II 

113TH CONGRESS 

2D SESSION S. 1923 

To amend the Securities Exchange Act of 1934 to exempt from registration 

brokers performing services in connection with the transfer of ownership 

of smaller privately held companies. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 14, 2014 

Mr. MANCHIN (for himself and Mr. VITTER) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Securities Exchange Act of 1934 to exempt 

from registration brokers performing services in connection with the transfer of ownership of smaller privately 

held companies. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Merg5 ers, Acquisitions, Sales, and Brokerage Simplification Act 

6 of 2014’’. 


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1 SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND AC2 QUISITION BROKERS. 

3 Section 15(b) of the Securities Exchange Act of 1934 

4 (15 U.S.C. 78o(b)) is amended by adding at the end the 

5 following: 

6 ‘‘(13) REGISTRATION EXEMPTION FOR MERGER

7 AND ACQUISITION BROKERS.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), an M&A broker shall be ex10 empt from registration under this section. 

11 ‘‘(B) EXCLUDED ACTIVITIES.—An M&A 

12 broker is not exempt from registration under 

13 this paragraph if such broker does any of the 

14 following: 

15 ‘‘(i) Directly or indirectly, in connec16 tion with the transfer of ownership of an 

17 eligible privately held company, receives, 

18 holds, transmits, or has custody of the 

19 funds or securities to be exchanged by the 

20 parties to the transaction. 

21 ‘‘(ii) Engages on behalf of an issuer in 

22 a public offering of any class of securities 

23 that is registered, or is required to be reg24 istered, with the Commission under section 

25 12 or with respect to which the issuer files, 

26 or is required to file, periodic information, 


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1 documents, and reports under subsection 

2 (d). 

3 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

4 in this paragraph shall be construed to limit 

5 any other authority of the Commission to ex6 empt any person, or any class of persons, from 

7 any provision of this title, or from any provision 

8 of any rule or regulation thereunder. 

9 ‘‘(D) DEFINITIONS.—In this paragraph: 

10 ‘‘(i) CONTROL.—The term ‘control’ 

11 means the power, directly or indirectly, to 

12 direct the management or policies of a 

13 company, whether through ownership of 

14 securities, by contract, or otherwise. There 

15 is a presumption of control for any person 

16 who— 

17 ‘‘(I) is a director, general part18 ner, member or manager of a limited 

19 liability company, or officer exercising 

20 executive responsibility (or has similar 

21 status or functions); 

22 ‘‘(II) has the right to vote 20 

23 percent or more of a class of voting 

24 securities or the power to sell or direct 


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1 the sale of 20 percent or more of a 

2 class of voting securities; or 

3 ‘‘(III) in the case of a partner4 ship or limited liability company, has 

5 the right to receive upon dissolution, 

6 or has contributed, 20 percent or 

7 more of the capital. 

8 ‘‘(ii) ELIGIBLE PRIVATELY HELD

9 COMPANY.—The term ‘eligible privately 

10 held company’ means a company that 

11 meets both of the following conditions: 

12 ‘‘(I) The company does not have 

13 any class of securities registered, or 

14 required to be registered, with the 

15 Commission under section 12 or with 

16 respect to which the company files, or 

17 is required to file, periodic informa18 tion, documents, and reports under 

19 subsection (d). 

20 ‘‘(II) In the fiscal year ending 

21 immediately before the fiscal year in 

22 which the services of the M&A broker 

23 are initially engaged with respect to 

24 the securities transaction, the com25 pany meets either or both of the folVerDate Mar 15 2010 07:18 Jan 16, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1923.IS S1923

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1 lowing conditions (determined in ac2 cordance with the historical financial 

3 accounting records of the company): 

4 ‘‘(aa) The earnings of the 

5 company before interest, taxes, 

6 depreciation, and amortization 

7 are less than $25,000,000. 

8 ‘‘(bb) The gross revenues of 

9 the company are less than 

10 $250,000,000. 

11 ‘‘(iii) M&A BROKER.—The term ‘M&A 

12 broker’ means a broker, and any person 

13 associated with a broker, engaged in the 

14 business of effecting securities transactions 

15 solely in connection with the transfer of 

16 ownership of an eligible privately held com17 pany, regardless of whether the broker acts 

18 on behalf of a seller or buyer, through the 

19 purchase, sale, exchange, issuance, repur20 chase, or redemption of, or a business com21 bination involving, securities or assets of 

22 the eligible privately held company, if the 

23 broker reasonably believes that— 

24 ‘‘(I) upon consummation of the 

25 transaction, any person acquiring seVerDate Mar 15 2010 07:18 Jan 16, 2014 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1923.IS S1923

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1 curities or assets of the eligible pri2 vately held company, acting alone or 

3 in concert, will control and, directly or 

4 indirectly, will be active in the man5 agement of the eligible privately held 

6 company or the business conducted 

7 with the assets of the eligible privately 

8 held company; and 

9 ‘‘(II) if any person is offered se10 curities in exchange for securities or 

11 assets of the eligible privately held 

12 company, such person will, prior to 

13 becoming legally bound to consum14 mate the transaction, receive or have 

15 reasonable access to the most recent 

16 year-end balance sheet, income state17 ment, statement of changes in finan18 cial position, and statement of owner’s 

19 equity of the issuer of the securities 

20 offered in exchange, and, if the finan21 cial statements of the issuer are au22 dited, the related report of the inde23 pendent auditor, a balance sheet 

24 dated not more than 120 days before 

25 the date of the offer, and information 


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1 pertaining to the management, busi2 ness, results of operations for the pe3 riod covered by the foregoing financial 

4 statements, and material loss contin5 gencies of the issuer. 

6 ‘‘(E) INFLATION ADJUSTMENT.— 

7 ‘‘(i) IN GENERAL.—On the date that 

8 is 5 years after the date of the enactment 

9 of the Small Business Mergers, Acquisi10 tions, Sales, and Brokerage Simplification 

11 Act of 2014, and every 5 years thereafter, 

12 each dollar amount in subparagraph 

13 (D)(ii)(II) shall be adjusted by— 

14 ‘‘(I) dividing the annual value of 

15 the Employment Cost Index For 

16 Wages and Salaries, Private Industry 

17 Workers (or any successor index), as 

18 published by the Bureau of Labor 

19 Statistics, for the calendar year pre20 ceding the calendar year in which the 

21 adjustment is being made by the an22 nual value of such index (or suc23 cessor) for the calendar year ending 

24 December 31, 2012; and 


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1 ‘‘(II) multiplying such dollar 

2 amount by the quotient obtained 

3 under subclause (I). 

4 ‘‘(ii) ROUNDING.—Each dollar 

5 amount determined under clause (i) shall 

6 be rounded to the nearest multiple of 

7 $100,000.’’. 

8 SEC. 3. EFFECTIVE DATE. 

9 This Act and any amendment made by this Act shall 

10 take effect on the date that is 90 days after the date of 

11 the enactment of this Act. 

Æ 


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