User:Hbuckner/Sandbox

Merger waves The economic history has been divided into Merger Waves based on the merger activities in the business world as:[15]

Period Name Facet

1897–1904 First Wave Horizontal mergers

1916–1929 Second Wave Vertical mergers

1965–1969 Third Wave Diversified conglomerate mergers

1981–1989 Fourth Wave Congeneric mergers; Hostile takeovers; Corporate Raiding

1992–2000 Fifth Wave Cross-border mergers

2003–2008 Sixth Wave Shareholder Activism, Private Equity, LBO

[edit] Deal objectives in more recent merger waves During the third merger wave (1965–1989), corporate marriages involved more diverse companies. Acquirers more frequently bought into different industries. Sometimes this was done to smooth out cyclical bumps, to diversify, the hope being that it would hedge an investment portfolio. Starting in the fourth merger wave (1992–1998) and continuing today, companies are more likely to acquire in the same business, or close to it, firms that complement and strengthen an acquirer’s capacity to serve customers. Buyers aren’t necessarily hungry for the target companies’ hard assets. Some are more interested in acquiring thoughts, methodologies, people and relationships. Paul Graham recognized this in his 2005 essay "Hiring is Obsolete", in which he theorizes that the free market is better at identifying talent, and that traditional hiring practices do not follow the principles of free market because they depend a lot upon credentials and university degrees. Graham was probably the first to identify the trend in which large companies such as Google, Yahoo or Microsoft were choosing to acquire startups instead of hiring new recruits.[16] Many companies are being bought for their patents, licenses, market share, name brand, research staffs, methods, customer base, or culture. Soft capital, like this, is very perishable, fragile, and fluid. Integrating it usually takes more finesse and expertise than integrating machinery, real estate, inventory and other tangibles.[17]