The U.S. M&A market is more advanced than those of other countries, and, as a result, the United States has a disproportionate share of transactions. The reasons behind the disparity are covered in this chapter.
In my travels, I have given M&A seminars on several continents. Inevitably, the attendees want to know how their local market stacks up against the United States, where the M&A business is highly advanced.
To give the response some context, a review of the U.S. market’s 120-year evolution is helpful. Historians and M&A experts identify six merger waves.
The first wave saw a horizontal M&A boom, as larger enterprises gobbled up their smaller competitors. Monopolistic firms, such as U.S. Steel and Standard Oil, became dominant, with a number later broken up by newly empowered antitrust authorities. The wave ceased with the financial panic of 1907.
Vertical mergers gained popularity, as firms integrated backward by buying supply sources or forward by acquiring distributors. Holding companies assembled many individual electric utilities into vast corporations. A decade of economic prosperity saw new technologies, such as commercial radio broadcasting, and higher stock prices propelling M&A volume. The wave ended with the 1929 stock market crash.
With the introduction of modern portfolio theory in the 1950s, ...