Gun Jumping Rules in M&A

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

Legal Requirements — No Jumping the Gun Prior to Close

  • Neither company can attempt to exercise control over the other
  • We cannot exchange competitively sensitive information
  • We 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...


Activities Permitted Prior To Closing

The following activities may be permitted before closing:

  • Joint planning (but not implementation) of the combined company’s post-merger organizational structure
  • Explaining respective compensation plans and employee benefits to each other
  • Interviewing employees and assessing their qualifications for positions with the combined company post closing
  • Conducting “get to know you” visits of people in similar functions
  • In limited circumstances, holding joint “get to know you” visits with third-party commercial counterparties, but only after consulting with the Legal Department and not for sales purposes
  • Conducting transition team meetings for post-closing operational planning (coordinated in advance through the integration team in consultation with the Legal Department)
  • Discussing financial, tax, IT, environmental, health or safety issues that do not include competitively sensitive information
  • Discussing regulatory compliance
  • Discussing valuations of assets
  • Assessing technology capabilities and synergies in operational positions, but not integrating operations or positions in advance of closing

Related Presentations