Managing Gun-Jumping And Related Antitrust Risks In M&A Transactions: An EU And US Update

In M&A transactions, the typical time gap of several weeks or even months between signing a transaction agreement and closing on the transaction creates a dual challenge: preserving the value and independence of the target company until closing and achieving "Day One Readiness" by planning for integration of the target into the acquirer's activities as soon as possible after closing.

When addressing these challenges, the parties need to respect the boundaries set by antitrust laws. Where the transaction is subject to pre-closing merger review in the EU and/or the US, the parties are subject to a standstill obligation imposed by the EU Merger Regulation (EUMR) and the Hart-Scott-Rodino Antitrust Improvement (HSR) Act—the parties may not implement the transaction before clearance is obtained¹ and need to continue acting as independent companies.² Not observing the standstill obligation amounts to "gun-jumping."