The purpose of this research is to provide an overview of merger and acquisition activity in the American economy in the 1980s. Serious questions have been raised concerning the potential adverse effects on the American economy which may stem from the mergers and acquisitions of the 1980s.1 These concerns range from macroeconomic effects to the impacts on corporate equity shareholders.2
BACKGROUND ON THE MERGER ENVIRONMENT
During the 1980s, corporate mergers and acquisitions haveassumed historically high levels of activity in the American economy.3 Earlier major episodes of merger and acquisition activity in the American economy (particularly in the 1960s) were primarily motivated by corporate diversification strate gies, in which the principal goal was growth.4 By contrast,
1D. Bandow, "Are Hostile Takeovers Good for the Economy?" Business and Society Review, Fall 1987, 45 49.
2P. F. Drucker, "The Problem of Corporate Takeovers: What Is to Be Done?" The Public Interest, Winter 1986, 20.
4W. F. Glueck, Business Policy and Strategic Management, 4th ed. (New York: McGraw Hill Book Company, 1984),274.
the unfriendly takeover (wherein the strategic goal often has little relevance to the primary business activity of the acquiring corporation) has characterized most of the acquisi tion and merger activity of the 1980s.5
Regardless of the strategic goals involved, merger and acquisition activity usually results in some degree of corpor ate diversification. This result has not been particularly characteristic of most mergers and acquisitions in the 1980s, however, where the principal business activities of target firms, more often than not have little in common with those of the raiding firms.6Several states have acted in the 1980s to make hostile cor porate takeovers either more difficult or impossible.7 At the federal level of government, there exists both strong opposi tion and strong support for takeover regul...