THE ROUND
Antitrust Regulation Could Lead to Uptick in Tech Carve-outs Pent-up demand also bodes well for divestitures By Benjamin Glick
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his year could prove to be an active one for technology divestitures, as some tech giants consider shedding assets ahead of new antitrust measures while others take advantage of high prices as they focus on their core strategies. At a time when the two major political parties in the U.S. often are at odds, they’re increasingly finding common ground when it comes to reining in large tech companies. In February, Sen. Amy Klobuchar, D-Minn., and a host of other lawmakers introduced the Competition and Antitrust Law Enforcement Reform Act, a bill that would overhaul antitrust regulation nationwide and could lead to a breakup of technology giants like Facebook, Twitter and Google’s
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parent company, Alphabet. Around the same time, Sen. Josh Hawley, R-Mo., proposed a resolution that would limit the M&A activity of dominant tech firms. While both parties, for now, agree that Big Tech should be subject to stricter antitrust regulation, their reasoning differs. Republicans, by and large, want legislation to target large tech companies for their outsized influence on the American public, while Democrats have set their sights on anticompetitive business practices, says Michael Marhofer, chair of the private equity group at law firm Benesch, Friedlander, Coplan and Aronoff LLP. “I’d be surprised if something doesn’t come out of Congress this
year that reshapes antitrust law and gives some heightened scrutiny on deals with tech companies,” he says. Stricter antitrust laws could stop deals in motion or spur divestitures from large tech companies. Both would create assets that may be of interest to smaller companies and investors, according to a report that Marhofer co-authored in February. That will put more businesses for sale in the market, which would help deal flow in the middle market, he says. If the federal government is able to advance its antitrust agenda against big tech firms, it could look to expand its focus beyond Silicon Valley giants. Marhofer says the government will likely target any company that has
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