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No Action Letter

As an M&A Broker, sometimes the Business Sale or Transfer is an “Asset” sale and sometimes it’s a “Stock” sale.  There are important differences, advantages and disadvantages to each. And for each party, Buyer, Seller and Broker.

This is also true for your Pro Biz M&A Adviser or Broker because the SEC has always been unclear on the so-called “Stock sale” because “stock” is transferred.   Of course, if you are not a government lawyer, you would immediately say, “Well, That’s OBVIOUSLY different from publicly traded stock!”

And you’d be right.  And yet on Mega-Transactions, the SEC does apply.  So the question is, “At what point, or size is it any “Private” concern of the SEC?”

And the answer has been ambiguous or unclear for longer than any of us in the business can ever remember.  It seems ridiculous, but the Broker technique was basically, “Stay under the radar, don’t become a test case.”  As you can imagine, many of us who are serious about our business and here for the long haul, we have wanted this nailed down and made clear.

Finally, working through our Association, we have a No Action Letter exempting M&A Brokers
This no-action letter represents a major victory after six years of efforts by the Campaign for Clarity, started by the AM&AA with an industry coalition including the IBBA, M&A Source, and 15 regional associations. Pro Biz is proud of being a Charter Member of the AM&AA and one for the first to be designed MMAA, Master Merger and Acquisition Adviser.

The Campaign seeks to clarify and simplify the complex, overlapping and unduly burdensome federal securities broker-dealer regulations that impact buyers and sellers of privately held businesses, and the professionals who seek to assist them.

On January 31, 2014 the SEC released a sweeping No Action Letter exempting M&A Brokers from SEC broker-dealer registration and FINRA membership involved in buying/selling private businesses to a buyer who will “control” and operate the business after closing, regardless of the size of the transaction and regardless of the transaction’s legal structure. The no-action letter is vastly broader than the SEC’s 2006 Country Business no-action letter

The No Action Letter means Pro Biz can broker any size deal and even if it is a “stock” sale, we are in no danger of a Closing Attorney saying, “Sorry, you didn’t have a Security Broker’s License, you will not be getting paid.”  Or worse, “See you in Court!” .    It is the AM&AA position and it is Pro Biz’s opinion that we still have more work to do to protect future generations of Brokers and Advisers.  We have before Congress Senate Bill S. 1923. The AM&AA and the industry coalition to which Pro Biz adheres are continuing their efforts in the United States Senate to get this Bill passed.

Meanwhile, as discussed, ALL Pro Biz  M&A transactions of  “Asset” or “Stock” sales are now afforded equal protection from the SEC.  And that’s good news for you, our Client!

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