17 Jun M&A Brokers Closer to Regulatory Relief

The US House of Representatives has introduced a bill to permit simplified broker-dealer registration by “M&A brokers,” intermediaries who focus on putting companies together. Previously they have had to go through an expensive registration process and the significant costs and burdens of maintaining their status at the same level as the largest traditional brokerage firms. The bill would permit a simple notice filing by M&A brokers to let the SEC know that they are there. The SEC then can write rules which could require certain capital to be maintained, recordkeeping requirements and the like, but tailored to their size and scale of activities.

The securities industry and bar associations have been pushing the SEC for quite awhile to make registration simpler not only for M&A brokers but also so-called “private placement brokers,” often called finders, who simply introduce sources of capital to companies and step away, not negotiating or structuring the transaction. The M&A industry, whose lobby is well organized, has at last gotten the attention of Congress on this issue, we will see if this can get pushed through not only the Republican-controlled House but the Democratic-controlled Senate and Pres. Obama.

If this bill does pass, it could significantly reduce the costs and burdens associated with the sale of privately owned businesses. This is good for entrepreneurs. It is also better for these brokers to come out of the shadows and allow the regulators to be aware of their activities. Hopefully this gets through!