HSR Filing Thresholds Explained: Size-of-Transaction and Size-of-Person Tests

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain acquisitions to file pre-merger notification reports with the Federal Trade Commission and the Department of Justice and to observe a mandatory waiting period before closing. The statute delegates the threshold-setting and rule-writing function to the FTC, which has issued the HSR Rules at 16 C.F.R. Parts 801 through 803. Whether a transaction requires a filing is determined by applying two independent tests in sequence: the size-of-transaction test and, for transactions below the upper threshold, the size-of-person test. A transaction that fails either test is not reportable; a transaction that satisfies both tests is reportable unless a specific exemption applies.

This sub-article is part of the HSR Act Filings and Antitrust Merger Review in M&A: A Deal Lawyer's Field Guide. It covers every element of the threshold analysis in operational detail: the mechanics of both tests, the 2026 threshold figures and the indexing formula, UPE identification and its consequences for the size-of-person calculation, how assets and voting securities are valued, the treatment of LLC interests and partnership interests, contingent consideration and earn-out mechanics, the 180-day aggregation rule for acquisitions from the same person, the 5-year prior acquisition look-back, the most commonly applicable exemptions, and a practical pre-LOI diligence workflow for deal counsel.

Acquisition Stars advises buyers, sellers, and private equity sponsors on HSR compliance across M&A, venture, and secondary transactions. Nothing in this article constitutes legal advice for any specific transaction.

Why HSR Thresholds Govern Deal Timing

The HSR filing requirement imposes a mandatory pre-closing waiting period that directly controls when a transaction can close. For a standard acquisition, the initial waiting period is 30 calendar days from the date the FTC and DOJ receive valid HSR filings from both parties. That period is compressed to 15 days for cash tender offers and bankruptcy asset sales. During the waiting period, the parties cannot close the transaction, cannot take steps that would effectively integrate their operations, and are subject to the FTC's and DOJ's authority to issue a Second Request for documents and data, which extends the waiting period until 30 days after both parties substantially comply.

Because the waiting period is an immovable constraint on deal timing, threshold determination belongs at the beginning of deal planning, not at the end. A buyer that fails to identify a filing requirement before signing a merger agreement with a closing condition tied to a specific date may find that the HSR waiting period makes the contractual closing date impossible to satisfy. Conversely, a buyer that unnecessarily files an HSR report delays its own deal and wastes legal and administrative resources on a process that antitrust counsel could have avoided with a careful threshold analysis.

The filing fees associated with an HSR notification are also tied to the transaction value and are not refundable even if the waiting period expires without a Second Request. The 2026 fee schedule establishes a tiered structure ranging from $30,000 for transactions valued at $119.5 million to $2.25 million for transactions exceeding $5 billion. For a mid-market buyer doing multiple acquisitions in a year, the aggregate filing fees are a meaningful line item that justifies rigorous threshold analysis before each transaction. The FTC's fee schedule is adjusted in parallel with the annual threshold adjustments, so both the reportability determination and the fee calculation must be rechecked against the current year's published figures.

Civil penalties for completing a reportable acquisition without filing are assessed on a per-day basis for each day the violation continues, with a current statutory maximum exceeding $50,000 per day. The FTC has pursued penalties against both strategic acquirers and private equity firms for failures to file, including cases where the parties believed in good faith that the transaction was below the threshold. A documented threshold analysis conducted by HSR counsel before signing is the primary defense against a penalty assessment, even if the analysis ultimately proves incorrect, because it demonstrates the absence of willful violation.

The Size-of-Transaction Test Mechanics

The size-of-transaction test asks a single question: does the value of the assets, voting securities, or non-corporate interests being acquired exceed the applicable dollar threshold? For 2026, the base threshold is $119.5 million. If the transaction value is at or below $119.5 million, the transaction is not reportable regardless of the size of the parties. If the value exceeds $119.5 million but is at or below $477.5 million (the upper threshold for 2026), the size-of-person test must be applied. If the value exceeds $477.5 million, the transaction is reportable without regard to party size.

