Changes In M&A Reviews and Their Implications
Recent changes in how mergers and acquisitions (M&A) are reviewed for competition concerns have made dealmakers rethink their strategies. The government is looking more closely at M&A deals to make sure they don’t harm competition, which means that deals might take longer to get approved and cost more.
One big concern is that some deals might not be approved at all because of these stricter rules. Even if deals aren’t blocked, they might take much longer to go through, making the process more uncertain and volatile.
This extra time can also make deals more expensive, and some buyers might not be able to afford the increased costs. In the worst cases, the long waiting time can lead to financial problems, and deals might fall apart.
To deal with these challenges, dealmakers are now thinking about the risk of competition issues from the very beginning of the deal process. They’re spending up to six months looking at the potential risks before they even start talking about the deal.
New rules also mean that companies need to provide more information upfront, which makes it more likely that their deal will be looked at again by regulators. Regulators are also paying close attention to the reasons behind deals and how they will work. If a deal looks too expensive or risky, it could be a problem.
Buyers and sellers are now being more careful when they decide who to involve in their deals, especially if they think there might be a competition problem. In some cases, buyers are looking for deals in places with easier rules.
Despite these concerns, many dealmakers are still interested in making deals. Even though some deals might take longer, most should still go through.
In this situation, it’s really important for dealmakers to think about competition risks early on. They’re preparing for more detailed checks, managing costs, and figuring out how long it will take. Deal makers are also looking at ways to make their deals safer from a competition point of view.
Also, in the tech industry, there are new rules to make sure big tech companies don’t get too much power. These rules are coming from the US, Europe, and China, and they’re affecting how tech companies can do mergers and acquisitions. So, everyone who’s making deals is keeping an eye on these changes.