2005005 Informal Interpretation

Date:

Tags:

Rule:
801.11
Staff:
Timothy Carson
Response/Comments:

Size of person is met because the facts you have shared demonstrate the financials are not consolidated at the UPE level, and the ordinary course balance sheets of the controlled portfolio entities, if consolidated, clearly would demonstrate size of person is met. You may submit the financials of the LP and the two portfolio companies to establish size of person is met. Additionally, I would encourage you to add a note to Item 4(b) stipulating that size of person is met.

Question

From: Carson, Timothy


Sent: Friday, May 15, 2020 10:26:37 AM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Cc: [Redacted]


Subject: RE: Size of person question

Size of person is met because the facts you have shared demonstrate the financials are not consolidated at the UPE level, and the ordinary course balance sheets of the controlled portfolio entities, if consolidated, clearly would demonstrate size of person is met. You may submit the financials of the LP and the two portfolio companies to establish size of person is met. Additionally, I would encourage you to add a note to Item 4(b) stipulating that size of person is met.

From: [Redacted}

Sent: Thursday, May 14, 2020 6:06 PM

To: [Redacted]

Subject: Size of person question

Hi HSR Group.
I am working on a new transaction. The UPE is a limited partnership of a private equity firm. The LP has two portfolio
companies at this point, and is planning to acquire a third.
Assume that the transaction value is such that size of person is relevant. I need guidance on whether to look at the
financial statements of the LP, the portfolio companies, or something else, in order to determine whether total assets or
net sales are greater than $188 million. The issue is that the LP’s balance sheet treats investment in the two portfolio
companies “at fair value” in terms of the total assets. Based on this balance sheet, total assets are well below $188
million. On the other hand, the portfolio companies’ own balance sheets value the assets at a higher figure. So
unfortunately in this instance it makes a difference. I just looked through the Premerger Notification Practice Manual
again, and the rule and examples, but I am having trouble finding a clear answer.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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