Editor’s Note: The Hart Scott Rodino Act (HSR Act), a pivotal federal law, mandates companies to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before finalizing mergers or acquisitions involving certain assets or voting securities. This notification is part of the FTC and DOJ Premerger Notification Program, designed to enable a thorough review of proposed transactions for potential antitrust issues. For professionals in cybersecurity, information governance, and legal discovery operating within the eDiscovery ecosystem, tracking the monthly HSR transaction data, now enriched in this update with key economic indicators like GDP growth and corporate profits, offers critical insights. This enhanced perspective helps in understanding the broader economic implications of merger and acquisition activities and their potential impact on the eDiscovery landscape.

Background Note: The data in this report synthesizes information from both published annual reports and monthly transaction reports. Annual reports, once released, are the definitive records for their respective fiscal years. Thus, they may necessitate minor revisions to previously reported monthly transaction figures. This analysis uniquely incorporates the latest economic data from the U.S. Bureau of Economic Analysis, offering a more comprehensive view by connecting the dots between HSR transaction trends and broader economic performance indicators.

Industry News – Antitrust Beat

HSR Transaction Overview: Key Insights from December 2023’s M&A Activity

HaystackID Staff Published with Permission

Focusing on December 2023, this report analyzes the Hart Scott Rodino (HSR) Act transaction data within the broader context of economic trends and M&A activities. By comparing these findings with past Decembers, we offer a comprehensive view of the market dynamics as they stood at the end of 2023.

December 2023 HSR Transaction Activity

December 2023 stands out in the M&A landscape with a total of 160 HSR transactions. This number, while representing a decrease from November 2023’s 204 transactions, indicates a less pronounced year-end slowdown compared to previous years. For instance, December 2022 recorded 148 transactions, highlighting a year-over-year increase and suggesting a growing trend in end-of-year M&A activities.

Economic Backdrop Influencing M&A

The U.S. economy in 2023 experienced significant growth, with the real GDP growing by 4.9% in the third quarter. This economic upturn, coupled with a rise in corporate profits, created a conducive environment for business expansion and strategic M&A decisions, directly impacting the volume of transactions observed in December.

Technology Sector’s Role in 2023 M&A

The technology sector was particularly influential in the M&A activity of 2023:

• Recovery in Tech M&A: The sector saw a resurgence in the latter part of the year, especially in Q4, including December. This uptick suggests a positive trend heading into 2024.
• Focus on AI and Cybersecurity: The increased interest in AI capabilities and cybersecurity within the tech sector was a significant driver of M&A activities. This focus also contributed to a boost in the sector’s stock performance.
• Private Equity Involvement: The tech sector witnessed increased activities from private equity firms, especially in software investments, driven by more favorable market conditions.

Market Dynamics and Professional Challenges

December’s HSR transaction data reflects the evolving relationship between economic conditions and M&A volume. For professionals in fields like eDiscovery, cybersecurity, and information governance, this meant navigating a market with complex data and security management needs.

Regulatory Considerations

The regulatory environment in 2023 posed unique challenges, particularly for tech-sector transactions. Increased scrutiny, geopolitical tensions, and evolving regulations like the Biden executive order on AI added complexity to the M&A processes, impacting the transaction landscape in December.

Considerations and Charts

December 2023’s HSR transaction data, when analyzed against previous years and within the context of economic and sector-specific trends, particularly in technology, provides a nuanced understanding of the M&A market at year’s end. These insights are invaluable for professionals looking to navigate the M&A landscape, underscoring the importance of staying informed about ongoing economic, technological, and regulatory developments.

Taken from the latest published Hart-Scott-Rodino (HSR) Premerger Notification monthly transactions as shared by the Federal Trade Commission (FTC) and augmented by released annual reports, the following transaction charts may be useful for law firms, legal departments and legal service providers seeking to understand the real-time pulse rate of Hart-Scott-Rodino Act mandated transaction reviews. As these reviews may lead to Second Requests, the charts may also be useful as a baseline for considering provider assertions regarding the depth, breadth, and volume of their Second Request support for this unique type of eDiscovery during specific time frames.

Chart 1: HSR Act Annual Transactions Reported in Fiscal Years 2000 – 2024*/**

Chart 2: Monthly HSR Act Transactions Reported in the Fiscal Year 2024 (October-September)*

Chart 3: Monthly HSR Act Transactions Reported in the Fiscal Year 2023 (October-September)*

*Monthly Real-Time Reporting – First Report is October 2019 (Monthly Running Report)
**Based on Annual Reporting as Represented in Final Annual HSR Transaction Reports.

Assisted by GAI and LLM Technologies

Source: ComplexDiscovery