Hart-Scott-Rodino Filing Requirements - What M&A Sellers Must Know

You’ve negotiated the deal of a lifetime, signed the purchase agreement, and started planning your post-exit future—then your attorney mentions something called “Hart-Scott-Rodino” and explains that federal regulators need 30 days to review your transaction before you can close. Welcome to the world of HSR antitrust filings, where larger lower middle market deals encounter a regulatory layer that smaller transactions avoid entirely.

Executive Summary

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain mergers and acquisitions to notify the Federal Trade Commission and Department of Justice before completing their transactions. For 2025, the FTC announced that transactions valued above $126.4 million trigger mandatory HSR filing requirements, though various exemptions and party size tests create a more complex threshold analysis. When HSR filing applies, sellers face a mandatory 30-day waiting period before closing, filing fees starting at $30,000 for smaller reportable transactions, and the possibility of extended reviews if regulators request additional information.

For business owners in the $2M-$20M revenue range, HSR filing requirements typically become relevant when selling to larger strategic acquirers or well-capitalized private equity firms at premium valuations. Understanding these requirements matters because they affect deal timeline predictability, transaction costs, and execution risk. This article explains when HSR filings are required, what the process involves, how to manage timeline implications, and why sophisticated sellers build HSR considerations into their deal planning from the start. Whether your transaction will trigger HSR filing requirements or not, understanding this regulatory framework helps you negotiate more effectively and avoid last-minute surprises. Don’t let HSR concerns distort your buyer selection. The goal is maximizing overall deal value, not avoiding a manageable compliance requirement.

Introduction

Federal antitrust review represents one of the most misunderstood aspects of M&A transactions for first-time sellers. Many business owners assume antitrust scrutiny only applies to mega-mergers between industry giants, the kind that make headlines and face congressional hearings. The reality is more complex. The Hart-Scott-Rodino Act creates notification requirements based on transaction size and party characteristics, not competitive significance. A completely benign acquisition with no competitive implications whatsoever still requires HSR filing if it exceeds the relevant thresholds.

This distinction matters because HSR filing is primarily a procedural requirement, not a judgment about your deal’s antitrust implications. While the substantial majority of transactions that require HSR filing receive clearance without extended review, approximately 96-98% based on historical FTC data, the process still adds time, cost, and complexity that affect deal dynamics. The agencies have discretion in how they allocate review resources, and outcomes can vary significantly based on administration priorities, agency workload, and industry-specific factors that are difficult to predict.

For sellers in our target range, businesses with $2M to $20M in revenue planning exits over 2-7 year horizons, HSR considerations typically arise in specific scenarios. If you’re selling to a large strategic acquirer at a substantial valuation multiple, the transaction value might exceed HSR thresholds. If a well-capitalized private equity firm is acquiring your company as part of a roll-up strategy, HSR filing requirements might apply based on the buyer’s overall size. Understanding these dynamics helps you evaluate buyer profiles, negotiate timeline provisions, and structure transactions efficiently.

We’ve guided numerous clients through HSR filing processes and helped many more understand why their transactions didn’t require filing. This article distills that experience into practical guidance for business owners navigating the intersection of M&A transactions and antitrust regulation.

Understanding HSR Threshold Calculations

The Hart-Scott-Rodino Act uses a size-based approach to determine filing requirements. The thresholds adjust annually based on gross national product changes, so the specific dollar amounts shift each year. According to the Federal Trade Commission’s annual threshold adjustment published in the Federal Register, the 2025 threshold structure works as follows.

The Size of Transaction Test

The primary HSR trigger is transaction value. For 2025, transactions valued at $126.4 million or more require HSR filing regardless of the parties’ sizes. This absolute threshold captures large deals between parties of any size. If the acquisition price for your business exceeds this amount, HSR filing will be required.

For transactions between $126.4 million and $252.9 million, a secondary “size of person” test applies. Under this test, filing is required only if one party has annual net sales or total assets of $252.9 million or more AND the other party has annual net sales or total assets of $25.3 million or more. This size of person test means that transactions in this middle range between smaller parties don’t require filing.

These thresholds are indexed to GNP and typically increase modestly each year. The FTC publishes updated thresholds each February, so parties contemplating transactions near threshold levels should verify current figures with the FTC website or antitrust counsel.

