Why Companies Do Not Pursue Attractive Mergers and Acquisitions ...

1.2.2.1. Acquisitions Are Growing in Value, Number, and Geographic Spread

We are seeing more acquisitions on a larger scale, more often than ever before.

—Jemison and Sitkin (1986a)

More companies, in more industries, in more countries, are engaging in mergers and acquisitions for more reasons. M&A scholars have acknowledged the growth and spread of these phenomena. Pablo (1994, p. 803), for example, maintained that acquisitions “have become a well institutionalised phenomenon”. Rappaport stated, “Mergers and acquisitions have become an increasingly important part of corporate growth strategy” (Rappaport, 1979, p. 99). Haspeslagh and Jemison (1991, p. 180) suggested, “[In the 1980s]…acquisition activity in all countries with market economies has heightened…and…going into the nineties, the acquisition phenomenon appeared increasingly broad-based, fragmented and global”.

The global value of M&As exceeded $3.8 trillion in 2006, which was up 38% over 2005 (Radler Cohen, 2007).

M&A activity used to occur in waves but has become more generalised and constant. In the United States, M&A activity has occurred in waves, which scholars characterise in terms of general motives and specific stimuli. Salter and Weinhold (1979), for example, suggested that the first identifiable wave at the turn of the nineteenth century was motivated by a desire on the part of acquirers to achieve monopoly power. In the 1920s and 1930s during a second wave, additional industry restructuring occurred as weaker competitors consolidated to gain strength, in part, to improve their competitive positions in relation to the large combined companies formed in the first wave. A number of oligopolies emerged in this period. Relatively few industries were affected during these waves. Stigler (1950) provided examples including steel, electrical products, oil, and packaging (as cited in Haspeslagh & Jemison, 1991). A 1960s wave, during which the conglomerates emerged, included substantial interindustry M&A activity, but there were few focal companies (Salter & Weinhold, 1979).¹