Today, Congressman Bill Huizenga (R-MI) released the following statement after the U.S. House of Representatives passed H.R. 935, the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2021. This legislation is designed to level the playing field for small businesses by reforming a costly one-size fits all regulatory requirement when a small or medium-sized business transfers ownership. This legislation passed the House with overwhelming bipartisan support by a vote of 419 to 0.
Unfortunately, federal securities regulations technically require an M&A broker to be registered and regulated by the SEC as well as FINRA, just like a Wall Street investment banker selling or buying publicly traded companies. This is a problem long identified by practitioners and the regulators themselves.
Whether it's a locally owned store in Holland, Michigan or a Fortune 500 company, today, the same rules apply, regardless of the size of the business, the size of the transaction, or whether they are publicly or privately held. Sadly, the last two years have only increased the need for my bill. Despite $5 trillion in COVID-19 relief packages, which often picked winners and losers, rising inflation costs are making it difficult for many small businesses to keep the lights on today.
Recent data from the Federal Reserve itself shows that 85% of small businesses experienced financial difficulties in 2021. According to the Small Business Administration, 68% of small business owners say they are having a hard time keeping and hiring staff. Nevertheless, small businesses continue to be the backbone of our local economies. Just look at my home state of Michigan, where 98% of businesses are small businesses and these small businesses employ half of the Michigan workforce. And just as important, for every $100 spent at a local business, roughly $68 stays in the local economy according to the Small Business Administration.
Small businesses need to grow and have to do a couple of different things to go be successful. For some that means they need to consolidate. Some they may need to restructure in order to recover from the challenges that have been exacerbated by the pandemic, the economy, or whatever it might be. Sometimes it may be a family succession plan that is happening within those small businesses. These innovators, entrepreneurs, and risk-takers are critical to our country's economic growth and prosperity. So we need to level the playing field that gives an unfair advantage to the "Wall Street Big Guys.'
Last year, Congressman Huizenga penned an op-ed on H.R. 935 which further detailed the importance of this common sense legislation. The piece, which was published in The Hill, is available here.