Mergers & Acquisitions in the Nineties:
Mergers and acquisitions fever gripped the 1980s, a fever that continued to engulf the 1990s. In contrast to the mergers and acquisitions fever that consumed the 1980s, the 1990s mergers and acquisitions fever was of a different strain. 1980s mergers and acquisitions consisted primarily of large, publicly held corporations. The mergers and acquisitions trend continued in the 1990s, but this wave of business marriages wedded more small and midsize businesses. Global competition, government deregulation, technological innovation, delayering, shifting economic conditions, the total quality and reengineering movements, and corporate rationalization are all factors which facilitate the willingness of corporate entities to effect mergers with former competitors or with organizations (Fairburn and Kay 23).
Mergers and acquisitions often increase the value of the companies who are buyers. Mergers and acquisitions play a major role in the growth of leading firms and in the development and maintenance of concentrated market structures. Mergers and acquisitions activity is also instrumental in fostering corporate diversification and the extension of a corporation’s primary focus or expertise into related production or marketing areas. Mergers and acquisitions are regarded as a particular vehicle for diversifying and for concentrating. Similarly, mergers and acquisitions tend – when they are successfully planned and implemented – to foster efficiency by capitalizing upon economies of scale and to enhance economic performance.
As of the mid-1990s, most of the big gains experienced by the so-called Global 500 corporations were due to mergers and acquisitions or restructuring (Whitford 92). Despite the benefits and value of mergers and acquisitions, many industry critics warn of the negative impact of business marriage. For example, mergers and acquisitions is often thought to increas...