Question
From:(redacted)
Sent:Tuesday, January 02, 2007 4:05 PM
To:Verne, B. Michael
Subject:HSR question
Mike,
Ihave a client that is acquiring 100% of the non-corporate interests in anentity, where approximately $30-$40 million in cash will be paid at closing andan additional amount paid out within 1-2 years based on the acquired entityreaching certain revenue targets. In no event shall such future payments exceedapproximately $40 million. Given the contingent nature of the considerationbeing paid for the non-corporate interests, I have concluded that the purchaseprice has not been determined, and that the value of the transaction should bethe fair market value of the interests being acquired. Based on the above figures,I would place that value somewhere between $30 million and $80 million (morelikely $60-$70 million). The client is fairly certain that if a fair marketvalue analysis were conducted, the value would exceed the current HSR filingthreshold. However, the client would prefer to go ahead and file withoutundertaking that analysis. In estimating the value of the transaction for thefiling, the client would instead rely on a good faith estimate.
My question is whether theclient's good faith estimate of the fair market value of the non-corporateinterests being acquired is sufficient for HSR purposes without actuallyperforming any fair market valuation. Thus, Item 2(e) of the form would be leftblank. As you can gather from above, there is no risk that the fair marketvalue would exceed the next filing threshold. Thanks for your assistance.