The transaction value is defined differently depending on what is being acquired. For acquisitions of voting securities, the value is the acquisition price for the securities being acquired, plus the fair market value of any voting securities of the same issuer already held by the acquiring person that are not being acquired in the current transaction. This "aggregation of existing holdings" rule means a buyer who already owns 5% of a target must count those pre-existing shares when computing whether the additional acquisition crosses the threshold. For acquisitions of assets, the value is the acquisition price, or fair market value if there is no cash price or if the acquisition price is not determinable.

When the consideration is not entirely cash, the value of non-cash consideration must be determined. Securities issued as consideration are valued at their market price as of the date of the filing. Assumption of liabilities is generally included in the transaction value to the extent the liabilities are assumed in connection with the acquisition and relate to the acquired assets. Earnouts and contingent payments are treated separately under the rules discussed in the contingent consideration section below. For stock-for-stock deals involving privately held acquirers, the value of the acquirer's stock being issued may need to be established by appraisal if there is no established market price.

Parties sometimes attempt to structure acquisitions as a series of smaller transactions to remain below the size-of-transaction threshold. The HSR rules address this directly through the aggregation rules applicable to acquisitions of voting securities from the same issuer within a 180-day period and through the prior acquisition rules that look back five years at prior acquisitions from the same UPE. A transaction that is non-reportable in isolation may become reportable when aggregated with prior or concurrent acquisitions from the same counterparty. Deal counsel should always confirm the current holdings of the acquiring person and the history of recent acquisitions before concluding that a new acquisition is non-reportable based solely on its standalone value.

The Size-of-Person Test Exceptions

For transactions valued between $119.5 million and $477.5 million in 2026, the size-of-person test determines whether the transaction is reportable. The test requires that one party to the transaction have annual net sales or total assets of $239 million or more, and the other party have annual net sales or total assets of $23.9 million or more. The test is structured asymmetrically: one party must be significantly larger (the upper-person threshold) and the other must clear a much lower floor (the lower-person threshold). If both parties independently satisfy the upper-person threshold, the test is met even if the lower-person party is very large. If neither party reaches the upper-person threshold, the test is not met and the transaction is non-reportable regardless of how close the transaction value is to $477.5 million.

Annual net sales are measured from the most recently completed fiscal year's financial statements. Total assets are measured as of the end of the most recently completed fiscal year. For entities that have not completed a full fiscal year (newly formed entities or entities formed through a recent acquisition), the financial figures are annualized from available data or measured as of the most recent fiscal quarter end. The acquiring person and the acquired person each include their respective UPE and all entities that the UPE controls: revenues and assets are consolidated upward to the UPE level for purposes of this calculation.

The size-of-person test creates meaningful safe harbor for transactions involving small targets. If the acquired person's UPE has total assets and annual net sales each below $23.9 million, the transaction is not reportable regardless of the acquiring person's size or the transaction value (assuming the transaction value is below $477.5 million). This safe harbor is particularly relevant for acquisitions of early-stage companies, professional practice groups, and asset-light service businesses, which frequently have low asset bases. Deal counsel should verify that the acquired person's balance sheet data is current and complete before relying on the small-person safe harbor.

The test also creates a narrow exception for transactions in which the acquiring person is small. A large acquirer can purchase from a small target without triggering a filing obligation if the acquired person's UPE is below the lower threshold. However, this scenario is uncommon in strategic M&A because buyers are typically larger than the businesses they acquire. The more operationally significant case is where a medium-sized strategic buyer with total assets between $23.9 million and $239 million acquires a large target: in that configuration, the acquiring person may fail the upper-person threshold and the transaction may be non-reportable despite a transaction value close to the upper limit.

