Premerger Notification Office Revises Leveraged Buyout Guidance

The Federal Trade Commission ("FTC") Premerger Notification Office ("PNO") has revised its position with respect to applying the size of transaction test in the leveraged buyout ("LBO") context by establishing that "new debt used to finance an LBO transaction, whether taken on by the buyer or the target, is to be included in the size of transaction." The PNO clarified that although "[t]ypical deductions from the size of transaction, such as for retiring pre-existing debt and for transaction expenses, are still permitted," the balance of the new debt must be included in the size of transaction, regardless of which transacting party takes on that new debt.

The PNO stated that, effective immediately, all prior guidance to the contrary is rescinded, and informal guidance on the PNO’s website will be updated accordingly.