holds, transmits, or has custody of the funds 
or securities to be exchanged by the parties 
to the transaction. 
‘‘(ii) Engages on behalf of an issuer in 
a public offering of any class of securities 
that is registered, or is required to be reg-
istered, with the Commission under section 
12 or with respect to which the issuer files, 
or is required to file, periodic information, 
documents, and reports under subsection 
(d). 
‘‘(C) RULE OF CONSTRUCTION.—Nothing in 
this paragraph shall be construed to limit any 
other authority of the Commission to exempt any 
person, or any class of persons, from any provi-
sion of this title, or from any provision of any 
rule or regulation thereunder. 
‘‘(D) DEFINITIONS.—In this paragraph: 
‘‘(i) CONTROL.—The term ‘control’ 
means the power, directly or indirectly, to 
direct the management or policies of a com-
pany, whether through ownership of securi-
ties, by contract, or otherwise. There is a 
presumption of control for any person 
who— 
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‘‘(I) is a director, general partner, 
member or manager of a limited liabil-
ity company, or officer exercising exec-
utive responsibility (or has similar sta-
tus or functions); 
‘‘(II) has the right to vote 20 per-
cent or more of a class of voting securi-
ties or the power to sell or direct the 
sale of 20 percent or more of a class of 
voting securities; or 
‘‘(III) in the case of a partnership 
or limited liability company, has the 
right to receive upon dissolution, or 
has contributed, 20 percent or more of 
the capital. 
‘‘(ii) ELIGIBLE PRIVATELY HELD COM-
PANY.—The term ‘eligible privately held 
company’ means a company that meets both 
of the following conditions: 
‘‘(I) The company does not have 
any class of securities registered, or re-
quired to be registered, with the Com-
mission under section 12 or with re-
spect to which the company files, or is 
required to file, periodic information, 
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documents, and reports under sub-
section (d). 
‘‘(II) In the fiscal year ending im-
mediately before the fiscal year in 
which the services of the M&A broker 
are initially engaged with respect to 
the securities transaction, the company 
meets either or both of the following 
conditions (determined in accordance 
with the historical financial account-
ing records of the company): 
‘‘(aa) The earnings of the 
company before interest, taxes, de-
preciation, and amortization are 
less than $25,000,000. 
‘‘(bb) The gross revenues of 
the 
company 
are 
less 
than 
$250,000,000. 
‘‘(iii) M&A BROKER.—The term ‘M&A 
broker’ means a broker engaged in the busi-
ness of effecting securities transactions sole-
ly in connection with the transfer of owner-
ship of an eligible privately held company, 
regardless of whether the broker acts on be-
half of a seller or buyer, through the pur-
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chase, sale, exchange, issuance, repurchase, 
or redemption of, or a business combination 
involving, securities or assets of the eligible 
privately held company, if the broker rea-
sonably believes that— 
‘‘(I) upon consummation of the 
transaction, any person acquiring se-
curities or assets of the eligible pri-
vately held company, acting alone or 
in concert, will control and, directly or 
indirectly, will be active in the man-
agement of the eligible privately held 
company or the business conducted 
with the assets of the eligible privately 
held company; and 
‘‘(II) if any person is offered secu-
rities in exchange for securities or as-
sets of the eligible privately held com-
pany, such person will, prior to becom-
ing legally bound to consummate the 
transaction, receive or have reasonable 
access to the most recent year-end bal-
ance sheet, income statement, statement 
of changes in financial position, and 
statement of owner’s equity of the 
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issuer of the securities offered in ex-
change, and, if the financial statements 
of the issuer are audited, the related re-
port of the independent auditor, a bal-
ance sheet dated not more than 120 
days before the date of the offer, and 
information pertaining to the manage-
ment, business, results of operations for 
the period covered by the foregoing fi-
nancial statements, and material loss 
contingencies of the issuer. 
‘‘(E) INFLATION ADJUSTMENT.— 
‘‘(i) IN GENERAL.—On the date that is 
5 years after the date of the enactment of 
the Small Business Mergers, Acquisitions, 
Sales, and Brokerage Simplification Act of 
2013, and every 5 years thereafter, each dol-
lar amount in subparagraph (D)(ii)(II) 
shall be adjusted by— 
‘‘(I) dividing the annual value of 
the Employment Cost Index For Wages 
and Salaries, Private Industry Work-
ers (or any successor index), as pub-
lished by the Bureau of Labor Statis-
tics, for the calendar year preceding 
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the calendar year in which the adjust-
ment is being made by the annual 
value of such index (or successor) for 
the calendar year ending December 31, 
2012; and 
‘‘(II) 
multiplying 
such 
dollar 
amount by the quotient obtained under 
subclause (I). 
‘‘(ii) ROUNDING.—Each dollar amount 
determined under clause (i) shall be round-
ed to the nearest multiple of $100,000.’’. 
SEC. 3. EFFECTIVE DATE. 
This Act and any amendment made by this Act shall 
take effect on the date that is 90 days after the date of the 
enactment of this Act. 
Amend the title so as to read: ‘‘A bill to amend the 
Securities Exchange Act of 1934 to exempt from reg-
istration brokers performing services in connection with 
the transfer of ownership of smaller privately held com-
panies.’’. 
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