2026 Threshold Updates and Annual Indexing

The HSR Act requires the FTC to adjust the dollar thresholds annually based on the change in gross national product (GNP). The FTC publishes the revised thresholds in the Federal Register each January or February, with the new figures taking effect 30 days after publication. The adjustment is multiplicative: each threshold is multiplied by the ratio of the GNP deflator for the preceding calendar year to the GNP deflator for the year ending September 30, 2003 (the base year established when the current indexing formula was adopted). The effect is that thresholds tend to increase each year in nominal terms, tracking general economic growth, though the rate of increase varies.

The 2026 thresholds (effective February 2026) are: size-of-transaction base threshold of $119.5 million; size-of-transaction upper threshold (waiving the size-of-person test) of $477.5 million; upper size-of-person threshold of $239 million; lower size-of-person threshold of $23.9 million. These figures should be verified against the FTC's current Federal Register notice before relying on them in any compliance determination, because this article may be read after the figures have been updated again. The prior year's thresholds (2025) had a base of $119.5 million for the lower boundary, with the upper threshold at $478 million, illustrating that year-over-year changes can be modest or occasionally nil depending on GNP trends.

The filing fee schedule is also adjusted annually and tracks the transaction value thresholds. For 2026, the filing fee tiers are: $30,000 for transactions valued at $119.5 million to below $173.3 million; $105,000 for $173.3 million to below $519.3 million; $280,000 for $519.3 million to below $1.036 billion; $805,000 for $1.036 billion to below $2.071 billion; $2.25 million for transactions at or above $5 billion. Each party to a reportable transaction pays the applicable filing fee: the filing fee is not split between the acquirer and the target.

Deal counsel who advise clients on multiple transactions each year must maintain a current threshold schedule and update it each February. The FTC publishes the revised thresholds on its website and through the Federal Register, but many practitioners use the prior year's figures habitually, particularly for deals that begin their diligence phase in January before the new thresholds are published. A transaction that is non-reportable under the prior year's thresholds may become reportable if the new thresholds are lower, though in practice the thresholds have not declined in recent years. The risk runs primarily in the other direction: a transaction that marginally triggers the prior year's thresholds may be non-reportable under the current year's higher thresholds.

UPE Identification and Control Rules

The ultimate parent entity is the entity that controls the acquiring person or the acquired person and is itself not controlled by any other entity. UPE identification is the foundational step in the HSR analysis because the financial metrics used in the size-of-person test (total assets and annual net sales) are measured at the UPE level and include all entities that the UPE controls. A misidentification of the UPE can dramatically understate reportable financial data: if an acquirer's UPE is a large publicly traded corporation, but counsel incorrectly identifies the acquiring subsidiary as the UPE, the size-of-person analysis may show the subsidiary below the upper threshold when the actual UPE is far above it.

Control of a corporation is defined as holding 50% or more of the outstanding voting securities. Voting securities are securities carrying the right to vote for the election of directors (or equivalents in non-U.S. entities). The 50% threshold is applied to the outstanding voting securities of the entity, not to a particular class: if an entity has two classes of voting stock and the acquirer holds a majority of one class but not of combined voting power, the control analysis must assess total voting power, not just share count. Supermajority voting rights, veto rights, and similar governance provisions do not in themselves constitute control under the HSR definition; the test is holding, not contractual power.

Control of a non-corporate entity (LLC, limited partnership, general partnership) is defined as holding 50% or more of the profits interest or 50% or more of the assets on dissolution. Unlike the voting securities test for corporations, the non-corporate control test is not linked to governance rights: a member holding 49% of an LLC's profits interest does not control the LLC even if the operating agreement gives that member supermajority blocking rights on major decisions. Carried interest, performance allocations, and preferred return provisions can affect the profits interest calculation and require careful analysis of the operating agreement in private equity fund and portfolio company contexts.

