Category Archives: Mergers & Acquisitions

Wachtell Publishes Financial Institutions M&A Guide for 2024

Editor’s Note: This post contains excerpts from Wachtell, Lipton, Rosen & Katz’s Guide: “Financial Institutions M&A 2024: Seizing Opportunities, Navigating Pitfalls,” the full version of which is available here. 

by Ed Herlihy, Richard Kim, Nick Demmo, David Shapiro, Matt Guest, Mark Veblen, Brandon Price, and Jake Kling

Photos of the authors

Top left to right: Ed Herlihy, Richard Kim, Nick Demmo, and David Shapiro
Bottom left to right: Matt Guest, Mark Veblen, Brandon Price, and Jake Kling
(Photos courtesy of Wachtell, Lipton, Rosen & Katz)

KEY TRENDS IN FINANCIAL INSTITUTIONS M&A DURING 2023

I. M&A FALLS FOR A SECOND CONSECUTIVE YEAR OWING TO GEOPOLITICAL, MACROECONOMIC AND REGULATORY FACTORS

Financial institutions M&A fell for the second year in a row in 2023. Like most other sectors of the economy, financial institutions faced significant M&A headwinds during the year, including geopolitical instability, elevated inflation, high interest rates, challenging and often volatile equity markets, enhanced antitrust risks and uncertainty, and recessionary fears that softened only towards the end of the year.

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Semiconductor Chips and Cloud Computing: A Quote Book

by Staff at the Federal Trade Commission’s Office of Technology

The FTC’s Tech Summit on AI[1] highlighted three panels that reflect different layers of the AI tech stack – hardware and infrastructure, data and models, and front-end user applications. Here, we publish the first in a three-part series of “Quote Books” summarizing each of the three panels. This first quote book is focused on hardware and infrastructure, including semiconductor chips and cloud computing.

 

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DOJ Continues to Modernize its Criminal Antitrust Enforcement Strategy

by Richard A. Powers

(Photo courtesy of the author)

Over the past few years, the Justice Department has been hard at work on a comprehensive update to the way it detects, investigates, and prosecutes price-fixing cartels. Several recent announcements, including at last week’s ABA White Collar Conference, preview the DOJ Antitrust Division’s next steps in this generational shift—the goals of which are to refine disclosure incentives, promote individual accountability, and obtain trial convictions.

First, on March 7, 2024, Deputy Attorney General Lisa Monaco announced the DOJ is kicking off a 90-day whistleblower “policy sprint”; the finish line is a new program to complement existing regulators’ programs, rewarding qualifying whistleblowers for bringing non-public, previously unknown misconduct to the DOJ’s attention. The Antitrust Division has long sought to encourage individual self-reporting as a complement to its corporate VSD policy, so expect that this initiative will aim to improve that incentive structure. Next, the DOJ updated the Justice Manual to incorporate the M&A safe harbor policy that it announced last fall. Notably for antitrust practitioners, the JM updates included changes to the Antitrust Division’s leniency policy that provide much-needed clarification on how companies that detect potential collusion at an M&A target can avoid inheriting those liabilities by promptly reporting to DOJ. Third, senior Antitrust Division officials continue to emphasize that they are focused on developing investigations through affirmative investigative techniques, such as wiretaps and whistleblowers.

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U.S. M&A Antitrust Enforcement: 2023 and the Year Ahead

by Ilene Knable Gotts, Nelson O. Fitts, Damian G. Didden, Christina C. Ma, and Monica L. Smith.

Photos of Authors

From left to right: Ilene Knable Gotts, Nelson O. Fitts, Damian G. Didden, Christina C. Ma, and Monica L. Smith (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

In 2023, leadership of the Federal Trade Commission and the Antitrust Division of the Department of Justice maintained an aggressive approach to merger enforcement, investigating and challenging transactions on the basis of a broad range of theories of harm articulated in the agencies’ newly issued 2023 Merger Guidelines. Although some transaction parties abandoned their deals at the prospect of a lengthy investigation or litigation, others defended their transactions in court, where the agencies met with mixed success. The FTC and DOJ also continued to disfavor merger settlements, entering into only three such consent decrees in 2023. 

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A View from Abroad: Unpacking DOJ’s M&A Safe Harbor Policy, Part II

by Joel M. Cohen, Marietou Diouf, James Hsiao, Francisco Málaga Diéguez, Aleksandra Oziemska, Jean-Pierre Picca, Anneka Randhawa, Jean-Lou Salha, Dr. Daniel Zapf, Dr. Nicolas Rossbrey, and Dr. Tine Schauenburg

Photos of the authors.

Top left to right: Joel M. Cohen, Marietou Diouf, James Hsiao, Francisco Malaga, Aleksandra Oziemska, and Jean-Pierre Picca. Bottom left to right: Anneka Randhawa, Jean-Lou Salha, Daniel Zapf, Dr. Nicolas Rossbrey, and Dr. Tine Schauenburg (Photos courtesy of White & Case LLP)

On October 4, 2023, United States Deputy Attorney General (DAG) Lisa Monaco announced a new Department of Justice (DOJ) Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company.  Under the policy, the acquiring party will receive a presumption of criminal declination if it promptly and voluntarily discloses criminal misconduct, cooperates with any ensuing investigation, and engages in appropriate remediation, restitution and disgorgement. While the DOJ has offered little guidance as to what it might expect from a company that self-discloses under the policy, many jurisdictions outside the United States offer corporate self-disclosure and cooperation incentives. This alert analyzes several of those practices in Europe and Asia, and what can be learned from their application. Continue reading →

Questions about the “Carrot” and “Stick” Remain: Unpacking DOJ’s New M&A Safe Harbor Policy, Part I

by Joel M. Cohen and Marietou Diouf

Photos of the authors

From right to left: Joel M. Cohen and Marietou Diouf (Photos courtesy of White & Case LLP)

On October 4, 2023, United States Deputy Attorney General (DAG) Lisa Monaco announced a new Department of Justice (DOJ) Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company.  Under the policy, the acquiring party will receive a presumption of criminal declination if it promptly and voluntarily discloses criminal misconduct, cooperates with any ensuing investigation, and engages in appropriate remediation, restitution and disgorgement.

