Strategies for Buyers and Sellers in Mergers and Acquisitions (M&A)

In business, the whole becomes greater than the sum of its parts when synergies unite. That’s why we need M&As.

The decision to engage in a merger or acquisition (M&A) has evolved historically along with business practices, economic climates, and regulatory changes. In the early 1900s, particularly in the United States, M&A activity was often driven by the desire to control entire industries. Large companies, sometimes referred to as trusts, would acquire or merge with competitors to dominate the market and set prices (monopolies in industries like oil, steel, and railroads).

After World War II, the economic boom in many countries led companies to seek growth through M&As. This period focused on diversification. Companies acquired businesses in entirely different industries to reduce risk, which was thought to stabilize earnings across different business cycles.

The 1980s witnessed a surge in leveraged buyouts (LBOs), where acquisitions were predominantly financed through debt. This period was marked by significant corporate restructuring. Companies looked to acquire undervalued firms, streamline operations, or remove underperforming divisions, and then sell them off for profit.

As globalization accelerated, companies began pursuing M&As to expand geographically and gain access to new markets. The decision to merge or acquire during this time was…