Once the UPE is identified, the acquiring person includes the UPE and all entities it controls, including indirect subsidiaries. The acquired person similarly includes all entities controlled by the acquired entity's UPE. For a private equity fund acquiring a portfolio company, the acquiring person's UPE may be the fund's general partner or a management company, and the consolidation upward may bring into scope other portfolio companies under common control. In platform-plus-add-on acquisition strategies, this consolidation can mean that the acquiring person's aggregate assets and revenues are substantially larger than any individual fund or portfolio company, potentially triggering the size-of-person test even for add-on acquisitions of modest size.

Asset Valuation Under HSR

For acquisitions of assets, the transaction value is the acquisition price if one is specified in the agreement. If the transaction involves no cash consideration, or if the consideration is not determinable from the agreement (for example, because it is tied to a formula not yet computable), the value is the fair market value of the assets being acquired as of the date the HSR notification is filed. Fair market value is the price a willing buyer would pay to a willing seller in an arm's length transaction, with both parties having reasonable knowledge of the relevant facts and neither being compelled to act.

The definition of assets for HSR purposes covers tangible and intangible property, contracts, and goodwill associated with the acquired business. Real property, equipment, inventory, accounts receivable, intellectual property (patents, trademarks, trade secrets, software), customer lists, and ongoing business contracts are all assets for this purpose. Excluded from the asset calculation are cash and cash equivalents, and securities (which are covered by the voting securities rules). The distinction between assets and voting securities matters when a transaction involves both: an acquisition of a target company's stock is measured under the voting securities rules, while an acquisition of a division or product line by asset purchase is measured under the asset rules.

Liabilities assumed in connection with an asset purchase are included in the transaction value where they are directly associated with the acquired assets. However, the HSR rules do not automatically treat assumed liabilities as part of the acquisition price in all circumstances. The key is whether the liability assumption is part of the consideration paid for the assets or is instead a structural feature of the acquisition (for example, acquiring a business subject to assumed leases, where the lease obligations are integral to the acquired operations). Deal counsel should assess each assumed liability category and determine whether it is properly characterized as consideration that increases the transaction value.

Intra-person transactions (acquisitions among entities that are both within the same UPE's corporate family) are exempt from HSR reporting under Section 7A(c)(3) of the Clayton Act and 16 C.F.R. Section 802.30. This exemption covers reorganizations, contributions, and transfers among commonly controlled entities. The exemption applies even if the entities are in different jurisdictions, different industries, or organized under different legal forms, provided both entities are within the same UPE's control chain at the time of the transaction. If the acquiring person's UPE is a private equity sponsor, however, the analysis must confirm that the target entity is actually within the same UPE's control chain before relying on the intra-person exemption: transactions between funds managed by the same sponsor but organized under different UPEs (which is the typical structure for separately raised PE funds) are not intra-person and may be reportable.

Voting Securities, LLC Interests, and Partnership Interests

The HSR rules treat acquisitions of voting securities of corporate issuers and acquisitions of non-corporate interests (LLC membership interests, limited partnership interests, general partnership interests) under parallel but distinct frameworks. For corporations, the relevant metric is the percentage of outstanding voting securities being acquired and the value of the total holdings after the acquisition. For non-corporate entities, the relevant metric is the percentage of the profits interest or dissolution assets being acquired, and the dollar value of the interest.

LLC interests present particular complexity because the economic and governance rights associated with membership interests are highly customizable through the operating agreement. An LLC may have multiple classes of membership interests with different voting rights, distribution priorities, and profit allocations. The HSR analysis must determine what percentage of profits or dissolution assets the acquiring person will hold after the acquisition, which requires reviewing the operating agreement's waterfall provisions, preferred return terms, and any class-specific allocation adjustments. Where the operating agreement includes a carried interest or performance allocation that could shift profits materially above or below the nominal membership percentage, the analysis must assess the allocation under the agreement's terms rather than defaulting to the nominal percentage.