Calculating Transaction Value

Transaction value under HSR rules isn’t simply the purchase price. The calculation includes the total value of voting securities, assets, and non-corporate interests being acquired. For asset acquisitions, you include the fair market value of all assets being transferred. For stock acquisitions, you calculate based on the acquisition price or, if no price is established, fair market value.

Earnout provisions, seller financing, and contingent payments create calculation complexity. Generally, you include the present value of contingent payments if they’re reasonably certain to be paid. Your antitrust counsel will help navigate these calculations, but understanding the basic framework helps you anticipate whether HSR filing requirements might apply.

Common Exemptions

Several exemption categories exclude transactions from HSR filing requirements even when they exceed size thresholds. The most relevant for lower middle market sellers include:

Acquisitions of goods in the ordinary course of business: Inventory purchases and similar routine commercial transactions are exempt regardless of size.

Real property acquisitions: Pure real estate transactions typically fall outside HSR requirements, though transactions involving operating businesses that happen to include real property don’t qualify for this exemption.

Acquisitions from foreign persons of assets located outside the United States: International transactions with limited U.S. nexus may qualify for exemption, though businesses with significant U.S. operations, revenues, or customers generally don’t qualify even if the parent entity is foreign.

Certain acquisitions of voting securities: Acquisitions solely for investment purposes (typically less than 10% of outstanding securities with no intent to influence control) may be exempt.

Understanding exemption categories matters because transaction structure affects HSR applicability. In some cases, restructuring a deal can eliminate filing requirements while achieving the same economic outcome for both parties. Exemption analysis requires careful legal evaluation. The consequences of incorrectly determining that an exemption applies can include significant penalties.

The HSR Filing Process and Timeline

When HSR filing is required, understanding the process helps you manage expectations and plan accordingly. The filing process involves specific procedural requirements that affect your deal timeline, and those requirements can vary significantly based on current enforcement priorities and administration approaches.

Preparing the HSR Filing

HSR filings require substantial information about both parties to the transaction. The filing includes detailed descriptions of both companies’ business activities, revenue breakdowns by industry classification codes, prior acquisitions, and documents relating to the transaction. The “Item 4” document production, which requires submitting documents prepared by or for officers and directors that analyze the transaction, competition, or market shares, often proves the most time-consuming preparation element.

For sellers, Item 4 document production means gathering any board presentations, investment banker materials, or strategic analyses that discuss competitive dynamics or market positioning. If your investment banker prepared materials describing your market share or competitive advantages, those documents likely require production.

Professional preparation of HSR filings typically takes 2-4 weeks for straightforward transactions. Complex deals with multiple business lines or international operations may require longer preparation time. Your M&A counsel and specialized antitrust counsel (if different) coordinate this preparation.

Filing Fees

HSR filing fees are substantial and scale with transaction value. According to the FTC’s official fee schedule for 2025, the structure is as follows:

The buyer typically pays the HSR filing fee, though this is negotiable. For transactions at the lower end of HSR-reportable values, the $30,000 fee represents a modest transaction cost. Total HSR compliance costs extend well beyond the filing fee itself.

Total Compliance Cost Considerations

When budgeting for HSR compliance, parties should anticipate costs beyond the filing fee:

Legal fees for filing preparation: Depending on complexity, antitrust counsel fees for preparing and filing HSR notifications typically range from $25,000 to $75,000 for straightforward transactions and can exceed $100,000 for complex deals involving multiple business lines or competitive overlaps.

Document collection and review: Item 4 document production requires identifying, collecting, and reviewing potentially responsive materials, which may involve internal staff time and outside counsel review.

Management time and distraction: Sellers should budget 50-200 hours of executive time for document collection, counsel coordination, and potential agency interactions. This represents a meaningful opportunity cost, particularly for owner-operated businesses.

Potential second request costs: If a second request is issued, compliance costs escalate dramatically, often reaching $500,000 to several million dollars for document review, data compilation, economic analysis, and extended counsel engagement. These costs primarily reflect extensive document review, economic expert fees, and senior management time diverted from business operations.

For transactions likely to clear without extended review, total HSR-related costs typically fall in the $75,000 to $150,000 range including fees, legal preparation, and related expenses. When accounting for indirect costs like management time and potential business impact during the review period, comprehensive costs may reach $100,000 to $200,000. Sellers should ensure the purchase agreement clearly allocates these costs between parties.

