In track, a runner “false starts” or “jumps the gun” when he or she begins running before the gun has sounded. A similar concept occurs when two competing firms that have agreed to merge begin coordinating their activities or combining their distribution networks before the merger closes. In track, the runner who gun jumps may be disqualified from the race. For a transaction, the penalties for gun-jumping include fines, injunctions and potentially prison terms. Thus, an understanding of what merging firms can and cannot do before the gun sounds is critical to the merger process.

GUN JUMPING

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