Partnership interests in general and limited partnerships are analyzed under the same non-corporate framework as LLC interests. A general partner's interest in a limited partnership is typically based on the GP's share of profits and assets on dissolution under the partnership agreement, not on governance rights. Limited partners who hold a limited partnership interest with a right to 50% or more of the partnership's profits or dissolution assets are treated as controlling the partnership for UPE purposes, even though limited partners ordinarily lack management authority. Preferred limited partnership interests with a liquidation preference must be analyzed carefully: if the preference effectively entitles the holder to the bulk of the partnership's assets on dissolution, the dissolution-assets test may be triggered even at a relatively small profits-interest percentage.

Converting corporate stock to LLC interests, or restructuring an entity from a corporation to an LLC in connection with an acquisition, does not change the HSR analysis: the substance of what is being acquired (the value and control represented by the interests) is what matters, not the legal form of the entity or the instrument. Where parties restructure an acquisition from a stock purchase to an asset purchase (or vice versa) to affect the HSR analysis, counsel should verify that the restructuring genuinely changes the applicable calculation and is not a form-over-substance arrangement that the FTC would disregard.

Contingent Consideration and Earn-Outs

Contingent consideration is a common feature of M&A transactions, particularly in acquisitions of privately held businesses where the parties disagree about valuation or want to align the seller's incentives with post-closing performance. For HSR purposes, contingent consideration is included in the transaction value to the extent it is determinable at the time the HSR notification is filed. "Determinable" means the payment can be calculated using information available at the filing date, even if the calculation requires applying a formula to historical financial data.

Fixed-cap earn-outs, where the maximum potential payment is specified in the purchase agreement and no conditions other than the passage of time or completion of the closing apply, are included at their stated maximum. The FTC's guidance has consistently treated the maximum payable as the relevant figure when an earn-out has a ceiling: the fact that the payment may ultimately be less does not reduce the includable amount at the filing stage. Parties who structure earn-outs with capped maximums should therefore verify whether including the maximum amount in the transaction value would push the deal above the size-of-transaction threshold, potentially triggering a filing requirement that would not exist if the earn-out were excluded.

Variable earn-outs tied to future financial performance (such as a payment equal to a multiple of revenue for the 12 months following closing) are generally not determinable at the filing date because the future revenue figure is unknown. Such contingent payments are excluded from the initial transaction value calculation. However, a subsequent filing obligation arises if the acquiring person acquires additional voting securities or assets of the same issuer after closing and the combined value of the new acquisition plus the pre-closing acquisition exceeds the reportable threshold. Deal counsel should document the basis for excluding each contingent payment and create a checklist of post-closing events that could trigger a subsequent filing obligation.

Indemnification holdbacks, escrow arrangements, and purchase price adjustment mechanisms (such as working capital true-ups) present a separate analysis. A working capital adjustment that is computed post-closing based on a defined formula applied to closing balance sheet data is generally determinable at signing even if the precise amount is not yet known, because the adjustment formula is fixed. A purchase price escrow that is entirely subject to indemnification claims (with no guaranteed release) is not a fixed payment and its inclusion depends on whether the maximum indemnification exposure is capped. Deal counsel should work through each pricing mechanism in the acquisition agreement and classify it as determinable (include in value) or non-determinable (document exclusion and monitor for subsequent obligation).

Aggregation Across Acquisitions from the Same UPE

The HSR rules require that acquisitions of voting securities from the same issuer within a rolling 180-day window be aggregated for threshold purposes. If an acquiring person purchases 3% of a target's shares in January and then an additional 5% in April of the same year, both tranches are combined for the size-of-transaction calculation. The value of the combined acquisition is the sum of the consideration paid in each tranche plus the fair market value of any previously held shares not included in either tranche. This aggregation rule is designed to prevent threshold avoidance through staged acquisitions from the same counterparty.

The 180-day period is measured backward from the date of the most recent acquisition. Each new acquisition from the same issuer resets the lookback window. A party that acquires shares in small increments over an extended period will eventually trigger the threshold when the most recent acquisition, combined with all acquisitions within the prior 180 days, pushes the aggregate value above the reportable threshold. At that point, a filing is required before the acquisition that causes the threshold to be crossed: the HSR notification cannot be filed after the threshold-crossing acquisition without implicating the gun-jumping prohibition.

