Mergers, Acquisitions, and Corporate Restructurings

By Patrick A. Gaughan | Go to book overview

2
HISTORY OF MERGERS

In much of finance there is very little attention paid to the history of the field. Rather, the focus is usually on the latest developments and innovations. This seems to be particularly the case in the United States, where there is less respect for that which is not new. It is not surprising, then, when we see that many of the mistakes and types of failed deals that occurred in earlier years tend to be repeated. The market seems to have a short memory and we see that a pattern of flawed mergers and acquisitions (M&As) tends to reoccur. It is for this reason that we need to be aware of the history of the field. Such an awareness will help us identify the types of deals that have been problematic in the past.

There have been many interesting trends in recent M&A history. These include the fact that M&A has become a worldwide phenomenon as opposed to being mainly centered in the United States. Other trends include the rise of the emerging market acquirer, which has brought a very different type of bidder to the takeover scene. We devote special attention in this chapter to these important trends in recent M&A history.


MERGER WAVES

Six periods of high merger activity, often called merger waves, have taken place in U.S. history. These periods are characterized by cyclic activity; that is, high levels of mergers followed by periods of relatively fewer deals. The first four waves occurred between 1897 and 1904, 1916 and 1929, 1965 and 1969, and 1984 and 1989. Merger activity declined at the end of the 1980s but resumed again in the early 1990s to begin the fifth merger wave. We also had a relatively short but intense merger period between 2003 and 2007. A good argument could be made that this period constitutes a sixth merger wave.

The various merger waves provoked major changes in the structure of U.S. business. They were instrumental in transforming American industry from a collection of small and medium-sized businesses to the current form, which includes thousands of multinational corporations. This chapter focuses more closely on the later merger periods because they are, of course, more relevant to recent trends in the world of mergers.

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Mergers, Acquisitions, and Corporate Restructurings
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Case Studies xi
  • Preface xv
  • 1 - Background 1
  • 1 - Introduction 3
  • 2 - History of Mergers 35
  • 3 - Legal Framework 74
  • 4 - Merger Strategy 125
  • 2 - Hostile Takeovers 181
  • 5 - Antitakeover Measures 183
  • 6 - Takeover Tactics 243
  • 3 - Going-Private Transactions and Leveraged Buyouts 291
  • 7 - Leveraged Buyouts 293
  • 8 - Topics in Going-Private Transactions 335
  • 9 - Employee Stock Ownership Plans 366
  • 4 - Corporate Restructuring 387
  • 10 - Corporate Restructuring 389
  • 11 - Restructuring in Bankruptcy 435
  • 12 - Corporate Governance 473
  • 13 - Joint Ventures and Strategic Alliances 523
  • 14 - Valuation 538
  • 15 - Tax Issues 607
  • Glossary 623
  • Index 631
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