2209003 Informal Interpretation

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Sheinberg, Samuel I.
From: 	HSRHelp
Sent: 	Friday, September 30, 2022 11:49 AM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Musick, Vesselina; Sheinberg, Samuel I.; Six, Anne; Whitehead, Nora;
Fetterman, Michelle
Subject: 	FW: Help on Interpretation - Size of Person of a Natural Person - Balance Sheet versus Transaction
Value of Interests in Target Entity
To:
Cc: HSRHelp <HSRHelp@ftc.gov>
From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Friday, September 30, 2022 11:49:06 AM (UTC-05:00) Eastern Time (US & Canada)
Subject: RE: Help on Interpretation - Size of Person of a Natural Person - Balance Sheet versus Transaction Value of
Interests in Target Entity
You are correct that the Target’s balance sheet should be used. However, we note that the last regularly prepared
balance sheet prior to consummation is the one that is relevant to the analysis.
Best regards,
Kristin
Kristin Shaffer
Attorney
Premerger Notification Office
Federal Trade Commission
202-326-2388 | kshaffer@ftc.gov
From:
Sent: Thursday, September 29, 2022 4:13:27 PM (UTC-05:00) Eastern Time (US & Canada)
To: HSRHelp <HSRHelp@ftc.gov>
Subject: Help on Interpretation - Size of Person of a Natural Person - Balance Sheet versus Transaction Value of
Interests in Target Entity
Greetings. Could we please ask your assistance in applying the size of person tests under the
following circumstances:
Individual X, who is the UPE of the acquired person, has no regularly prepared balance sheet.
Individual X holds more than 50% of the voting securities of the target company, “Target,” and
hence controls Target. Target has a regularly prepared balance sheet that is more recent than
15 months old and that shows assets less than the $20.2 million lower size of person threshold.
However, the value of the interests held by individual X in Target, as measured by the
transaction value proposed to be paid for those interests in the proposed transaction, exceeds
the $20.2 million threshold. (For purposes of the example and for the sake of simplicity, we are
assuming that individual X has no other assets apart from his interest in Target.)
ABA Premerger Manual Interpretation 94 states that, if individual X has no regularly prepared
balance sheet and controls other entities, and if any of the entities controlled by the natural
person has a regularly prepared balance sheet, the total assets shown on the balance sheet of
any controlled entities would be included in Individual X’s “size of person”; however, the value of
the interest held in the controlled entity by Individual X would not be included.
Are we therefore correct in understanding that, under the stated circumstances, for purposes of
determining the size of person of Individual X, Individual X’s holdings in Target should be
measured according to the total assets reflected on Target’s most recent regularly prepared
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balance sh eet (wh ich are less than t he size-of-person reporting thresho l d) and not according to
t he va lue of t hose in terests as measured by t he tra nsaction va lue to be paid for those in terests
in the proposed transact ion (w hich are more t han the si ze-of-person report ing t hresh old).
Thank you for your help and gu idance.
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