M&A activity has definitely slowed down. Due to economic uncertainty and high-interest rates, companies are hesitant to expand during these times. In addition, executing deals has also become more difficult due to regulatory changes, especially in the tech industry. In this article, Mark Legaspi, Director, Legal - Corporate at LinkedIn, discusses key regulatory considerations for M&A in the current market.
“When you have a deal that’s reportable to the regulators, you need to make your filings as clean as possible as they can very easily kill the deal.” - Mark Legaspi
According to Mark, regulators are now more aggressive when reviewing deals, with the intention of slowing down or stopping acquisitions. They are now less predictable and less reliant on historical precedent. Because of this, companies are now hesitant to do deals, especially if they are certain that the deal is reportable to the regulators. Furthermore, stricter regulators have changed the dynamics of negotiations and deal documentation. Here are the most impacted aspects of M&A landscapes.
Despite these extra hurdles, Mark emphasizes that if the buyer truly believes in the deal’s strategy and synergies, they should pursue it. Buyers must prepare a compelling story for the seller and the regulators about why the deal is beneficial for everyone, including the market and consumers. These narratives must be formed much earlier in the process now.
Furthermore, the deal team must be extra careful about the integrity of their documents. In a reportable deal, the regulators will require the buyer to submit a comprehensive filing of all internal documents detailing the analysis of the deal.
A legal team will also delve into the company's internal system, including non-privileged emails and casual communications with colleagues, looking for conversations that could be perceived as anti-competitive. All buyers need to ensure their documentation is as clean as possible.