History of US M&A is a combination of history of acquisition, stock acquisition history, history of takeovers and even history of finance is not be left out in this context.
History of merger waves in the US consists of six major waves the last of which still continues unabated. Through each of the waves, the trend of corporate restructuring varied according to the prevailing regulatory landscape or the ongoing stage of technological evolution.
The first phase at the turn of the twentieth century (1897 to 1904) saw a spate of horizontal mergers with enterprises in the same line of business combining to create monopolistic industries. This was facilitated by the laissez faire economy with minimal regulations in place. However, the US Supreme Court onslaughts against monopolistic combinations by 1904 brought this first wave of corporate restructuring to a grinding halt.
The second wave saw the rise in vertical mergers (1916-1929) when manufacturing corporations integrated forward into the source of raw material or backward towards distribution outlets. The purpose was to combine complementary resources. Moreover, this was the only available option since the legal environment did not favor horizontal mergers. The Great Depression and the stock market collapse of 1929 brought this wave to rest.
The third phase (1965-1969) witnessed the rise of conglomerates. By this time the law had become opposed to both vertical and horizontal mergers as anti competitive in nature. Under these regulatory fetters when companies aiming high growth started looking beyond their conventional market segments, conglomerates stepped into the corporate scenario. Conglomerates were multi product, multi location and multi divisional corporations. This period of conglomerates ended in 1969 when the competition laws were also set against them.
During the fourth wave (1981-1989) M&A had become acceptable as the order of the day. Companies with untapped potential and underperforming corporations faced hostile take over bids. This fourth wave phased out as economic slow down set in.
The fifth wave (1992-2001) consisted of prolonged M&A activities driven by the buoyancy of the bull market. Significantly this fifth wave ended with another crash in 2001.
Currently since 2003 the US is in the midst of the sixth wave, marked by the proliferation of M&A activities and the creation of large corporations equipped to take on global competition. Though this is the last of the series of merger moves in history, yet it continues to surge ahead even today without losing momentum. Thanks to the globalization has exponentially increased the number of cross border M&A. The winds of globalization have forced businesses to target beyond their national borders for competitive advantage that is world wide in scale. The advent of global capital on an unprecedented scale has given a tremendous booster to the great merger movement. In the wake of globalization, cross border M&A is a real option today even on the agenda of small and medium sized companies. This was something unthinkable even in the recent past.
