Ten Important Lessons From The History Of Mergers & Acquisitions

The background of mergers and acquisitions in the United States is comprised of some five distinctive waves of activity. Each influx occurred at a different time, and each exhibited some unique characteristics related to the nature of the experience, the sources of funding for the experience, and to some extent, differing degrees of success from influx to wave.

When the quantity, character, mechanisms, and outcomes of the transactions are viewed in an objective historical framework, important lessons emerge. In this era in American history, the business environment related to mergers and acquisitions was significantly less regulated plus much more powerful than it is today. There was very little by way of antitrust impediments, with few laws and regulations and even less enforcement. 13 billion in assets were acquired (17.5% of the country’s total manufacturing resources).

The American economy during the last half of the 1960s (1965 through 1970) was flourishing, and the growth of corporate and business mergers and acquisitions, related to conglomeration especially, was unprecedented. It was this economic boom that painting the backdrop for the 3rd influx of mergers and acquisitions in American history. A peculiar feature of this period was the relatively common practice of companies concentrating on acquisitions that were bigger than themselves.

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100 million in possessions spiked so significantly. Compared to the years preceding the third wave, mergers, and acquisitions of companies this size occurred far less frequently. Between 1948 and 1960, for example, they averaged 1.3 per year. Between 1967 and 1969, however, there have been 75 of these – averaging 25 per year.

During the third wave, the FTC reports, 80% of the mergers that occurred were conglomerate transactions. Even though the best conglomerate names out of this period were huge corporations such as Litton Industries, LTV, and ITT, many small and medium-size companies attempted to pursue an avenue of diversification. The diversification involved included not only product lines here, however the industries in which these companies thought we would participate as well. As a result, most of the firms involved in these activities moved substantially outside of what had been thought to be their core businesses, very with deleterious results often.

Since the ascension of the third influx of mergers and acquisitions in the 1960s, there has been a great deal of pressure from stockholders for company development. With all the only easy path to that growth being the path of conglomeration relatively, a great deal of companies pursued it. That pursuit was funded differently in this third wave of activity, however.

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