Legal Blog

M&A Nugget: Gun-Jumping

Sometimes, a purchaser and seller are so anxious to merge their companies that they take steps to share detailed competitive information and to combine operations prior to the closing on the business transaction. If taken too far, this practice, known as “gun-jumping” or “jumping the gun”, may violate federal anti-trust laws. The government frowns upon and has instituted enforcement actions against companies that it believes have either a) shared sensitive information that could have an unfair impact on competition, such as pricing, or b) integrated the operations of the companies prior to the waiting period required under a federal law known as the “Hart Scott Rodino Act”, which applies to transactions of a certain size. The federal government’s lawsuits, none of which have been decided by a judge, have all settled for substantial monetary fines. Of course, it is always necessary to share certain information when conducting due diligence on a purchase. That is permissible, as long as the information is not used in an anti-competitive way. It is also permissible to plan before the closing for the integration that will occur post-closing. Using the concepts described above as a guide, the purchaser and seller can avoid being accused of jumping the gun.

 

 

If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.

 

ABOUT GLENN D. SOLOMON

gsolomon@offitkurman.com | 443-738-1522

Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.

 
 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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