Mergers, Acquisitions, and Corporate Restructurings, Fourth Edition

Chapter 2. History of Mergers

In much of finance there is very little attention paid to the history of the field. Rather the focus usually is on the latest developments and innovations. This seems to be particularly the case in the United States, where there is less respect for that which is not new. It is not surprising then that we see that many of the mistakes and types of failed deals that occurred in earlier years tend to be repeated. The market seems to have a short memory and we see that a pattern of flawed mergers and acquisitions (M&As) tends to reoccur. It is for this reason that we need to be aware of the history of the field. Such an awareness will help us identify the types of deals that have been problematic in the past.

There have been many interesting trends in recent M&A history. These include the fact that M&A has become a worldwide phenomena as opposed to being mainly centered in the United States. Other trends include the rise of the emerging market acquirer, which has brought a very different type of bidder to the takeover scene. For these reasons we will devote special attention in this chapter to these important trends in recent M&A history.

Merger Waves

Five periods of high merger activity, often called merger waves, have taken place in the history of the United States. These periods were characterized by cyclic activity, that is, high levels of mergers followed by periods of relatively fewer deals. The first four waves occurred between 1897 and 1904, 1916 and ...