Mergers and acquisitions in heavily regulated industries — banking, insurance, healthcare, and telecommunications being the most prominent — involve an additional layer of complexity that goes well beyond the standard HSR antitrust review process. These industries are regulated by specialized federal and state agencies whose approval must be obtained before a transaction can close, and those agencies have broad authority to impose conditions, require divestitures, mandate behavioral commitments, or deny approval entirely based on their assessment of the public interest implications of the proposed combination. Business owners in regulated industries must understand the applicable approval requirements before launching a sale process, because regulatory risk can materially affect deal timing, price, and certainty.

Banking and Financial Institution Transactions

Acquisitions of banks and other depository institutions require approval from multiple federal and state banking regulators. The specific regulator whose approval is required depends on the type of institution being acquired: the Office of the Comptroller of the Currency (OCC) for national banks, the Federal Reserve for bank holding companies, the FDIC for state-chartered non-member banks, and the applicable state banking department for state-chartered institutions. In most bank acquisitions, multiple regulators must approve the transaction simultaneously, and their respective approval processes do not perfectly align in timing or substance.

Banking regulators evaluate proposed acquisitions based on a broad set of statutory criteria, including the financial and managerial resources of the acquiring institution, the convenience and needs of the communities served by the target institution, the competitive effects of the combination (particularly in local deposit and lending markets), and the applicant’s record under the Community Reinvestment Act (which requires that banks meet the credit needs of all community members, including low- and moderate-income populations). The CRA evaluation can be a significant obstacle for acquirers with poor CRA ratings or for transactions in markets where the agencies believe the combined entity will underserve certain communities.

Bank merger review timelines are typically longer than standard HSR review: federal banking agency review often takes four to six months, and complex transactions with significant competitive overlaps or CRA concerns can take a year or more. This extended timeline must be reflected in the purchase agreement’s outside date provision and in any financing commitments that are subject to expiration.

Insurance Company Transactions

The regulation of insurance in the United States is primarily a state function, and the acquisition of an insurance company requires regulatory approval from the insurance departments of each state in which the target company is domiciled or does business above applicable thresholds. Most states have adopted versions of the Insurance Holding Company Act, which requires prior approval of any acquisition of control of an insurance company — typically defined as the acquisition of 10 percent or more of the voting securities.

The state insurance department review process examines the financial condition and reputation of the acquiring entity, the proposed transaction terms, the effect on policyholders, the adequacy of the acquiring entity’s capital and surplus to meet the insurance company’s obligations, and any planned changes to the insurance company’s operations or management after closing. The form A filing — the standard pre-acquisition disclosure form required in most states — is a detailed document that must be submitted to each state insurance department with jurisdiction.

Insurance regulatory approval timelines vary significantly by state but typically run from 60 to 180 days per state. When approvals are required from multiple states, the process must be managed in parallel across all relevant jurisdictions, which requires significant coordination and resources. Some states are more stringent in their review and are more likely to impose conditions or request supplemental information, which can extend timelines.

Healthcare Transactions

Healthcare M&A is subject to a complex and rapidly evolving landscape of regulatory requirements at both the federal and state levels. In addition to standard HSR antitrust review, certain healthcare transactions require notification and review by state attorneys general under newly enacted state healthcare transaction review laws. California, New York, Massachusetts, Oregon, and many other states have enacted laws requiring advance notice to the state attorney general for transactions involving hospitals, health systems, physician groups, or other healthcare entities above specified size thresholds. Some states also require affirmative approval from a state health department or a certificate of need review before a transaction can close.

Transactions involving healthcare entities that participate in federal healthcare programs (Medicare and Medicaid) are also subject to certification and enrollment requirements that must be completed before the new owner can bill for services. Change of ownership notifications must be submitted to CMS, and the new owner must obtain its own provider enrollment before it can begin receiving Medicare and Medicaid reimbursement. Failure to complete these enrollment steps promptly after closing can result in a gap in billing that significantly impacts the acquired business’s cash flow.

Telecommunications Transactions

Acquisitions involving Federal Communications Commission (FCC) licensees — including broadcast stations, telecommunications carriers, cable systems, and wireless spectrum license holders — require FCC approval before consummating the transfer of the licenses. The FCC’s review assesses whether the proposed transfer of control serves the public interest, convenience, and necessity — a broad standard that gives the Commission considerable discretion to impose conditions on its approval, including conditions related to competition, localism in broadcast, cybersecurity, foreign ownership, and other policy objectives.

FCC license transfers are typically reviewed on a timeline of 60 to 180 days, but complex transactions or transactions that generate significant public interest opposition can take considerably longer. The FCC’s process includes public notice of the proposed transfer and an opportunity for third parties to file petitions to deny, which can introduce opposition that extends the review timeline.

Allocating Regulatory Risk in Purchase Agreements

In transactions subject to significant regulatory approval risk, the purchase agreement must carefully allocate the risk that the required approvals are not obtained or are obtained only with unacceptable conditions. Key provisions include: the scope of the buyer’s obligation to seek approvals (best efforts, reasonable best efforts, or hell-or-high-water), the definition of acceptable versus unacceptable conditions, the buyer’s obligation to divest assets or make behavioral commitments to obtain approval, the outside date for closing (which must be far enough in the future to account for the realistic regulatory timeline), and the reverse termination fee payable by the buyer if approvals are not obtained.

Sellers in regulated industries should push for the buyer to bear the primary regulatory risk through a meaningful reverse termination fee applicable to regulatory failure, and should resist purchase agreements in which the buyer can walk away from a regulatory failure without economic consequence. The more complex and uncertain the regulatory approval requirement, the more important the reverse termination fee mechanism is as a seller protection.