The Safe Harbor policy is a clear continuation of the DOJ’s push for corporate voluntary self-disclosure (VSD).  But as with many DOJ policy pronouncements, the devil is in the details.  It remains unclear what it will take for an acquiring company to obtain the “carrot” DOJ is dangling and poses questions as to the “stick” the DOJ might wield if a self-disclosure does not achieve safe harbor, or more broadly, if an acquirer fails to identify criminal misconduct in the acquisition process. Continue reading →

DOJ Announces New Safe Harbor Policy to Encourage Acquiring Companies to Timely Disclose Misconduct Uncovered During M&A Transactions

by Jacquelyn M. Kasulis, Zachary S. Brez, Nick Niles, Meghan Dolan, Grace Zhu, Shruti Chandhok, Brian Benczkowski, Mark Filip, John Lausch, Kim B. Nemirow, Marcus Thompson, Asheesh Goel, Cori A. Lable, Erin Nealy Cox, and David Weiner

Top left to right: Jacquelyn M. Kasulis, Zachary S. Brez, Nick Niles, Meghan Dolan, and Grace Zhu.
Middle left to right: Brian Benczkowski, Mark Filip, John Lausch, Kim B. Nemirow, and Marcus Thompson.
Bottom left to right: Asheesh Goel, Cori A. Lable, Erin Nealy Cox, and David Weiner.
Not pictured: Shruti Chandhok.
(Photos courtesy of Kirkland & Ellis LLP)

Overview

Deputy Attorney General Lisa Monaco recently announced that the Department of Justice has adopted a new Mergers & Acquisitions Safe Harbor Policy, in remarks delivered at the Society of Corporate Compliance and Ethics’ 22nd Annual Compliance & Ethics Institute on October 4, 2023. Under the Safe Harbor Policy, acquiring companies will receive a presumption of declination of prosecution if they: (1) promptly and voluntarily disclose criminal misconduct within six months from closing of an acquisition, (2) cooperate with the DOJ’s investigation and (3) engage in timely and appropriate remediation, restitution and disgorgement. The Safe Harbor Policy, which will be applied department-wide, is a continuation of the DOJ’s efforts to incentivize voluntary self-disclosure and encourage companies to prioritize compliance.

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FTC Alleges “Serial Acquirer” Theory in Challenge to Consummated PE Deals

by Andrew J. Nussbaum, Jonathan M. Moses, Nelson O. Fitts, Adam L. Goodman, and Itai Y. Thaler

Photos of the authors

From left to right: Andrew J. Nussbaum, Jonathan M. Moses,  Nelson O. Fitts, Adam L. Goodman, and Itai Y. Thaler. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

Last week, the Federal Trade Commission sued U.S. Anesthesia Partners, Inc. (“USAP”) and its private equity investor, Welsh, Carson, Anderson & Stowe, as well as a number of Welsh Carson entities, in federal district court, alleging that USAP and Welsh Carson conspired to monopolize and reduce competition for anesthesia services in Texas.  The FTC’s complaint alleges that, beginning in 2012, Welsh Carson, through its investment in USAP — which varied between 23% and 50.2% over the relevant period — directed a “roll-up scheme” to acquire and consolidate over a dozen Texas anesthesia practices; caused price increases across the state; and coordinated prices and allocated markets with some of the remaining independent anesthesia providers.  The complaint claims violations of the Sherman Act, the Clayton Act, and the FTC Act, and seeks unspecified “structural relief” that could include restitution and divestitures.

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FTC and DOJ Propose Fundamental Revision of Merger Guidelines

by Ilene Knable Gotts, Christina C. Ma, and Katharine R. Haigh

Photos of the authors

Left to right: Ilene Knable Gotts, Christina C. Ma, and Katharine R. Haigh (photos courtesy of Wachtell, Lipton, Rosen & Katz)

Recently, the Federal Trade Commission and Antitrust Division of the Department of Justice published a proposed replacement to the existing Horizontal Merger Guidelines and Vertical Merger Guidelines. The agencies’ draft guidelines (the “Guidelines”) do not have any independent legal effect, but are intended to influence the federal courts and to provide guidance as to how the federal antitrust authorities will analyze the competitive impact of transactions and decide whether to challenge them. 

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Navigating Generative AI in M&A Transactions

by Frank J. Azzopardi, Matthew J. Bacal, David R. Bauer, Pritesh P. Shah, Samantha Lefland, Christopher C. Woller, and Joshua Shirley 

Photos of the authors

Top left to right: Frank J. Azzopardi, Matthew J. Bacal, David R. Bauer, and Pritesh P. Shah. 
Bottom left to right: Samantha Lefland, Christopher C. Woller, and Joshua Shirley.
(Photos courtesy of Davis Polk & Wardwell LLP)

The recent rise of consumer and market interest in generative artificial intelligence (GAI) tools has spurred growing interest in GAI assets from strategic acquirers and private equity investors. This article provides a brief introduction to GAI tools and their current uses, as well as an overview of the due diligence, transactional and other commercial considerations for investors and acquirers engaging in related investment and M&A activity.

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