The Waiting Period

Once both parties file their HSR notifications, a 30-day waiting period begins. During this period, the FTC and DOJ review the transaction to determine whether it raises competitive concerns that warrant further investigation. The agencies divide responsibility for reviewing specific transactions based on their respective expertise and current workloads.

For most transactions, the waiting period expires without agency action, and parties can proceed to closing. The agencies can grant “early termination” of the waiting period, allowing parties to close before the full 30 days elapse. Early termination is discretionary and has become uncommon under current enforcement approaches. Parties should plan for the full 30-day waiting period rather than assuming early termination will be granted.

The waiting period can be extended if the reviewing agency issues a “second request,” a formal request for additional information about the transaction. Second requests significantly extend the timeline and are discussed in detail below.

Realistic Timeline Planning

While the minimum waiting period is 30 days, realistic timeline planning should account for greater variability. Timeline expectations can vary significantly by administration, and under current enforcement approaches, parties should plan toward the longer end of estimated ranges. Based on typical transaction patterns, HSR-reportable transactions typically require 45-120 days from signing to closing, though timelines can extend further based on agency priorities and enforcement approaches. Key factors include:

Filing preparation time: 2-4 weeks for straightforward transactions, potentially longer for complex deals

Waiting period: 30 days minimum, with early termination now rarely granted

Post-clearance closing activities: Additional time for financing drawdowns, third-party consents, and other closing mechanics

Agency engagement: Even without a second request, agencies may issue voluntary information requests or schedule informal discussions that extend timelines

For planning purposes, we typically recommend assuming 75-90 days for HSR-reportable transactions without significant competitive overlaps under current enforcement conditions, and building in contingency for potential extensions. Transactions with identifiable antitrust sensitivities should plan for even longer timelines.

Managing Second Request Risk

The most significant HSR-related execution risk is the possibility of a second request. When the reviewing agency needs more information to assess competitive implications, it can issue a second request before the initial waiting period expires. Second requests fundamentally change the transaction timeline and require careful management.

What Triggers Second Requests

Based on FTC Annual Reports to Congress from 2019-2024, the agencies historically have issued second requests for approximately 2-4% of HSR-reportable transactions, though this rate varies significantly by year, administration priorities, and enforcement focus areas. Recent enforcement trends suggest rates at the higher end of this range, particularly for transactions in priority sectors. Certain transaction characteristics are associated with higher second request likelihood:

Horizontal overlaps: When buyer and seller compete in the same markets, agencies are more likely to examine whether the combined entity would have market power concerns. This is one of several factors considered, though the presence of overlap alone doesn’t guarantee extended review.

Concentrated markets: Transactions in industries with few competitors tend to receive closer scrutiny, particularly in sectors the agencies have identified as enforcement priorities.

Current enforcement focus areas: Agency priorities focus particularly on healthcare, technology, and agriculture transactions, which may face higher scrutiny regardless of size. These sectors have been identified as enforcement priorities under current administration policies.

Vertical relationships: When a buyer is a customer or supplier of the target, agencies may consider whether the transaction could affect competitors’ access to necessary inputs or distribution channels.

Recent industry consolidation: Industries that have experienced significant M&A activity may face heightened scrutiny for additional transactions, particularly where agencies perceive cumulative competitive effects.

Large transaction values: Higher-value transactions generally receive more thorough review, as agencies allocate resources toward deals with greater potential market impact.

For lower middle market transactions without significant horizontal overlaps or concentration concerns, second request risk is generally lower than the overall average. Sellers in niche markets or those selling to competitors should evaluate this risk carefully with antitrust counsel.

Second Request Process and Timeline

If the agency issues a second request, the initial 30-day waiting period is replaced by a new waiting period that begins 30 days after the parties substantially comply with the second request. Substantial compliance typically means producing all responsive documents and providing all requested data.

Second request compliance is expensive and time-consuming. The document production requirements often resemble litigation discovery, requiring review of emails, files, and records across the organization. Based on published case studies and legal industry surveys, compliance costs commonly range from $500,000 to several million dollars for complex transactions. These costs primarily reflect extensive document review (often 100,000+ documents requiring attorney examination), economic expert analysis ($50,000 to $500,000 for expert fees), and senior management time diverted from business operations. Timeline extensions of 6-12 months are common, and some investigations extend even longer.

For transactions facing second request risk, parties often negotiate “pull and refile” provisions that allow withdrawing and refiling HSR notifications to restart the waiting period. This tactic can provide additional time for negotiation with the agencies before facing second request deadlines.

