The wave of international mergers and acquisitions experienced in both the United States and the UK in the 1980’s and 1990’s is known as the fourth merger and acquisition wave. The fourth wave began just as the U.S. emerged from the recession of 1981-82, which as a result of global competition had laid bare the weaknesses of traditional American center industries. In many cases, changes in markets and technology had resulted in obsolete assets and redundant personnel. The progressive deregulation of airlines, trucking, telecommunications, and banking would also reveal excess capacity in those industries. The conglomerate boom had saddled corporations with unwieldy inefficient/under-managed operations. Massive shifts in investment away from manufacturing to services, along with energy shortages, high inflation, rising interest rates, and falling unemployment had all further contributed to the most serious crisis of confidence in the American business system since the Great Depression. Postwar corporate profits were reaching a low point, and many of the nations biggest companies were suffering from low productivity and a widely perceived loss of managerial competence. Many of these problems were addressed by the merger and acquisition wave of the 1980’s.Brief History of the Merger WavesThe American economy has experienced four distinct waves of mergers during the twentieth century.The first wave may be dated approximately as having taken place between 1885 and 1905. This wave consisted predominantly of horizontal mergers. Thus in this period we have an increase in concentration in industrial markets. Mergers were particularly strong in the steel, rubber and tobacco industries.The second wave may be dated approximately as having occurred during the period 1916-30, with the peak during the late 1920’s. Horizontal mergers continued to be predominant, but vertical ones and conglomerate in particular started...
