Question

Describe any two of the three major characteristics of the fifth merger wave of the 1990s.

Answer 1

INTRODUCTION

History has shown that Mergers and Acquisitions have been prominent since the late 19th century majorly in advanced countries. But now it is a common phenomenon across different economies (backward or forward) to merge or acquire other companies. The name merger waves came across as the companies in order face the intense competition during the 20th century began merging activities with other companies. This was broken down into six stages also termed as waves.

FIFTH MERGER WAVE (1993 - 2000)

This period was a period of mega deals. Due to globalization and entry of foreign companies, major and large companies joined hands with the local companies of the host country in order to spread their business. A few such examples that can be illustrated are Ford acquiring Volvo and merger of Daimler and Chrysler.

CHARACTERISTICS

• Long-term Strategy

The mergers that took place in this period were for a long-term business strategy. This is because the companies aimed to establish their footstep in other countries which would lead to increase in business. This will benefit the economies as well as the business in the long run as they will have their foothold in the world.

• Running business in different parts of the world

Due to globalization, the economies allowed companies to enter their economies freely. This was an advantage for major and large scale companies as they could expand their business. This will benefit the economies as well as the business in the long run as they will have their foothold in the world.