February 5, 2014

Private M&A Brokers: SEC Provides Broker-Dealer Relief

As noted in this memo by Jessica Forbes & Gregory Gnall of Fried Frank, in a significant departure from prior guidance, the SEC’s Division of Trading and Markets issued a no-action letter – entitled “M&A Brokers” – last week that permits a person giving advice on M&A deals to receive transaction-based compensation under certain conditions without having to register as a broker-dealer. Note that the no-action letter is subject to numerous conditions, some of which may limit its utility, including the limitation that it only relates to the sale of privately held companies and that the M&A broker may not directly or indirectly through its affiliates provide financing for an M&A transaction. Here’s some analysis from Keith Bishop…