Background Note: The data presented in this update is derived from a synthesis of published annual reports and monthly transaction reports. It’s important to recognize that annual reports, once published, serve as the definitive records for the fiscal year. Consequently, newly published annual reports may lead to minor adjustments in the transaction numbers that were initially reported on a monthly basis.

Industry Update Summary

A Hart-Scott-Rodino Act Transaction Update (September FY 2023)

HaystackID Staff Published with Permission

The Hart-Scott-Rodino (HSR) Act serves as a crucial indicator for merger and acquisition (M&A) activity in the United States. By requiring companies to file premerger notifications for proposed deals that meet certain size thresholds, the HSR Act provides valuable data for understanding the state of the M&A market. This analysis delves into the trends in HSR filings from the fiscal year 2000 to 2023, offering a concise view of M&A activity over the past two decades. The analysis is particularly relevant for professionals in cybersecurity, information governance, and eDiscovery, as it sheds light on market conditions that could influence business strategies and regulatory compliance.

Companies involved in M&A activities are the primary focus of this analysis, which spans data from the fiscal year 2000 to 2023, all within the United States. The objective is to understand the state of the M&A market through the lens of HSR filings data. The data from 2000 to 2023 reveals a fluctuating pattern in HSR filings. The early 2000s saw a sharp decline, bottoming out in 2003 with 1,014 transactions. A gradual recovery ensued until the financial crisis of 2008, after which there was another dip. The market rebounded again, peaking in 2021 with 3,644 transactions.

In FY 2022, there were 3,259 HSR transactions. However, in FY 2023, the number dropped significantly to 1,884 transactions, representing a 42.17% decrease year-over-year. The monthly average also declined from 271 transactions in FY 2022 to 158 in FY 2023. Examining the monthly data for FY 2023 shows fluctuations within the year. The highest number of transactions in 2023 was reported in November with 243, while the lowest was in April with 120. Despite these variations, the overall trend indicates a decline in M&A activity.

The significant decline in HSR filings in recent years, particularly in FY 2023, suggests that economic uncertainty has had a considerable impact on M&A activity. This trend is worth noting as it may influence strategic decisions. The data indicates a cyclical pattern influenced by various economic factors. The recent decline in HSR filings, especially the 42.17% drop in FY 2023, is particularly noteworthy, even understanding adjusted HSR notification thresholds, and warrants close attention from both eDiscovery professionals in those in related fields.

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 – 2023*/**

Chart 2: 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