It’s not 2021 anymore,” said Dorsey M&A lawyer Robert Rosenbaum. If there was a theme running through the Power 30 M&A lawyers this year, it would be that.
Starting really with the third quarter of 2020, M&A work became busy, maybe even hectic, with firms bringing on lawyers and clients edgy about the sales and the market.
But eventually people understood that the world wasn’t coming to an end, that interest rates were low and there was cash available, said Rosenbaum, co-head of the corporate group at Dorsey, who represents buyers and sellers in their transactions.
Not that there aren’t any concerns. There’s inflation, a war in Ukraine and economic disarray in the United Kingdom, where Dorsey has an office.
But Rosenbaum said his clients are also concerned about regulatory activity in the U.S.
The federal government has stepped it up in two areas, Rosenbaum said. One is under the Hart-Scott-Rodino Act, 15 U.S.C. § 18a which comes into play when the deal involves two parties of a certain size, now for transactions are $101 million or more. Those parties must file notices with the Department of Justice or the Federal Trade Commission, which review the transaction for anticompetitive offenses. It also charges a large filing fee, depending on the size of the deal, and may require a waiting period
Both agencies are more aggressively interpreting their mandates to address anticompetitive effects of transactions and it is causing uncertainty in the market, Rosenbaum said.
The other required filing is under the Committee on Foreign Investment in the United States (CFIUS) that reviews transactions with foreign nationals for national security concerns.
It means that deals between foreign investors including China and the U.S. have slowed dramatically, especially if deemed nationally sensitive.
“More clarity on the rules of the road about what’s going to be challenged would be useful,” Rosenbaum said.
Additionally, in tech deals involving issues of cybersecurity or data privacy, the regulatory regime is very complex and driven by individual states, he said.
COVID left its impact on the deal-making process, Rosenbaum said. Generally, deals now take longer and diligence is deeper and more time consuming. It’s all just more careful, he said.