Transactions That Encounter Significant Challenges

While most HSR-reportable transactions ultimately clear, and we want to emphasize that 96-98% of filings receive clearance without extended review, some face substantial obstacles. Understanding what can go wrong helps sellers negotiate appropriate protections:

Extended investigations: Even transactions that ultimately clear may face 12-18 month review periods, during which deal economics can shift, financing commitments may expire, and key employees may depart.

Consent decrees requiring divestitures: Agencies may condition clearance on divesting specific business units, product lines, or geographic territories, reducing the transaction’s value to both parties.

Transaction abandonment: Some parties abandon transactions rather than accept agency-required remedies or continue extended investigations. Public databases show that a meaningful number of HSR-reportable transactions are withdrawn or restructured after regulatory challenges.

Litigation: In rare cases, agencies may sue to block transactions, leading to extended litigation that can take years to resolve.

These outcomes are relatively uncommon for lower middle market transactions without significant competitive concerns, but sellers should understand the range of possibilities when negotiating deal protections.

Negotiating Second Request Provisions

Purchase agreements for HSR-reportable transactions should address second request risk explicitly. Key provisions include:

Antitrust efforts covenants: Defining what efforts the buyer must make to obtain antitrust clearance, ranging from “reasonable best efforts” to “hell or high water” commitments requiring the buyer to accept any divestiture or remedy demanded by regulators.

Reverse termination fees: Payments from buyer to seller if the transaction fails to close due to antitrust issues, compensating the seller for opportunity costs and deal expenses. These fees typically range from 3-6% of transaction value for transactions with meaningful regulatory risk.

Outside dates: Extended timeframes for HSR-reportable transactions that contemplate potential second request scenarios. Agreements should specify whether outside dates extend automatically upon second request issuance.

Cooperation requirements: Obligations for both parties to cooperate in HSR preparation and agency interactions.

Sellers should pay careful attention to these provisions. A buyer willing to accept “hell or high water” antitrust covenants is expressing confidence that the transaction will clear. Buyers seeking weak antitrust commitments or narrow termination fee triggers may be signaling concerns about clearance or reserving flexibility to abandon the transaction.

Building HSR Considerations Into Deal Strategy

Sophisticated sellers incorporate HSR considerations into their overall deal strategy rather than addressing them reactively. This proactive approach improves outcomes and reduces surprises without distorting buyer selection decisions.

Evaluating Buyer Profiles

Different buyer types present different HSR implications. Strategic acquirers in your industry may face horizontal overlap concerns that increase second request risk, even if the transaction value would clear easily. Private equity buyers typically present fewer competitive concerns but may be executing roll-up strategies that attract agency attention.

Strategic buyers in your industry: These buyers often offer premium valuations but present the highest likelihood of competitive overlap concerns. The agencies examine whether combining competitors would reduce market competition, even for relatively small acquisitions.

Private equity firms (platform investments): When a PE firm acquires your company as a new platform, competitive concerns are typically minimal since the buyer isn’t already operating in your industry. These transactions usually present straightforward HSR clearance paths.

Private equity firms (add-on acquisitions): When a PE firm is adding your company to an existing portfolio company in your industry, the analysis resembles a strategic acquisition. The combined entity’s market position determines the competitive analysis.

Roll-up strategies: Buyers executing multiple acquisitions in your industry may face heightened scrutiny as agencies evaluate the cumulative competitive effects of the acquisition program.

When evaluating potential buyers, consider:

• Does the buyer compete with you in any product or geographic markets?
• Is the buyer acquiring other companies in your industry?
• What is the buyer’s appetite for antitrust risk?
• Does the buyer have experience managing HSR processes?

These factors affect not just whether HSR filing is required but whether the filing will proceed smoothly.

Transaction Structure Considerations

In some cases, transaction structure affects HSR applicability or process efficiency. Working with experienced M&A and antitrust counsel early in the process can identify structural options:

Asset vs. stock purchases: Different structures may have different threshold calculations and exemption applicability.

Staged acquisitions: Acquiring less than 100% initially, with options or rights for subsequent acquisitions, may affect HSR timing and filing requirements for each stage.

Carve-out structures: If competitive overlap concerns exist for specific product lines or territories, structuring the transaction to exclude those elements may reduce regulatory risk.

Holding period structures: Some transactions can be structured to address agency concerns through behavioral commitments or hold-separate arrangements rather than divestitures.

