What are the latest advancements on federal corporate laws as relating to mergers and acquisitions?
For many small businesses, the option of merging with another business – or acquiring it altogether – can be an attractive and lucrative way to increase productivity, grow jobs, and ultimately increase profits. Oftentimes, businesses considering this maneuver will enlist the services of a professional advisor or business broker to help set up the deal and seamlessly transition the companies involved.
Unbeknownst to many, these consultants are heavily regulated by the Securities and Exchange Commission (SEC), which oversees any merger or acquisition involving the “purchase/sale, exchange, or issuance or stock or debt, or a merger or business combination transaction.” The compliance costs for these brokers are substantial, reaching almost $150,000 annually – which is, of necessity, passed on as part of the final cost of the merger or acquisition. For many small and micro businesses, these compliance costs preclude the involvement of a broker or consultant, resulting in potential pitfalls as they attempt to expand.
Fortunately, Congress has introduced a new piece of legislation known as the Small Business Mergers, Acquisitions, Sales and Brokerage Simplification Act. Under this Act, brokers and consultants would be exempt from the regulatory oversight requirements if the proposed merger/acquisition involves businesses with annual earnings of less than $25 million and/or gross revenues of less than $250 million. In addition, the exemption would only be available in situations in which the buyer intends to maintain control and ownership of the business after purchase.
The sponsors of the bill hope that these changes will allow smaller businesses the opportunity to work with experienced professionals during the merger and acquisition process, thereby allowing businesses the opportunity to avoid any mistakes along the way. Moreover, the change would help effectuate the estimated $10 trillion worth of private companies that will be sold or transferred as the Baby Boomer generation retires.
If you are considering a merger or acquisition and would like to discuss the best ways to accomplish your business goals, contact the South Carolina attorneys at Willcox, Byuck & Williams, P.A. today! Please call: (843) 461-3020 in Myrtle Beach or (843) 536-8050 in Florence.