What is Gun Jumping and How to Avoid It

Meaning of Jumping the Gun

Prior to close: 

• Neither company can attempt to exercise control over the other
• Cannot exchange competitively sensitive information
• Must operate as separate entities until the transaction closes

Examples of Prohibited Activities:

• No joint pricing, promotions, expansion plans (or influencing each other on these) 
• No coordination on competitive practices, decisions or strategies
• Can’t participate in or influence each other’s day-to-day operations
• No joint decision-making on operational purchases or dispositions
• Acquirer employees cannot act on behalf of Target employees, nor vice versa
• No coordination on sales, purchasing or contracts with suppliers or vendors
• No division of customers or markets between the companies
• No implementation of integration plans prior to closing
• No broad unfettered access to each other’s systems (email, reports, etc)
• No access to office space or sales, marketing or operational personnel

Competitively Sensitive Information:

Before closing, an acquirer should not exchange competitively sensitive information with the other party. Examples of competitively sensitive information include:

• Current or future prices, price schedules, pricing policies, pricing plans or terms of sale
• Product-specific costs, including materials and third-party labor supply costs and national vendor contract terms
• Customer and product-specific prices, profitability, profit margins, discounts or rebates
• Vendor prices, profit margins, discounts or rebates
• Competitive strategies, including:
• Sales, bidding and marketing plans
• Specific harvesting plans
• Growth or expansion plans (including product and geographic markets)
• Other strategic plans
• Attempts to retain specific customers, land suppliers or materials/labor suppliers...

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