M & A History – 5 interesting Facts
Majority of the M&A activities began during the late 19th century in the United States of America. The macroeconomic environment of a country including the GDP and other policies usually are key factors that drive the M&A activities.
Here we discuss interesting facts around the history of M&A deals. Read on-
1. The first Wave of Mergers
This began during 1897 and continued till 1904. During the first wave, mergers usually happened between companies which enjoyed a monopoly in their industry. Usually, the mergers were horizontal in nature.
2. End of the First Wave
The mergers that happened during the first wave were not successful as they could not reach the efficiency levels as desired. This failure was further propelled by the economic meltdown in 1903 and the stock market crash in 1904. Moreover, the legal framework was not supportive to M&As resulting in overall failure.
3. The Second Wave of Mergers
The second wave commenced in 1916 and continued till 1929. Unlike the first wave, the second wave witnessed the merger of oligopolies. Post World War I, the technological developments and economic boom resulted in the betterment of infrastructure. Transportation system improved and railroads were expanded. Such economic developments presented favorable conditions for M&A. Also, the new policy by the government allowed the companies to work in unison. The industries that witnessed major M&A activities during this period were transportation equipment, chemicals, food manufacturing, primary metal production, petroleum product manufacturing and so on. The second wave ended in 1929 with the stock market crash that resulted in the Great Depression.
4. The Third Wave
Between 1965 and 1969, higher stock prices, strict antitrust laws and interest rates motivated the companies to go for mergers. It ended in 1968 due to the poor performance of the companies. Some of the prominent M&A during this period were United Technologies and OTIS Elevator, the merger of INCO and ESB etc.
5. Fourth Wave of Merger
This phase, between 1981 and 1989, witnessed mergers primarily in industries such as banking, oil & gas, and airlines. This was the period when foreign takeovers became commonplace. It ended with new anti-takeover laws and the Gulf Wars. After this, the fifth wave, from 1992 to 2000, was propelled by globalization and financial boom. Long term business goals were the key driving factors behind the mergers during this phase.
We hope you found the read useful. If you are looking for merger and acquisition consultants, then contact us at https://linqpartners.com/contact-us/ as we have a strong understanding of the transportation and logistics business and have hands-on experience of mergers and acquisitions in this industry.