The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain significant transactions to file notification with the Federal Trade Commission and the Department of Justice before completing the transaction, and to observe a waiting period during which the agencies can review the transaction for potential anticompetitive effects. HSR compliance is a mandatory pre-closing requirement for transactions above the applicable filing thresholds, and failure to comply can result in substantial civil penalties. Business owners who are selling their companies need to understand whether HSR filing is required, what the filing involves, and how the waiting period and potential Second Request process can affect the timeline and cost of their transaction.

Filing Thresholds: Size of Transaction and Size of Person

HSR filing is required when a proposed acquisition meets two sets of tests: the size of transaction test and the size of person test. These tests are based on annually adjusted dollar thresholds. For 2025, the size of transaction threshold is $119.5 million — transactions where the acquirer will hold assets, securities, or non-corporate interests worth more than this amount resulting from the transaction must be analyzed for HSR compliance (subject to additional tests and exemptions). Transactions worth more than $478 million are reportable regardless of the size of the parties.

For transactions between $119.5 million and $478 million, an additional size of person test must be satisfied for the filing to be required. The size of person test requires that one party to the transaction have annual net sales or total assets of at least $239 million and the other party have annual net sales or total assets of at least $23.9 million. These thresholds are adjusted annually by the FTC based on changes in the gross national product. If the transaction fails either test (size of transaction or, where applicable, size of person), no HSR filing is required and the transaction can close without waiting.

Common Exemptions

Even when a transaction meets the size thresholds, it may be exempt from the HSR filing requirement under one of several statutory or regulatory exemptions. The most commonly applicable exemptions include: the ordinary course of business exemption for acquisitions of assets in the ordinary course of the acquirer’s business, the investment-only exemption for acquisitions of less than 10 percent of voting securities of an issuer acquired solely for investment purposes without seeking to influence management, the real property exemption for acquisitions of certain categories of real property, and the acquisition of non-U.S. assets exemption for acquisitions of assets located outside the United States where the foreign sales and assets do not meet specified thresholds.

The intracompany transaction exemption is also significant: transactions among entities that are under common control (where one entity is more than 50 percent owned by the other) are exempt. Corporate restructurings, reorganizations, and transfers among affiliates typically do not require HSR filing. Parties who believe an exemption applies should confirm the analysis with antitrust counsel, because incorrect reliance on an exemption can result in significant penalties.

The Waiting Period

When an HSR filing is required, both parties must file their respective forms with the FTC and DOJ, and the transaction cannot close until the applicable waiting period expires. The standard waiting period is 30 days from the date the filings are received by both agencies (or 30 days from the date the filing is submitted by the last party to file). During this 30-day period, the FTC and DOJ review the transaction to determine whether to conduct a more in-depth investigation.

Historically, early termination of the waiting period was available, allowing the agencies to grant clearance before the 30-day period expired when the transaction raised no competition concerns. Early termination was used routinely to accelerate closing timelines. However, the FTC suspended early termination in 2021 and has not consistently reinstated it. As a result, parties should plan for the full 30-day waiting period in all but exceptional cases.

If the agencies determine that no further investigation is warranted, they allow the waiting period to expire (or grant early termination, if available), and the parties are free to close. If the agencies decide they need more information to evaluate the transaction’s competitive effects, they will issue a Second Request before the initial waiting period expires.

The Second Request Process

A Second Request is a formal demand for additional documents and information issued by the FTC or DOJ when the reviewing agency determines that more information is needed to assess the transaction’s competitive effects. A Second Request is a major investigative tool that can dramatically extend the timeline and cost of an M&A transaction. The Second Request process typically adds six months to a year or more to the pre-closing timeline, and the cost of compliance — including document collection, review, and production in response to the information demands, as well as the legal and economic expert fees associated with defending the transaction — can run into the tens of millions of dollars for large, complex deals.

When a Second Request is issued, the parties must “substantially comply” with the information demands before the Second Request waiting period begins. The substantial compliance period — during which the parties are gathering and producing documents and responses — can take three to six months or more. After substantial compliance is certified, a new 30-day waiting period begins, during which the agency reviews the produced materials. The agency may then clear the transaction, impose conditions (remedies) as a precondition to clearance, or challenge the transaction in federal court.

Strategic Decisions Around HSR Filing

Parties make several important strategic decisions around HSR filing, including: which agency (FTC or DOJ) will review the transaction, whether to file simultaneously or stagger the filings, how to describe the transaction in the filing to minimize the likelihood of a Second Request, and whether and when to approach the reviewing agency informally to discuss the transaction before or during the waiting period. The agency that reviews a particular transaction is generally determined by each agency’s industry focus and prior experience with the parties or the relevant market, and there is an informal clearance process between the two agencies at the outset of the review period.

Sellers have a significant interest in ensuring that the HSR process does not unduly delay closing. The purchase agreement should allocate responsibility for HSR filing fees (which are paid by the buyer for most transactions but can be significant for larger deals), specify which party is responsible for leading the regulatory process, require the buyer to use specified efforts to obtain clearance, and set an outside date for closing that accounts for a reasonable HSR review timeline. In transactions where the competitive analysis is complex, parties often engage antitrust counsel early to assess the likelihood of a Second Request and to plan a strategy for the most efficient possible review process.