Antitrust authorities in the United States have been shining the spotlight on private equity (PE) roll-ups and serial acquisitions, which are multi-merger strategies pursuant to which a buyer acquires multiple companies in an industry. PE investments offer many benefits to target firms, including management, industry and operational expertise. PE also injects needed capital into companies to rescue neglected assets. As such, PE investments often translate into lower costs, increased efficiencies, higher productivity, higher-quality output and sales growth.

Notwithstanding these benefits, the Federal Trade Commission (FTC) and Department of Justice (DOJ) are geared up to investigate and challenge serial acquisitions or roll-ups by PE firms. Many of these transactions have flown “under the radar” because they were below the Hart-Scott-Rodino (HSR) Act’s reporting threshold. The agencies are particularly concerned that a PE firm or dominant player could use a roll-up strategy to gradually consolidate market power over time, without triggering any enforcement action.

Serial Acquisitions Have Long Been Within the Purview of US Antitrust Laws