Aggregation for asset acquisitions from the same person operates under a parallel rule. Assets acquired from the same seller within a 180-day period are combined for threshold purposes. This rule applies to acquisitions from the same UPE: if an acquiring person purchases operating assets from one subsidiary of a corporate group in March and additional assets from a different subsidiary of the same corporate group in July, both acquisitions are aggregated because both are acquisitions from the same UPE. The identity of the direct seller is not dispositive; what matters is whether both sellers share the same UPE.

Acquisitions of voting securities and acquisitions of assets from the same person are not aggregated with each other under the current rules: the 180-day aggregation applies within each category (securities or assets) separately. A buyer that purchases assets from a seller in one transaction and then acquires voting securities in a related entity from the same UPE in a separate transaction does not aggregate those two different types of acquisitions for threshold purposes, though each must independently satisfy the threshold tests. Deal counsel planning multi-step transactions should map out each acquisition step, identify the applicable aggregation category, and apply the 180-day rule within each category before concluding that any individual step is non-reportable.

The 5-Year Look-Back and Prior Acquisition Exception

The prior acquisition exception under 16 C.F.R. Section 801.15 requires an acquiring person to look back five years when computing the value of voting securities held in an issuer. When the acquiring person holds voting securities acquired in a prior HSR-reportable transaction (a transaction for which a filing was made and the waiting period expired or was terminated), those prior holdings are not included in the value calculation for a subsequent acquisition from the same issuer. This exception prevents a party that already went through the HSR process for a prior acquisition from having to file again every time it makes a small additional acquisition of the same issuer's securities.

The prior acquisition exception has important limitations. It applies only to securities acquired in a previously filed transaction, not to all securities held by the acquiring person. If the acquiring person holds a block of shares that it acquired through open-market purchases that were below the reportable threshold (and for which no filing was made), those shares must be included in the value of the current acquisition. The exception therefore creates an asymmetric benefit: an acquiring person that previously cleared the HSR process for a large block can accumulate additional shares without re-filing, while an acquiring person that accumulated its current position through a series of small non-reported acquisitions must include all of those prior holdings in the current value calculation.

The five-year period is measured backward from the date of the current acquisition. Prior acquisitions that were completed more than five years before the current acquisition are not included in the look-back regardless of whether they were previously filed. This creates a natural reset: an acquiring person that last acquired voting securities of an issuer more than five years ago can treat its current holdings as a fresh starting point and exclude all prior holdings from the threshold calculation. Deal counsel tracking repeat acquirers in specific companies should maintain a dated acquisition history that allows the five-year window to be applied accurately.

The look-back interacts with the 180-day aggregation rule in a way that requires care. The 180-day aggregation applies to the most recent tranche: if the acquiring person acquired additional shares within the past 180 days, those acquisitions are combined with the current acquisition for threshold purposes, regardless of the five-year rule. The five-year look-back then applies to determine how far back the prior holdings must be included. In practical terms, an acquiring person analyzing whether its current purchase triggers a filing must separately compute: (a) the value of the current acquisition, (b) the aggregate value of all acquisitions from the same issuer within the prior 180 days, and (c) whether any prior acquisitions outside the 180-day window but within the five-year window were themselves non-reported and must be included.

Common-Sense Exemptions: Investment Only, Ordinary Course, and Foreign

The HSR rules provide several categorical exemptions that remove reportable-size transactions from the filing requirement when the antitrust concern is minimal. The three most frequently applicable in M&A practice are the investment-only exemption, the ordinary course of business exemption, and the foreign commerce exemption. Each has specific requirements that must be satisfied at the time of the acquisition; they cannot be elected retroactively if the requirements are not met from the outset.

