Consulting Playbook: Key Steps to Navigate Antitrust Regulation during a merger
The Consulting Playbook, Edition #15
Two big Energy Organizations were merging and the newly formed company was an entity subjected to some issues with Antitrust Authority, and it had to get clearance. That predicament required both companies to follow certain procedures, while creating the future company of such scale. During the negotiation process neither company was permitted to share information regarding bid content, pricing, cost structure, their strategy or teams. The negotiations with the authorities continued for about a year, and pushed the companies depending on location, to divest some of their activities before the merger.
The fines for non-compliance with the antitrust regulations would have been double digits of a year’s revenue of the whole new company if they found any violations, and naturally that had to be avoided.
The company decided to hire a consulting firm to help with planning the integration, designing the new business model with clean team processes while ensuring compliance with regulatory requirements.
Setting the Ground Rules for the Integration
The Consultant focused on the most important objective – to ensure successful merger and smooth launch of the new company, while in case that the antitrust authorities didn’t okay the merger, to have both companies successfully function as independent entities, in their competitive landscape.
Clean Team Consultants sanitizing the information exchange, did their work based on 3 Main principles:
- No discussion and disclosure of financial, dealings, and negotiations parties
- Meeting were attended by a lawyer and clean team member to ensure the agreed agenda was implemented
- Sensitive topics discussion had to be sanitized and their content could not be revised by either party.
Preparation Pays Off in the End
The Clean Team Approach allowed the two companies to prepare for the merger while awaiting the Antitrust authority’s decision of the new company.
- New Company’s vision was created
- New Company’s key executives and staff were selected
- Synergies were identified and associated implementation plan drafted
- Labor negotiations prepared
- Day 1 Readiness and Launch executed
Overcoming Antitrust Issues in Mergers
Mergers and acquisitions are for many companies and in many cases, the most viable option to survive and thrive. However antitrust regulations and other serious complications can derail the process. Many arrangements and negotiations can become risky matters between competitors in pending mergers.
Here are a Few Steps that can Help Parties Better Prepare for a Merger and Minimize Risk:
- Consult a reputable law firm and receive the necessary support in assessment of the pros and cons of the pending deal. Specifically, in regards to type of industry, what investigating enforcers will look at, and for preparation of negotiating agreements.
- Notifications and exemption review – while they differ for various industries, a number of notifications must be filed prior to the merger. Knowing the exemptions in each case is also very important when preparing the documentation for pre-merger filing.
- Careful examination of all relevant directives under the Federal Trade Commission, Department of Justice, European Union Merger Control and the Hart-Scott-Rodino Act, must be carried out, and necessary clearance obtained.
- Additional clearance by over a 100 jurisdiction bodies and regulatory organizations might be required too. The process can be lengthy and tedious.
- To facilitate the merger review process, and minimize the scrutiny as well as longer delays, have a full set of economic and legal presentations, data, and evidence, and be ready to respond to any inquiries in a timely manner.
- Organize the non-parties and witnesses to assist the review process as called up by authorities, and have them prepare to cooperate as necessary.
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About The Consulting Playbook
The Consulting Playbook is a collection of posts designed to offer insights into how businesses and their executives can utilize consulting as a strategic lever to boost performance. Each Consulting Playbook post is broken down into a few elements: Case Study, Additional Information regarding the technical application, and Additional Links related to the topic.