While transactions can sometimes be structured to avoid HSR thresholds through staged acquisitions, this approach often creates tax inefficiencies or financing complications that exceed the $75,000-$150,000 direct cost of HSR compliance. Your M&A counsel should analyze whether any structural modifications provide genuine value or simply shift costs and complexity without meaningful benefit.

Geographic and International Considerations

For businesses operating across state lines or with international components, additional considerations apply:

Multi-state operations: HSR filing is a federal requirement that applies regardless of where within the United States the business operates. State-level merger notification requirements are generally limited to specific regulated industries (banking, insurance, utilities).

International operations: Businesses with foreign subsidiaries, significant export revenues, or non-U.S. customers may face additional filing requirements in other jurisdictions. Major international filing regimes include the European Union, United Kingdom, Canada, and numerous other countries with their own notification thresholds and review processes.

Parallel filing strategies: For transactions requiring filings in multiple jurisdictions, coordinating timing and messaging across regulatory reviews requires careful planning.

Your antitrust counsel should identify all applicable filing requirements early in the process to ensure adequate timeline and cost planning.

Actionable Takeaways

Understanding Hart-Scott-Rodino filing requirements helps you navigate larger transactions more effectively. Here’s how to apply this knowledge:

Know your thresholds. The 2025 HSR filing threshold is $126.4 million, with size of person tests creating additional requirements for transactions between $126.4 million and $252.9 million. If your anticipated transaction value approaches these thresholds, consult antitrust counsel early to confirm current thresholds and applicability.

Budget for total compliance costs. HSR compliance extends well beyond filing fees. For transactions likely to clear without extended review, budget $75,000 to $150,000 for direct HSR-related costs, and $100,000 to $200,000 when accounting for management time and indirect impacts. For transactions with competitive sensitivities, budgets should be substantially higher.

Evaluate buyer profiles for antitrust implications. Competitors and active industry consolidators present different HSR dynamics than financial buyers or unrelated strategic acquirers. Consider these factors when assessing buyer attractiveness and negotiating deal protections, but remember that a premium offer from a strategic buyer is often worth the additional process complexity.

Negotiate strong antitrust provisions. If your transaction requires HSR filing, ensure your purchase agreement includes appropriate antitrust covenants, reverse termination fees for antitrust failure, and realistic outside dates that account for potential extended review under current enforcement approaches.

Build realistic HSR timing into your deal planning. HSR-reportable transactions typically need 45-120 days from signing to closing under current enforcement conditions, with substantial variability based on transaction characteristics and agency priorities. Plan toward the longer end of these ranges and structure your personal and business activities accordingly.

Engage specialized counsel appropriately. While your M&A counsel handles most HSR matters, transactions with meaningful second request risk may benefit from specialized antitrust expertise, particularly for competitive analysis and agency engagement strategy.

Don’t let HSR concerns distort your buyer selection. The goal is maximizing overall deal value, not avoiding HSR filing. A buyer offering substantially better terms is often worth HSR complexity, provided appropriate protections are negotiated. HSR compliance is a routine procedural requirement for larger deals, manageable with proper planning, not a reason to accept inferior offers.

Conclusion

Hart-Scott-Rodino filing requirements add a regulatory layer to larger M&A transactions that smaller deals avoid. For business owners selling at premium valuations to well-capitalized buyers, HSR considerations become relevant aspects of deal planning and execution. Understanding the threshold calculations, filing process, and timeline implications helps you navigate these requirements effectively.

The key insight is that HSR filing is primarily procedural. While the review process is substantive and agencies do occasionally challenge transactions, approximately 96-98% of reportable deals receive clearance without extended investigation. Transactions involving lower middle market companies without significant competitive overlaps typically proceed to clearance after the waiting period. The process adds time and cost but rarely derails transactions when parties plan appropriately and negotiate suitable protections.

By building HSR considerations into your deal strategy from the start, budgeting for realistic compliance costs under current enforcement approaches, negotiating appropriate purchase agreement provisions, and working with experienced counsel, you can manage this regulatory requirement as another aspect of sophisticated transaction execution. The key is avoiding surprises. Understanding HSR implications early allows you to structure deals effectively and set appropriate expectations with all parties.

For sellers in our target range, HSR requirements often represent a marker of success. Your business has grown valuable enough to trigger federal filing requirements. That’s a milestone worth navigating thoughtfully on your way to a successful exit.