Hart-Scott-Rodino (HSR) Act
A federal law requiring advance notification to the FTC and DOJ for M&A transactions above certain size thresholds — triggering a mandatory waiting period for antitrust review before closing.
Full Definition
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to M&A transactions above statutory thresholds to notify federal antitrust agencies and wait a prescribed period before closing, giving regulators an opportunity to review for anticompetitive concerns. HSR applies to both mergers and acquisitions of voting securities or assets. Thresholds are adjusted annually for inflation.
How it actually works: For 2024 transactions, HSR thresholds: (1) Size-of-transaction — deals valued over $119.5M require filing regardless of party size; (2) Size-of-parties — deals $47.8M to $119.5M require filing only if one party has $239M in sales/assets and the other has $23.9M. Deals below $47.8M generally don't trigger HSR regardless of party size.
Filing mechanics: both parties file detailed HSR forms with the FTC and DOJ, pay a filing fee ($30K-$2.25M depending on deal size), and wait 30 days (15 days for cash tender offers and bankruptcy sales). If the agencies have concerns, they issue a "Second Request" — a comprehensive document request that pauses the clock until fully responded to, often adding months to the process. Most HSR filings clear without Second Request; deals in concentrated industries or with competitive overlap are more likely to face deeper review.
For SMB/LMM deals, HSR is usually not triggered — most deals are below $119.5M and below party-size thresholds. But deal sizes in the LMM are creeping up, and sophisticated buyers often check HSR applicability early in diligence. The 2024 FTC/DOJ merger guidelines also expanded scrutiny of roll-up transactions, making HSR relevant for private equity platforms executing bolt-on strategies that individually might not trigger filings.
Seller vs. Buyer Perspective
HSR usually doesn't affect SMB deals but can apply when: (1) your business is larger than typical SMB ($40M+ revenue); (2) the buyer is much larger (large PE platform, strategic consolidator); (3) the deal is a roll-up contributing to industry concentration. If HSR applies, plan for 30 extra days in the timeline and budget for significant legal fees ($50-200K) for the filing. If your business is in a concentrated industry (local healthcare, regional utility, specialty products), anticipate potential Second Request risk and build timing into the deal. Working with an antitrust attorney early in the process is worth the investment.
Antitrust analysis should be part of your investment thesis, not an afterthought. Key questions: (1) Does HSR apply to this specific deal? (2) Is the target in a concentrated industry with likely regulatory interest? (3) What's the realistic closing timeline factoring in HSR? For roll-up platforms, understand that enforcement agencies are increasingly scrutinizing accumulated market power from bolt-on acquisitions — documentation of market definition and competitive dynamics matters. Filing fees are significant: $30K for smaller filings, scaling to $2.25M for the largest transactions. Pre-filing coordination with counsel prevents nasty surprises.
Real-World Example
A PE-backed specialty distribution platform with $180M revenue agrees to acquire a $45M revenue target for $125M. HSR applies (deal value exceeds $119.5M 2024 threshold). Filing prepared and submitted with $150K filing fee (deal-size-based). Standard 30-day waiting period begins. Parties respond to a few "pull and refile" questions but don't get a Second Request. 30-day period ends without action; HSR clearance achieved. Deal closes. Total HSR-related cost and time: $250K in legal and filing fees, 30-day waiting period built into the deal timeline, no material issues.
Why It Matters & Common Pitfalls
- !Threshold analysis is technical. The "size of transaction" and "size of parties" calculations include specific inclusions and exclusions. Don't estimate; get proper analysis.
- !Second Requests are devastating to timeline. A Second Request can add 6-18 months to closing. Evaluate the risk early.
- !Failure to file is serious. HSR violations carry civil penalties up to ~$51K per day. Not filing when required is reckless.
- !Roll-up scrutiny increasing. 2024 merger guidelines signal heightened interest in aggregated market power from PE roll-ups.
- !Foreign investment overlaps. HSR interacts with CFIUS (foreign investment review) when foreign parties are involved. Combined review adds complexity.
- !Pre-filing communications. Informal communication with agencies pre-filing can smooth the process, especially for novel transactions.
- !State-level antitrust. Some states (California, New York) have state-level merger notification requirements below federal thresholds.
- !Industry-specific reviews. Healthcare, banking, telecommunications have sector-specific review in addition to HSR.
Frequently Asked Questions
What is the HSR Act?↓
What are the 2024 HSR thresholds?↓
How long is the HSR waiting period?↓
Do most SMB M&A deals trigger HSR?↓
Related Terms
Antitrust Review
Government review of M&A transactions for anticompetitive effects — conducted by the FTC and DOJ under Hart-Scott-Rodino filing requirements for deals above statutory thresholds. Most SMB deals don't trigger formal antitrust review; transactions in concentrated industries or by large serial acquirers face closer scrutiny. See [HSR Act](#hsr-act-hart-scott-rodino) for full treatment.
CFIUS Review
The Committee on Foreign Investment in the United States — an interagency body that reviews acquisitions of US businesses by foreign buyers for national security implications. CFIUS can recommend the President block a deal, require divestitures of sensitive assets, or impose operating conditions (mitigation agreements). Filing is mandatory for certain transactions involving foreign government ownership; voluntary for others. Deals in defense, semiconductors, critical infrastructure, sensitive personal data, and advanced technology face the highest scrutiny. Processing time: 30-45 days for standard review, up to 90 days for full investigation.
Closing Conditions
Closing conditions are requirements that must be met before a deal can close — regulatory approvals, rep accuracy, no material adverse change. Failure to satisfy can delay or kill deals.
Regulatory Approvals
Government authorizations required before specific M&A transactions can close. Common categories: antitrust/competition (HSR Act filings for deals above thresholds), financial services (banking regulators for financial institution acquisitions), healthcare (state healthcare authority approvals for hospital, physician practice, or insurance deals), foreign investment (CFIUS review when foreign parties are involved), and professional licensing (state board approvals for licensed business transfers). Missing regulatory approvals is a closing condition failure.
Merger
A transaction in which two companies combine into one legal entity by operation of law — rather than one buying assets or stock of the other — with shareholders of both receiving stock or cash in the surviving entity.
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Disclaimer: The information provided on this page is for educational and informational purposes only. It should not be considered financial, legal, or investment advice. Business valuations depend on many factors specific to each situation. Always consult with qualified professionals — including business brokers, CPAs, and M&A attorneys — before making acquisition or sale decisions. LegacyVector is not a licensed broker, financial advisor, or attorney. Data shown may be based on limited samples and may not reflect current market conditions.
LegacyVector Research Team
Reviewed by M&A professionals · Updated April 2026