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

A more recent wave in the 1970s was stimulated in part by a relaxation of antitrust enforcement and the availability of low-cost debt. Much of the M&A activity that occurred in the four waves through the 1970s was narrowly based in terms of industry sectors and companies (Haspeslagh & Jemison, 1991).

M&A analysts and scholars, however, suggest that while there are still industry and company loci to much M&A activity, they are becoming less important. M&As have spread throughout the economy (Haspeslagh & Jemison, 1991; Pablo, 1994; Sikora, 2000).

M&As are also becoming a global phenomenon. Melin (1992, p. 111) refered to them as “a predominant feature of internationalisation during the last decade”. Anglo-Saxon economies have historically accounted for a volume of M&A activity disproportionate to their size (Haspeslagh & Jemison, 1991). Elsewhere, business traditions, regulatory environments, and institutional contexts have militated against acquisitions. In Japan, with its historically low level of M&As, acquisitions tended to be motivated largely by a desire on the part of acquirers to rescue troubled firms (Haspeslagh & Jemison, 1991). A manufacturer might, for example, acquire a struggling supplier in order to maintain a source of raw materials or a distributor in order to retain a presence in a particular channel or market segment. However, the motives for M&As now may well be broadening in Japan where M&A activity more than doubled in the 1980s and continued to increase throughout the 1990s. Kruse, Park, Park, and Suzuki (2002) refered to a “surge” in Japanese acquisitions, and challenged the traditional views of M&A scholars like Odagiri and Hase (1989), who suggested that Japanese corporate governance structures, reciprocal shareholdings, and a cultural propensity for internal product development have precluded significant M&A activity.

Significant growth in M&A activity has also occurred in Europe where a cross-border restructuring of industry is taking place in the wake of the passage of the Single European Act (Lindvall, 1991). Eighty percent of 152 companies surveyed by Angwin and Savill (1997) indicated that expanding in Europe outside of their home base was a strategic priority.