Since the 1980's, and even more now in the late nineties, it has become a growing trend for companies, both large and small, domestic and foreign, to form strategic alliances within their particular industries. There are many specific goals that companies may be looking to achieve by dong this, but the main underlying reason is to guarantee the long-term sustained achievement of "fast profitable growth" for their business. They have to keep up with a rapidly increasing diversified global market and increased competition. Nowadays, with the struggle for competitive advantage becoming stronger and stronger, it is almost essential to form alliances. Diversifying and expanding techniques such as mergers and acquisitions are very popular methods for forming these alliances. Basically stated, a merger is a joining of forces and acquisition is a purchase of a company, whether it is welcome or hostile. The two terms are often used interchangeably. Much research and planning is required in the early stages of these processes, which starts with an acquisition strategy used in trying to find a suitable company to merge with. Advantages and disadvantages of the merger must be thought out, as well as many other important aspects, such as risk factors and new organizational structures that must be considered and closely monitored throughout all of the stages of the merger or acquisition.
Mergers reached record levels in the banking industry as well as in the industrial sector in the second half of the 1980s. The general economic conditions of the period and changes in the enforcement of the antitrust laws regarding mergers may have eased the way for some combinations, but there is good reason to believe that the increased merger activity is likely to persist on its own and result in a restructuring of the industry.
The effect of mergers on......
