cameron and green making-sense-of-change-management

Mergers and acquisitionsThe chapter has the following four sections:• the purpose of merger and acquisition activity;• lessons from research into successful and unsuccessful mergers andacquisitions;• applying the change theory: guidelines for leaders;• conclusions.THE PURPOSE OF MERGER AND ACQUISITION ACTIVITYWe begin with a short history of mergers and acquisitions. It is useful totrack the changes in direction that merger and acquisition activity havegone through over the last 100 years to achieve a sense of perspective onthe different strategies employed. Gaughan (2002) refers to five waves ofmerger and acquisition activity since 1897 (see box), claiming that we arecurrently in the fifth wave of this ever-evolving field. However activityhas slowed, with reported figures showing a 26 per cent reduction inglobal merger and acquisition activity in 2002.THE FIVE WAVES OF MERGER ANDACQUISITION ACTIVITYFirst wave (1897–1904): horizontal combinations and consolidations ofseveral industries, US dominated.Second wave (1916–29): mainly horizontal deals, but also many verticaldeals, US dominated.Third wave (1965–69): the conglomerate era involving acquisition ofcompanies in different industries.Fourth wave: (1981–89): the era of the corporate raider, financed by junkbonds.Fifth wave: (1992–?): larger mega mergers, more activity in Europe andAsia. More strategic mergers designed to compliment company strategy.Source: adapted from Gaughan (2002)223