January 10, 2019

Government Shutdown: What Does It Mean for M&A?

Among its many other dubious achievements, the government shutdown has thrown a monkey wrench into a lot of pending deals. Broc’s blogged several times about the shutdown’s impact on the SEC’s operations over on (here’s his most recent). Unfortunately, the SEC isn’t the only game in town – and the limited operations of other federal agencies during the pendency of our annual national dumpster fire are also causing headaches for dealmakers.

This Fried Frank memo addresses how federal agencies are being affected by the shutdown & what that may mean for your transaction. This excerpt deals with the antitrust regulators – and says that you may see more HSR second requests & can forget about early termination of your waiting period for the time being:

The Federal Trade Commission and the Department of Justice are continuing to accept Hart-Scott-Rodino filings during the shutdown. The applicable statutory HSR waiting periods will run, but early termination of the waiting period will not be granted during the shutdown. Second requests will continue to be issued. The agencies will perform certain critical functions with respect to time sensitive investigations and (if timing extensions or suspensions cannot be negotiated) pending litigation or new cases that “must be filed due to [HSR] or statute of limitations deadlines.”

Given the limited agency staff working during the shutdown, parties should expect delays. In particular, there may be additional need to pull and refile HSR filings to allow the agencies additional time to conduct preliminary reviews, with the goal of avoiding or narrowing the scope of in-depth Second Request investigations. In addition, resource constraints may prompt the agencies to issue more Second Requests than otherwise in order to allow additional time to complete their investigations. For transactions that present no substantive antitrust issues, without the possibility of early termination, parties will need to endure the full statutory waiting period (30 days for most transactions)

That’s nice. Anyway, the memo also touches on how the shutdown’s impacted the operations of other regulators you may interact with – including the SEC, FCC, CFIUS & bank regulators – as well as the federal courts.

John Jenkins