A Form S-4 is a M&A registration statement required under the Securities Act of 1933. The purpose of this statement is to give the public notice of a pending merger or acquisition. The primary reason to file a Form S-4 is to comply with the SEC, but it also is essential for providing transparent communications with shareholders. Read on to learn more about what this statement contains, when it needs to be filed and how your public company can meet all the requirements for it.
Who Needs to Make an S-4 Filing?
The SEC requires an S-4 filing from any publicly traded company undergoing a merger or an acquisition. This form must also be filed in bankruptcy situations when there is an exchange offer on the table, and during hostile takeovers. The form must be filed regardless of the underlying purpose of the merger. Other examples of companies that are required to file an S-4 include technology startups merging for synergy or established manufacturers integrating their supply chains. It also may be relevant in a Chapter 11 scenario if the reorganization plan includes equity exchanges.
Companies merge for a wide range of underlying reasons. It may be a strategic move in which two companies that have unrelated business concepts join forces to expand their market and revenue. It may occur when competitors who share the same market decide it would be more efficient to join forces and leverage economies of scale to reduce costs or expand offerings. Companies may also merge when they have the same or equivalent products in non-competing markets, because a merger is an easy way to expand their reach. Finally, companies that occupy different parts of the supply chain may decide to merge to reduce costs and integrate their supply chain.
While most mergers are consensual, a hostile takeover is a type of merger where one company tries to take over another company without buy-in from its board of directors. Even in scenarios where the merger is fraught, the S-4 Form must be filed.
Regardless of the underlying reason for the merger, companies must complete the right paperwork to seal the deal. Although a merger requires a certain set of documents before it can move forward legally, there are also financial reporting documents that must be filed with the SEC, notably the S-4 Filing. While the S-4 is required for reporting purposes, there are practical reasons that a company must complete the S-4 as well.
Consider that after a merger or an acquisition, company shares will be redistributed to shareholders from both companies. Shareholders will be materially affected by the merger or acquisition, because they own shares. Additionally, mergers and acquisitions tend to change the valuation of a company, usually (though not always) for the better.
Investors want to know about mergers and acquisitions because there is a good deal of money to be made. The company that is being purchased will usually see a spike in share price to reflect the valuation when the two businesses combine forces. Shareholders are generally credited for their shares in a ratio that reflects the valuation; they may either cash out their shares and take a profit or receive what are known as fractional shares of the new entity, using the aforementioned ratio to determine the quantity.
Knowing how mergers affect shareholders explains why the Form S-4 is so critical; shareholders who will be materially affected by the proposed transaction will naturally want to examine the document thoroughly to make their investment decisions.
Why an S-4 Filing Matters for Shareholders
In addition to the compliance concerns related to an S-4 filing, it’s also worth noting how much these statements can matter to a company’s shareholders. During times of transition, it’s crucial to make sure shareholders are fully informed and understand what the pending changes could mean. An S-4 filing helps reduce confusion by providing investors with information regarding share price changes, new ownership ratios, synergy projections and more.
Providing this information can do a lot to help make the process much smoother. Existing shareholders can vote with confidence and avoid disputes caused by confusion and uncertainty. For new investors, filing an S-4 demonstrates a commitment to full transparency, which can help them overcome any hesitation about their investments.
What an SEC Form S-4 Contains
The S-4 filing contains need-to-know information regarding the deal. While what is reported on an S-4 form will vary since every deal is materially different, a typical S-4 filing will contain descriptions of variables such as:
- Basic elements of the deal, including a discussion of risk
- Reasons for the merger from both perspectives
- Material contracts with the parties to the merger
- Financial information about both companies
- Material interests of key stakeholders on both sides, including counsel
- Mandatory information on any underwriters involved in the deal
- New board composition details
Common Merger Scenarios Requiring S-4
Filing an S-4 is required in each of these typical M&A situations:
- Consensual mergers
- Reverse mergers
- Hostile takeovers
- Exchange offers resulting from bankruptcies
How DFIN Can Help With Financial Reporting During a Merger
Mergers and acquisitions are inherently complicated, but DFIN is here to provide dedicated support throughout the deal. We've helped numerous global companies navigate the mergers and acquisitions process with services such as secure file sharing, contract review, due diligence and dedicated assistance at any time.
During such a high-stakes deal, filing the mandatory paperwork on time can feel like one more hoop to jump through. Rather than stress about whether your Form S-4 is as comprehensive as it needs to be, turn to the team at DFIN. We are happy to help public companies handle the complexities of required SEC reporting using secure, cloud-based software that streamlines compliance.
Our ActiveDisclosure℠ product gives companies a collaborative workspace so stakeholders can work together in real time to prepare financial reporting documents related to the deal. Plus, you can track changes to ensure up-to-date work is submitted and upload data from a single source of truth, so no inaccuracies are introduced in the process. There's also built-in XBRL tagging for SEC compliance as well as data privacy features for securing sensitive documents. When it's time to submit, this top-notch security architecture has your organization covered.
ActiveDisclosure℠ is just one of the products you'll have access to when you become a DFIN client. There's also a dedicated virtual data room where both parties can come together to review documents, share information, iron out any differences and enjoy dedicated support should the need arise.
Dedicate your full attention to the details of the merger or acquisition without worrying about the software, financial reporting compliance or other administrative headaches. Trust DFIN, the industry's leading mergers and acquisitions expert, with a team of local staff available anytime you need them.
