1 2growth.3 By contrast, the unfriendly takeover (wherein the strategic goal often has little relevance to the primary busi ness activity of the acquiring corporation) appeared to charac terize most of the corporate acquisition, merger, and consoli dation activity of the 1980s.4
Regardless of the strategic goals involved, merger and acquisition activity usually results in some degree of corpor ate diversification. This result was particularly characteris tic of most mergers and acquisitions in the 1980s, where the principal business activities of target firms, more often than not had little in common with those of the raiding firms.5 Serious questions have been raised concerning the adverse effects which may stem from such activity.6 Within the frame work of this problem area, the proposed research study will investigate the following research questions:
1. Why do corporate acquisitions, mergers, and consol idations occur?
2. Why do some corporate acquisitions, mergers, and condolidations succeed while others fail?
3W. F. Glueck, Business Policy and Strategic Management, Fifth Edition (New York: McGraw Hill Book Company, 1989), p. 274.
4J. Smith, "Merger Poppycock," Financial World (19 April 1988): 4.
5J. Brooks, The Takeover Game (New York: Harper & Row, Publishers, 1987), p. 11.
6D. Bandow, "Are Hostile Takeovers Good for the Economy?" Business and Society Review, 63 (Fall 1987): 45 49.
3. How do corporate acquisitions, mergers, and consol idations affect the employees of the organizations involved in such activities?
Diversification has long been recognized as a desirable goal for both firms and investors.7 In this context, diversi fication is viewed as a viable means of reducing risk in a var iety of contexts.8 A cursory consideration of diversification attained through corporate acquisition, merger, and consolida tion activity, therefore, would tend lead one to a conclusion that such a re...