Effective Date: January 1, 2026
Regulatory Status
Steve Tucker and Adelphoï Labs provide mergers and acquisitions (M&A) advisory services as an exempt M&A broker under Section 15(b)(13) of the Securities Exchange Act of 1934, as enacted by the Consolidated Appropriations Act, 2023. This federal exemption permits M&A brokers to facilitate securities transactions related to the transfer of ownership of eligible privately held companies without registration as a broker-dealer with the U.S. Securities and Exchange Commission (SEC).
What We Are NOT
- A registered broker-dealer with the SEC or FINRA
- A licensed real estate broker, agent, or salesperson
- Authorized to sell, broker, or transact in real property
- An investment advisor registered under the Investment Advisers Act of 1940
Applicable Federal Law
Our M&A advisory services are provided under the exemption established by Section 15(b)(13) of the Securities Exchange Act of 1934. The relevant statutory text provides:
"The registration requirements of subsection (a) shall not apply to any M&A broker... engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether the broker acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the eligible privately held company..."
— Securities Exchange Act of 1934, Section 15(b)(13)
Eligible Privately Held Company
Under Section 15(b)(13), our advisory services are limited to transactions involving "eligible privately held companies" that meet the following criteria:
- No class of securities registered with the SEC under Section 12 of the Exchange Act
- Not required to file periodic reports under Section 15(d) of the Exchange Act
- In the fiscal year immediately preceding the engagement, the company had EITHER:
- EBITDA of less than $25,000,000, OR
- Gross revenues of less than $250,000,000
Note: These thresholds are subject to adjustment for inflation every five years as provided by law.
Buyer Requirements
We facilitate transactions only where the M&A broker reasonably believes that upon consummation of the transaction, the buyer (or buyer group) will:
- Control the acquired company, which is presumed if the buyer has:
- The right to vote 25% or more of a class of voting securities
- The power to sell or direct the sale of 25% or more of a class of voting securities
- In the case of a partnership or LLC, the right to receive upon dissolution or has contributed 25% or more of the capital
- Actively participate in management of the company, including but not limited to:
- Electing executive officers
- Approving the annual budget
- Serving as an executive or other executive manager
We do not facilitate transactions involving passive investors or investor groups formed with our assistance.
Prohibited Activities
In compliance with Section 15(b)(13), we do NOT engage in the following activities:
- Custody of Funds or Securities: We do not receive, hold, transmit, or have custody of funds or securities to be exchanged in connection with any transaction
- Provide Financing: We do not directly or indirectly provide financing for any transaction
- Public Offerings: We do not facilitate public offerings or transactions involving shell companies (except business combination-related shell companies)
- Dual Representation Without Disclosure: We do not represent both buyer and seller in the same transaction without providing clear written disclosure and obtaining written consent from both parties
- Form Buyer Groups: We do not assist in forming groups of buyers
- Passive Investors: We do not facilitate sales to passive buyers or groups of passive buyers
- Binding Authority: We do not have the ability to bind any party to a transaction
Disclosure Requirements
Before buyers become legally bound to a transaction, they must receive or have reasonable access to:
- The most recent fiscal year-end financial statements of the company, prepared by management in the normal course of operations
- Any statement by an independent public accountant if the financial statements have been audited, reviewed, or compiled
- A balance sheet dated no more than 120 days before the date of the offer
- Information pertaining to management, business operations, results of operations, and material loss contingencies
Real Estate Transactions
M&A advisory services involve the transfer of business ownership through stock or asset sales. We do NOT buy, sell, or broker real estate. If a business transaction includes real property, clients should engage a licensed real estate professional for that component of the transaction. We are not licensed as real estate brokers or agents in any jurisdiction.
Success Fees and Compensation — IRS Treatment
Our compensation typically includes retainer fees and success-based fees contingent upon closing. For tax purposes, the IRS has established specific rules regarding the treatment of M&A advisory fees:
IRS Revenue Procedure 2011-29 provides a safe harbor election:
"A taxpayer may elect to treat 70% of the amount of success-based fees as an amount that does not facilitate the transaction [and is potentially deductible] and 30% as an amount that does facilitate the transaction [and must be capitalized]."
— IRS Revenue Procedure 2011-29
This election must be made by attaching a statement to the original federal income tax return for the year the fee is paid or incurred. Clients should consult their tax advisors regarding the specific treatment of M&A advisory fees for their circumstances.
State Compliance
The federal M&A broker exemption under Section 15(b)(13) does not preempt state securities laws. We maintain compliance with applicable state requirements, including those aligned with the North American Securities Administrators Association (NASAA) Model M&A Broker Rule.
Key differences between federal and state requirements may include:
- Control Threshold: The NASAA Model Rule uses a 20% voting/capital threshold, while the federal exemption uses 25%
- State-Specific Requirements: Some states may have additional or different requirements
Antifraud Provisions
While exempt from broker-dealer registration under Section 15(b)(13), M&A advisors remain fully subject to:
- The antifraud provisions of the Securities Exchange Act of 1934
- The antifraud provisions of the Securities Act of 1933
- Applicable state securities law antifraud provisions
- Other applicable federal and state laws
Disqualification
Neither Adelphoï Labs nor any of its principals or associated persons has been barred or suspended from association with a broker or dealer by the SEC, any state, or any self-regulatory organization.
Not Legal or Tax Advice
This disclosure is for informational purposes only and does not constitute legal, tax, or investment advice. The information provided regarding Section 15(b)(13), IRS Revenue Procedure 2011-29, and related regulations is intended as a general summary only. Clients should consult with qualified attorneys, certified public accountants, and other professional advisors regarding their specific circumstances and compliance obligations.
Contact Information
If you have questions about this disclosure or our M&A advisory services, please contact us:
Adelphoï Labs
Email: [email protected]
Phone: 214-856-2268
By engaging our M&A advisory services, you acknowledge that you have read, understood, and agree to the terms of this disclosure.