Bill Overview
Title: Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2021
Description: This bill exempts from securities registration requirements certain merger-and-acquisition brokers that facilitate transfer of ownership in privately held companies with earnings or revenues under a specified threshold. However, this exemption shall not apply to certain brokers, including those that provide financing related to the transfer of ownership, engage on behalf of any party in a transaction involving specified shell companies, or have been barred or suspended from association with a broker or dealer.
Sponsors: Rep. Huizenga, Bill [R-MI-2]
Target Audience
Population: Brokers and small business owners involved in mergers, acquisitions, and sales of small businesses
Estimated Size: 15000000
- The bill impacts merger-and-acquisition brokers by exempting them from securities registration requirements under specified financial conditions.
- Privately held companies with earnings or revenues under a certain threshold will be able to transact more easily, impacting their operational flexibility.
- Unregistered brokers will not face the same regulatory hurdles when facilitating ownership transfers for these small businesses, simplifying the process.
- Businesses that could benefit from streamlined brokerage processes are those with earnings under the threshold specified by the bill.
- Affected brokers are those dealing with transfers exclusively within this financial bracket, potentially increasing their business activities.
Reasoning
- The policy aims to simplify the process for small business mergers, acquisitions, and sales by removing certain regulatory requirements for brokers.
- This simplification is expected to lower the transaction costs and barrier for small businesses, thereby potentially increasing their operational flexibility and profitability.
- Given the budget constraints and the target population, not all small businesses will be impacted immediately; the focus will likely be on those transactions that are ready to occur and impacted by the current regulatory framework.
- Since the policy benefits are closely tied to the earnings or revenue threshold, businesses slightly above the cutoff may not see any benefit, whereas those below may see significant advantages.
- The effects on wellbeing are likely to vary based on how directly individuals are involved in the impacted transactions.
Simulated Interviews
M&A Broker (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- This policy will help streamline my business operations considerably.
- The reduced regulatory burden means quicker deal closures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 3 |
Small Business Owner (New York, NY)
Age: 32 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- This policy can reduce my stress over the legal complexities of merging my business.
- It allows for smoother transitions and less interference from unnecessary regulations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Retired (Chicago, IL)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 18/20
Statement of Opinion:
- The policy seems useful for those still in business, though it doesn’t affect me now.
- I wish there had been something like this when I sold my business.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Tech Startup Founder (San Francisco, CA)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- This policy might make it easier for me to exit if an acquisition deal comes up.
- Saves time not having to deal with complex securities registration.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Merger & Acquisition Consultant (Miami, FL)
Age: 54 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- The legislation will likely increase my client's interest in M&A due to reduced costs.
- This could invigorate the small business M&A market which has been sluggish.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Boutique Marketing Agency Owner (Seattle, WA)
Age: 39 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 14/20
Statement of Opinion:
- I believe this could positively impact my clients, making transitions smoother.
- However, it doesn’t seem to directly affect my agency's operations significantly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Business Analyst (Portland, OR)
Age: 50 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This is a positive step towards reducing unnecessary red tape for small businesses.
- I think the benefits will be seen more in mid to late effects as more people take advantage of it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Junior Broker (Atlanta, GA)
Age: 25 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- The policy is likely beneficial, but as a recent entrant, I’m not sure how much it affects my daily work.
- Seems like a great opportunity for growth in the field.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Owner of Small Construction Firm (Phoenix, AZ)
Age: 42 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- This act could make it less daunting to consider selling my business or merging.
- The complexities of legal barriers have always been off-putting.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Investor in Small Companies (Boston, MA)
Age: 37 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 9/20
Statement of Opinion:
- This act simplifies the pathway for facilitating transactions and makes small businesses more attractive investments.
- I'm optimistic about the potential market activity increase.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Cost Estimates
Year 1: $5000000 (Low: $1000000, High: $10000000)
Year 2: $5000000 (Low: $1000000, High: $10000000)
Year 3: $5000000 (Low: $1000000, High: $10000000)
Year 5: $5000000 (Low: $1000000, High: $10000000)
Year 10: $5000000 (Low: $1000000, High: $10000000)
Year 100: $5000000 (Low: $1000000, High: $10000000)
Key Considerations
- Exemption alignment with existing securities laws and potential for broader application.
- Ensure effective oversight to identify ineligible brokers and prevent abuse.
- Consideration for businesses marginally above the earnings threshold looking to benefit.