The traditional reliance on federal Hart-Scott-Rodino (HSR) thresholds as the primary jurisdictional gatekeeper is effectively obsolete. Following the 2026 announcement by the Federal Trade Commission (FTC) of revised thresholds and a new filing fee schedule for pre-merger notifications, states have aggressively advanced their own pre-merger regimes.
The Federal Baseline vs. State Divergence
These state-level adoptions run parallel to the federal HSR regime, creating a complex, dual- compliance environment that fundamentally alters timelines, and risk allocation.
To establish the regulatory baseline under Section 7A of the Clayton Act, the federal HSR “size-of-transaction” threshold is currently $133.9 million (effective February 17, 2026). While transactions falling below this figure may avoid federal review, they frequently remain subject to targeted state-level enforcement.
State Pre-Merger Regulations
While the federal pre-merger process recently became less burdensome, following the March 2026 Fifth Circuit decision that cemented the vacatur of the FTC’s sweeping new HSR rules and reverted filings back to the simpler “old” form, states are actively stepping in to fill the perceived enforcement gap.
This shift has resulted in a fragmented landscape of state-specific pre-merger regimes, carrying mandated notice periods, and sectoral triggers. Just a few examples of these additional regulations include:
- Sector-Specific Oversight: States like New York (Article 45-A) and California (OHCA) mandate rigorous 30 to 90 day advance notices for qualifying healthcare transactions, adding mandatory state-level waiting periods regardless of whether federal HSR thresholds are met.
- New Jersey: The state’s expanded mini-WARN Act mandates a rigorous 90-day advance notice for qualifying mass layoffs or operational transfers commonly associated with post-merger integration.
- California (SB 25): Starting in 2027, parties to an HSR-reportable transaction must submit a copy of their federal HSR filing to the California Attorney General if a party has its principal place of business in the state or generates at least 20% of the federal HSR threshold ($26.78 million) in in-state sales.
Strategic Implications for Deal Execution
This multi-jurisdictional environment requires deal counsel and corporate development teams to adjust standard transaction structuring in three critical areas:
- Upfront Due Diligence: The preliminary diligence phase must now incorporate a comprehensive regulatory analysis based on the target’s state footprint. Identifying local notification triggers early is critical to avoiding delayed filings or post-signing structural complications.
- Deal Timelines and Outside Dates: Transaction agreements must account for asynchronous review periods. For example, a 30-day federal HSR waiting period may expire while parties remain subject to an inflexible 90-day state-level review. Outside dates and regulatory efforts covenants must be meticulously calibrated to accommodate these extended timelines.
- Pre-Closing Integration Risks: Regulatory authorities at both levels are broadly interpreting operational “control” prior to closing. Premature integration (whether violating the federal HSR waiting period or bypassing a state’s mandatory notice window) exposes parties to severe financial penalties. Pre-closing operating covenants must be drafted narrowly to prevent the inadvertent transfer of beneficial ownership before formal clearance is secured in all required jurisdictions.
Staying ahead of these regulations can significantly streamline the M&A process. To learn more, contact the Corporate Law team at Mandelbaum Barrett today and let us help your business with mergers and more.
Disclaimer: This post is for informational purposes only and does not constitute legal advice or an attorney-client relationship. Prior results do not guarantee a similar outcome.