On May 6th, NASAA (North American Security Administrators Association) adopted amendments to its Model Rule Exempting Certain Merger & Acquisition Brokers (“M&A Broker Rule”) From Registration by revising it to achieve uniformity with federal law. Once officially adopted by each state, the amended Model State Rule, coupled with the federal M&A Broker Registration Exemption, will exempt certain M&A Brokers from broker-dealer registration. A copy of the amended M&A Broker Rule is available at: https://www.nasaa.org/adopted-model-rule/
21 states have already adopted some form of exemption from registration for certain M&A Brokers. These states are expected to adopt the amended NASAA Model State Rule fairly quickly.
Many of the remaining 29 states which have yet to adopt any form of registration exemption for M&A Brokers may simply have been waiting for NASAA to finalize its Model Rule before promulgating a registration exemption in their state.
The process of adopting the amended Model Rule will vary state by state. Some states will be able to adopt the Model Rule simply by administrative rule making, while others may need their state legislature to pass a bill containing the Model Rule to amend their state securities laws.
This should be good news for owners of small- to medium-sized, privately held companies who are someday planning to sell their business. They can now choose from a wider range of experienced, M&A professionals to advise them on the sale of their business without the fees often associated with registered investment bankers, and without the risk of running afoul of federal and state securities laws.
Now is the time for business owners, business brokers and M&A Intermediaries to contact their state securities regulator and see what their plans are, if any, to adopt the NASAA M&A Broker Rule. Use this NASAA webpage: https://www.nasaa.org/contact-your-regulator/ to identify your state regulator, including their contact information.
Watch this space for further updates on the state-by-state progress in adopting the NASAA Model State Rule.
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a complimentary, confidential, consultation, have them contact me at mertel@transworldma.com
Mike Ertel, CBI, M&AMI, CM&AA
Managing Director, Broker
Transworld M&A Advisors
813.299.7862 Direct
©2024 J. Michael Ertel, PA