In some deals between buyers and sellers there is a kind of third party, which is the federal government. There’s the review by the Department of Justice or the Federal Trade Commission for antitrust law compliance. They don’t want companies to get too big, and their review is authorized by the 1976 law known as the Hart-Scott-Rodino Antitrust Improvements Act, 15 U.S.C. § 18a. It now applies to companies worth $101 million or more.
If there are two public companies involved, the Securities and Exchange Commission will review it for market manipulation. “It’s not about what you’re doing but how you’re talking about it,” said Faegre Drinker Biddle & Reath partner Morgan Burns.
He added, “Sometimes you beat the government and sometimes you don’t.”
Burns has led over 100 M&A transactions and over 100 capital markets transactions during his career. He has also advised numerous public companies on corporate governance and compliance matters.
Burns predicts a bright future ahead for mergers and acquisitions — in the long run. “There’s a lot of capital set aside for M&A transactions, all the money in private equity, [and] corporate balance sheets are strong, I would say right now a lot of companies are taking a wait and see prognosis, but the long term is great. There’s a lot of reasons to do a deal, corporate balance sheets are strong,” he said.
Burns is among the many M&A lawyers who say that it’s a relationship business, even though the amount of money in play may be enormous. But it’s not only the money, it’s being trusted with a transformational event in the client’s life, he said. “Clients need someone who is going to take it very seriously but not be paralyzed by it. Fearless but not careless. If you are afraid or nervous you’re not going to do well.”