0606007 Informal Interpretation

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Verne, B. Michael
From:
Sent: 	Tuesday, June 13,2006 !1 : l I AM
To: 	Verne, B. Michael
Subject: 	Size of Person: Newly Formed Entiiy
Dear Mike:
I have a question regarding application of the Size of Person test to a newly formed LLC that is the
Acquiring Person in a proposed transaction, The Acquiring Person proposes to indirectly (through
another newly formed LLC) acquire two sets of assets from the same Seller UPE. As a newly formed
entity, the Acquiring Person does not have assets or sales exceeding $11.3 million prior to the
acquisitions. The value of each set of assets alone does not exceed $56.7 million, but the
aggregated value of the two sets of assets does exceed $56.7 million.
I understand if the two sets of assets are acquired (i.e., closed) simultaneously, no HSR filing would
be required as the Acquiring Person does not meet the Size of Person test. However, it is possible
the closings may not occur simultaneously (they may occur approximately one month apart). As a
newly formed entity, the Acquiring Person does not yet regularly prepare balance sheets. If a
balance sheet is prepared following closing of the acquisition of the first set of assets, that balance
sheet would reflect the value of those assets and the Acquiring Person would then meet the Size of
Person test for !he second acquisition of assets. However, it is uncertain at this time whether a
balance sheet will actually be prepared in between the first acquisition and the second acquisition (if
they do not occur simultaneously).
For purposes of calculating Size of Person, is there a standard or accepted period of time after which
a balance sheet is presumed to have been prepared (or should have been prepared)?
There is no specified period of time, but an excessive delay could raise avoidance
issues. See # 187 in the Premerger Notification Practice Manual.