HSR Threshold Update: Implications for Mid-Market Deals

The Federal Trade Commission published the annual HSR threshold update in late January, raising the size-of-transaction threshold to $126.4 million. For deals just above the line, the new disclosure regime adopted in late 2024 has now had a full year of practice and the patterns are becoming clear.

The headline number - the size-of-transaction threshold - is largely a mechanical adjustment, indexed to GNP. The size-of-person threshold moved in parallel. For deals comfortably above the line, neither change matters. For deals close to it, the adjustment can be the difference between filing and not filing, and the trend is for more deals each year to fall below.

What does matter, and matters a lot, is the substance of the filing itself. The reformulated HSR form requires meaningful narrative disclosure of the rationale for the transaction, the structure of the merging parties' supply relationships, certain prior acquisitions, and a more detailed picture of overlapping product lines. Several categories of internal documents that were previously excluded - including ordinary-course strategic plans and certain board-level transaction analyses - are now squarely within the production obligation.

We expect the average preparation time for a substantively-complete HSR package to remain at six to eight weeks - roughly triple what it was under the old rules. Sponsors with rolling deal pipelines should plan accordingly. The implication for transaction timetables is that the antitrust workstream needs to begin in parallel with diligence, not after signing. Waiting until signing to commission the antitrust analysis routinely costs two to four weeks on the back end of the deal.

Three practical points are worth flagging. First, the 'transaction rationale' narrative is reviewed carefully and compared to the parties' contemporaneous documents. Inconsistencies invite second-request scrutiny. The narrative should be drafted by deal counsel in close coordination with the client's strategy and corporate development teams, not as a last-minute drafting exercise.

Second, the expanded document production calls for genuine document hygiene during the pre-signing period. Strategy memoranda, board materials, and competitive-positioning decks prepared in the months leading up to a transaction will land at the agencies in their original form. Counsel should be reading those documents as they are written, not at filing time.

Third, the prior-acquisition disclosure regime has real teeth for serial acquirors. Sponsors with active platform strategies in concentrated industries should be maintaining a rolling prior-acquisition log and a refreshed view of overlap analysis. Building this in advance turns what would otherwise be a fire drill into a single-day exercise at filing.

We continue to expect the agencies to use the expanded record selectively rather than systematically. The vast majority of filings still clear early termination or the standard waiting period without further inquiry. But the deals that draw scrutiny do so faster and with more substance than they did three years ago - and that scrutiny is informed by a record the parties themselves provided. Plan the filing as a persuasion document, not a compliance exercise, and the rest of the antitrust process tends to follow.

What we are watching

We will return to this topic across the coming quarter. If you are actively negotiating a transaction where these issues are live, we'd welcome a confidential conversation.

Three takeaways

• The market is settling, but the diligence bar is rising.
• Preparation, not posture, is the source of speed.
• The right structure can move price more than another round of negotiation.