SEC offers relief to M&A brokers

Abstract

Purpose

To explain a No-Action letter recently issued by the USA Securities and Exchange Commission (SEC) permitting persons who qualify as “M&A Brokers” to facilitate the sale of private companies without registering with the SEC as broker-dealers, subject to a number of restrictions.

Design/methodology/approach

Explains how persons engaged in merger and acquisition activity have historically been required to register with the SEC, summarizes the conditions to the relief for the newly defined M&A Broker, explains what an M&A Broker can and cannot do, lists 10 criteria an M&A Broker must meet to obtain relief from registration, recommends policies and procedures for companies planning on taking advantage of the exemption from registration, and explains comparable UK legislation that applies to financial advisers advising on investments or arranging deals for M&A transactions.

Findings

While many questions and considerations remain, including how this guidance will play out in respect of various state law regimes, the M&A Broker designation has the potential to relieve some of the burdens of registration for advisors specializing in private business combinations.

Originality/value

Practical guidance from experienced securities and financial services lawyers.

Citation

D. Sacks, R., Donegan, T. and S. Gittleman, C. (2014), "SEC offers relief to M&A brokers", Journal of Investment Compliance, Vol. 15 No. 2, pp. 18-21. https://doi.org/10.1108/JOIC-05-2014-0015