, maintaining and producing documents for the HSR filing. • Mandatory Disclosures. HSR filings would require mandatory disclosure of prior transactions for the past ten years, regardless of size, which could result in investigations of long-closed transactions, including transactions that were previously non-HSR reportable. In addition, HSR filings would require intrusive disclosures for PE funds regarding their structure and the identity of their limited partners, financing sources and creditors. The proposed changes to the HSR premerger notification rules will significantly increase the burden associated with HSR filings and could delay many deals and even deter some deals at the margins. The proposed HSR rules are not yet final but could go into effect as early as Q1 of 2024. 10. Emerging State Healthcare Notification Laws: Pre-Closing Notice Requirements for Certain Healthcare Transactions BY DELANEY DURST & LARA FLATAU A growing number of states have proposed or enacted legislation requiring pre-closing notice and/or approval of certain healthcare transactions. Although states have historically limited regulatory review of healthcare transactions to licensed providers, such as hospitals, many of the newly enacted statutory requirements have expanded review requirements to include transactions involving physician groups and management service organizations, among others. These laws highlight increased state government focus on healthcare mergers and acquisitions, joint ventures and other strategic transactions and transactions involving PE firms, which appear to be some of the primary intended targets. Lawmakers enacting this legislation are acutely focused on the impact of continued consolidation in the healthcare industry on patient care, healthcare costs and access to services. Generally, the applicable state notification requirements allow the relevant state agency (commonly the state attorney general or health department) to review healthcare transactions that meet the statutory criteria or that involve certain healthcare entities. The state laws vary considerably in the types and sizes of transactions to which they apply, the filing requirements and the timing considerations. However, the laws all share a common goal of allowing state regulators to assess the impact of certain healthcare transactions on local market competition and restrictions on patients’ access to care.
9 HEALTHCARE PRIVATE EQUITY: 2024 OUTLOOK & TRENDS IN M&A |
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