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Tax Blog

Small Business Mergers, Acquisitions, Sales and Brokerage Simplification signed into Law

Tucked deeply into the Consolidated Appropriations Act of 2023, lies a fourteen-page provision entitled “Small Business Mergers, Acquisitions, Sale, and Brokerage Simplification”. The aim of this provision is to create a sense of clarity for Merger and Acquisition Brokers (M+A) on if they are required to Register with the Security and Exchange Commission (SEC) and comply with Financial Industry Regulatory Authority (FINRA) regulation requirements.

Prior to the passage of this provision, many if not all M+A Brokers were relying on a no-action letter from the SEC. This letter addressed concerns without actually changing anything. This letter was not binding in any legal proceedings. So, for years, M+A Brokers continued to push for further guidance and clarity. That push finally paid off on December 29, 2022.

Registration is not required for an M+A Broker during the representation of buyers and sellers involving a privately held business. Provided that the privately held business in the transaction has either (1) “The earnings of the company before interest, taxes, depreciation, and amortization are less than $25,000,000.” or (2) “The gross revenues of the company are less than $250,000,000.”

There are some key provisions that M+A brokers need to be aware of that may require registration.

· If the Broker receives, holds, transmits, or maintains custody of the funds or securities that are to be exchanged

· If the Broker provides any financing with the transaction

While this allows M+A Brokers to breathe a sigh of relief, this does not mean that people buying or selling a business should forgo their due diligence of finding good legal counsel to help them through all the steps of the transaction. Nor does it mean you should not seek out accounting help to give you a complete picture of the business’s finances.

For more information about this provision, or if you need assistance buying or selling a business, please contact the Professionals at The Center for Legal, Financial, & Tax Planning Inc., at (618) 997-3436.

*** This blog does not contain a comprehensive review of the new provisions. The information provided above is for general informational purposes and should not be considered Legal, Financial, or Tax Planning Advice. ***



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