I am attorney Laura Anthony founding partner of Legal & Compliance, a full service corporate,
securities, and business transactions law firm.
Today is the continuation in a LawCast series talking about the federal and Florida M&A
broker exemption.
Following the SEC’s lead, effective July 1, 2016, Florida passed a statutory exemption
from the broker-dealer registration requirements for individuals and entities affecting securities
transactions in connection with the sale of equity control of private operating businesses,
called an M&A Broker.
In this LawCast series I have gone through the specifics of the new Florida exemption.
In this and the next LawCast in the series I will discuss the federal exemption.
On January 31, 2014, the SEC division of Trading and Markets issued a no-action letter in favor
of entities affecting securities transactions in connection with the sale of equity control
of private operating businesses.
The SEC stated that it would not require broker dealer registration for M&A brokers arranging
for the sale of privately held businesses in accordance with the facts and circumstances
set forth in the no action letter.
The no action letter does not cover the facilitation of sales, mergers or acquisitions, or acquisitions
of publicly reporting, operating, or shell companies, which activities still require
broker dealer registration.
The SEC defined M&A broker as a person engaged in the business of affecting securities transactions
solely in connection with the transfer of ownership and control of a privately held
company through the purchase, sale, exchange, issuance, repurchase, redemption of, or a
business combination involving securities or assets of the company to a buyer that will
have that will actively operate the company or the business conducted with the assets
of the company.
The buyer would not have to be involved in daily operations, but could actively operate
the company through the power to elect executive officers, and approve the annual budget, or
by service as an executive.
The SEC defined privately held company as a company that does not have any class of
securities registered or required to be registered with the SEC under Section 12 of the Exchange
Act or with respect to which the company files, or is required to file periodic information
documents and reports under Section 15D of the Exchange Act.
The SEC specifically states, that the no action letter does not cover shell companies.
The SEC no action letter provides an exemption for M&A brokers that facilitates mergers,
acquisitions, business sales and business combinations between sellers or buyers have
privately held companies.
M&A Brokers may advertise the sale of businesses, including descriptions of the business location
and price range.
In the next and last LawCast in this series, I will go through the limitations to the federal
M&A broker exemption.
I am securities attorney Laura Anthony, founding partner of Legal and Compliance and producer
of LawCast.
Should you have any questions about today’s topic, please visit SecuritiesLawBlog.com
and LawCast.com, or contact me directly.
Inquiries of a technical nature are always encouraged.