Private equity investors were involved in two out of every five major US mergers and acquisitions in 2022, with their 40% involvement rate up significantly from the 10% seen in 2001, according to a report by Bloomberg citing data from the Federal Trade Commission (FTC) and the Department of Justice (DOJ).
This surge in private equity-driven mergers helps explain why antitrust agencies have intensified their scrutiny of the sector. The FTC and DOJ are increasingly focused on the role of private equity, particularly in response to concerns that the industry’s growing influence could stifle competition. In March 2023, the FTC launched an inquiry into acquisitions by private equity firms in the US healthcare sector.
Simultaneously, the DOJ initiated a wide-ranging investigation in 2022 targeting individuals and entities with overlapping board memberships in competing companies. This effort, based on a rarely enforced antitrust law banning “interlocking directorates,” led to the resignation of board members at over a dozen companies. Notably, individuals linked to private equity firms like Thoma Bravo LLC, as well as major investors such as Blackstone Inc, Apollo Global Management Inc, and KKR & Co, have come under scrutiny.
The agencies have revealed the statistics on private equity involvement to support a recent decision to require merging firms to disclose more detailed information about their investors during antitrust reviews. The new rules aim to close gaps in current reporting, which the agencies say can allow private investors to influence competitive decision-making and create opportunities for anticompetitive acquisitions to go unnoticed.
“Changes in the investment landscape have created significant gaps in reporting requirements for minority holders who can influence competitive decisions,” the agencies explained in recent statement. “When these relationships are hard to identify, the risk of anticompetitive harm from unlawful acquisitions greatly increases.”
Under US law, mergers and acquisitions that meet certain thresholds must be reported to the FTC and DOJ, triggering a 30-day waiting period before the deal can close. While most mergers clear this initial review without issue, the agencies have the authority to request additional information and launch in-depth investigations if concerns arise.
These reporting thresholds are adjusted for inflation annually. In 2001, deals valued at $50m or more required notification. Today, that threshold is set at $119.5m.
Though the agencies release annual data on the number and size of deals submitted for antitrust review, this is the first time they have disclosed details about the types of companies involved in the transactions.