The investment-only exemption under 16 C.F.R. Section 802.9 exempts acquisitions of voting securities where the acquiring person will hold 10% or less of the issuer's outstanding voting securities after the acquisition and the acquisition is made solely for the purpose of investment. The investment-purpose requirement is a facts-and-circumstances test that focuses on whether the acquiring person intends to participate in the management or strategic direction of the issuer. Passive institutional investors, index funds, and venture investors who hold board observer seats without voting rights have successfully relied on this exemption. However, an investor who negotiates board representation, provides strategic assistance, or coordinates with other shareholders on operational matters cannot rely on the exemption even if the ownership stake is below 10%.

The ordinary course of business exemption covers acquisitions of goods or realty transferred in the ordinary course of business. This exemption is primarily relevant for acquisitions of inventory, equipment, or real property in the ordinary course of a company's operations and is rarely applicable to M&A transactions structured as acquisitions of going-concern businesses. The exemption is not available simply because the seller regularly sells the type of asset being acquired: the focus is on whether the transaction is of a type and scale that both parties engage in as a routine part of their businesses, not an isolated extraordinary transaction structured to look like an ordinary-course transfer.

The foreign commerce exemption has two components. First, acquisitions of assets located outside the United States are exempt unless the foreign assets generated more than $94.7 million in sales into the United States (indexed annually, 2026 figure approximate). Second, acquisitions of voting securities of a foreign issuer are exempt unless the foreign issuer holds U.S. assets or generated U.S. sales above the applicable threshold. These exemptions recognize that HSR is primarily concerned with harm to U.S. competition, and transactions involving foreign businesses with minimal U.S. presence do not raise the same concerns. Cross-border deals where the target operates primarily outside the United States must analyze whether U.S. nexus through sales or asset location is sufficient to require reporting.

Pre-LOI Threshold Diligence Workflow

HSR threshold analysis should be completed before a letter of intent is signed, not after. A signed LOI with a closing timeline that does not account for the 30-day HSR waiting period creates unnecessary schedule pressure and potential liability if the parties proceed toward closing before the waiting period expires. The pre-LOI workflow requires deal counsel to gather four categories of information: the transaction structure and consideration terms, the UPE identification for both parties, the financial data needed for the size-of-person test, and the prior acquisition history of the acquiring person with respect to the target.

Transaction structure information includes whether the deal is structured as an asset purchase, stock purchase, or merger; the total consideration including any contingent payments; the identity of the direct buyer and seller entities; and whether any exemptions may apply based on the nature of the assets or the parties' relationship. This information is typically available from the first round of deal discussions and does not require full due diligence. A threshold memo prepared from term-sheet-level information is sufficient to identify whether the transaction is clearly below threshold, clearly above threshold, or in a range requiring more detailed analysis.

UPE identification requires reviewing the corporate structure of both parties, including any private equity sponsor relationships, holding company chains, and joint venture structures. For publicly traded acquirers, the UPE is typically the publicly traded parent and the consolidation is straightforward. For private equity buyers, the UPE analysis must trace upward through the fund structure to identify whether the general partner or management company constitutes the UPE and whether other portfolio companies under common control must be included in the consolidated financial figures. This information is often available from the buyer's counsel but may require the buyer's internal cooperation to produce the fund organizational charts.

Prior acquisition history must be gathered from the buyer's records for the five-year look-back period and the 180-day rolling window. Buyers who are active acquirers in a particular sector may have accumulated positions in related entities through a series of smaller transactions, any one of which may have been below the threshold individually but which, when aggregated with the current acquisition, triggers a filing requirement. An HSR compliance calendar maintained by deal counsel or in-house antitrust counsel, logging all acquisitions by UPE with dates and values, is the most reliable tool for identifying aggregation issues before they become violations. Establishing this calendar as a practice matter at the beginning of an active acquisition program is considerably less expensive than retrospectively reconstructing the acquisition history under the pressure of a government inquiry.

Frequently Asked Questions