The activity involving corporate acquisitions, mergers, and consolidations constitute a contentious issue in the con temporary American economy.1 During the decade of the 1980s, actions of this type assumed historically high levels of activ ity.2 In this study, the shades of difference between the terms acquisitions, mergers, and consolidations were not rele vant to the study findings, thus, the terms are often used interchangeably in this study. The justification for the use of these terms in this way is explained in the "Definition of Terms" section at a later point in this chapter.
The questions raised by the outcomes of many of the acqui sitions, mergers, and consolidations deal with a wide scope of concerns, which range from macro effects on the economy as a whole to micro effects on shareholders and employees. This research study investigated one specific aspect of the corpor ate acquisition, merger, and consolidation activity which
1G. Houseman, "The Merger Game Starts With Deception," Challenge, September October 1986, 44.
2P. F. Drucker, "The Problem of Corporate Takeovers: What Is to Be Done?" The Public Interest (Winter 1986): 17.
1 2occurred in the American economy during the 1980s. This aspect concerned the effect on the operating efficiency of the firmsurviving in an acquisition, merger, or consolidation which was effected through a leveraged buyout (LBO). The term LBO, as it is used in this study, is also dealt with in the "Definition of Terms" section of this chapter.
Earlier episodes of corporate acquisition, merger, and consolidation activity in the United States were primarily motivated by corporate diversification strategies, in which the principal goal of any eveutual merger or consolidation was growth.3 By contrast, either the unfriendly takeover, or the leveraged buyout, wherein (in either case) the strategic goal of the merger often has little relevance to the primary busi ness a...