The Five Merger Waves
have typically occurred in cyclical patterns:
periods of intense merger activity have been followed by intervening
Historians and M&A specialists have identified five merger waves in
history of the United
What follows are the dates of each merger wave and some of each waves
First Merger Wave (1897-1907)
first merger wave followed the Depression of 1883.
About two thirds of all merger activity during the first merger wave
was concentrated in a handful of industries: petroleum products,
mining, metals, food products, and transportation.
first merger wave included many horizontal mergers, so the affected
industries became highly concentrated. For example, during this period
J.P. Morgan merged U.S. Steel with Carnegie Steel and more than 700
small steel firms. The resulting mega-steel company controlled 70~80%
of the steel production in the United States.
monopolies created during the first merger wave spurred a backlash. The
Justice Department charged a number of the large monopolies with
violating the Sherman Antitrust Act (1890). President Theodore
Roosevelt (1901-1907), became known as a trust buster. He began
aggressively pursuing the trusts while in office. His successor,
William Howard Taft, also enforced the Sherman Antitrust Act vigorously.
Second Merger Wave (1916-29)
second merger wave began during World War I and continued until the
stock market crash of October 29, 1929.
of the heighten government vigilance that occurred toward the end of
the first merger wave, mergers during the second merger wave faced
increased governmental scrutiny. The Clayton Act (1914) was an
additional tool that federal authorities could now wield against
mergers of the second merger wave were characterized by oligopolies
rather than monopolies. There were more vertical mergers than
Third Merger Wave (1965-1969)
third merger wave coincided with a period of economic prosperity in the
The strong economy gave many firms the resources necessary to acquire
third merger wave was characterized by mergers among unrelated
companies, also known as conglomerate mergers.
horizontal mergers that occurred during the third merger wave were
subject to strict antitrust enforcement. Antitrust enforcers now had
yet another piece of key legislation in their arsenal: the Celler-Kefauver Act of 1950. This law reinforced
the Clayton and Sherman Acts.
Johnson Administration (1963-1969) favored aggressive antitrust
enforcement. Richard M. Nixon, who took office in 1969, was generally
more tolerant of merger activity.
Fourth Merger Wave (1981-1989)
fourth merger wave coincided with the presidency of Ronald Reagan, and
the economic prosperity of the mid- to late-1980s.
most mergers that occurred during the fourth merger wave were friendly,
this period included more hostile takeovers than previous merger waves.
It was during the fourth merger wave that the term corporate raider
entered the American lexicon.
of the fourth merger wave were larger than those of earlier periods.
Mergers in the billion-dollar range became common.
was more widely used to finance mergers.
Fifth Merger Wave (1993-2000)
fifth merger wave followed the economic recession of 1990-91, and
coincided with the presidency of Bill Clinton.
mergers occurred at about the same level as they had during the fourth
merger wave; but hostile takeover activity diminished.
many of the mergers of the fourth wave were executed for short-term
financial gains, mergers of this period emphasized longer term business
mergers were less common than they were during the fourth wave.