There have been six merger waves in the historical mergers.

Yong Rin (2011) contends that the first four merger waves were centered in the U.S. while the fifth and the sixth involved Europe and Asia. These six merger waves shared common features that they all occurred in cyclical patterns and ended with a stock market crash. What follows is the detail of each merger wave. First wave 1897 to 1904 The first merger wave took place after the depression of 1883, peaked in 1899 and lasted until 1904. The mergers during that time were characterized by horizontal consolidations in metals, food products, petroleum products, chemicals, coal, transportation equipment, and machinery industry. Gaughan (2011) says this merger wave played a role in creating large monopolies. Remarkably, people witnessed the first billion-dollar megamerger merger when U.S. Steel was combined with Carnegie Steel leading to a foundation of a steel giant conglomerate of 785 separate firms which accounted for 75 percent of U.S. steel-making capacity. The lax enforcement of federal antitrust laws was blamed for the thriving of the first wave. The Sherman Antitrust Act enacted in 1890 was unable to control this period of intense mergers. Also, investment bankers also played an aggressive role in promoting the merger activities. Second wave 1916 to 1929 The second merger wave occurred during the World War I, and paved the way for the stock market crash of 1929 and the Great Depression of the 1930s. The second wave

was predominantly driven by vertical mergers that resulted in the oligopoly. Industries having the most mergers were primary metals, petroleum products, food products, chemicals, and transportations equipment. Many prominent corporations were born during this merger period namely General Motors, IBM, John Deere, and Union Carbide. In 1914, the Clayton Act was passed to reinforce the antimonopoly provisions of the Sherman Act. The antitrust environment, by and large, was more stringent in the 1920s. As a result, fewer monopolies were created during the second merger wave, but more oligopolies and vertical mergers. Third wave 1965 to 1969: The third merger wave is known as a conglomerate merger era. It is worth mentioning that many bidders in the third wave were relative smaller than the target firms and most of the mergers were financed by stock transactions rather than by investment bankers like they were in the two previous waves. The antitrust atmosphere was heightened with the promulgation of the Celler-Kefauver Act of 1950 that impeded the anti-competitive acquisition of a firms assets. In front of the intense antitrust enforcement of horizontal and vertical mergers, the acquiring firms adopted a diversification strategy and moved into areas outside their core business activities. Good examples of conglomerate firms in this period are Ling-Temco-Vought (LTV), Litton Industries, and ITT.

Fourth wave 1984 to 1989: The fourth merger wave started in 1984, ended by 1989, and followed by a relatively mild recession in 1990. The consolidation pattern of this period was characterized by restructuring through leveraged buyout (LBO) and hostile takeovers. In the fourth wave, mergers were concentrated the most in oil and gas, airline, and banking industry. In contrast with the other three merger waves, many mergers during this wave were financed with large amounts of debts. Investment bankers play a crucial role in promoting the fourth wave. They designed many innovative products and techniques to facilitate or prevent acquisitions. Besides, corporate raiders and deregulation in many industries were found to be significant causal factors to the fourth merger wave. During this period, the conflicts between the federal and state governments arose, as target companies persuaded local legislatures to pass anti-takeover legislation and relied on them to defense against unwanted takeovers. Examples of well-known LBO deals during this period are RJR Nabisco, Beatrice Cos., Safeway Stores Inc., and Owens-Illinois Inc. Fifth wave 1992 to 2000 The fifth takeover wave started in 1992, and was known as an era of international megadeals. The mergers took place throughout Europe, Asia, and Central and South America. There were less hostile takeovers but more strategic mergers in this period. The use of debts to finance mergers was not common like they were in the fourth wave. Instead, most of the deals were increasingly financed through the use of equity. The mergers increased both in takeover values and number of deals. Chand (2009) notes,

during this wave, 119,035 M&A deals were recorded in the U.S. and 116,925 deals in Europe (including the U.K.), which were more than three times and almost 10 times higher in the U.S. and Europe, respectively, than during the fourth merger wave. Roll-up - a process in which smaller target businesses are consolidated into one large corporation enthralled the market. The roll-ups were primarily concentrated in such industries as funeral printing, office products, and floral products. Prominent roll-ups formed during the fifth merger wave are Metal USA, Office Products USA, Floral USA, Fortress Group, and U.S. Delivery Systems. Unfortunately, many megadeals of this period were not successful as expected. The fifth wave then ended with an eight-month recession in 2001. Sixth wave 2003 to 2007: Chand (2009) indicates that the sixth merger wave began by mid-2003 with significantly increased merger activities in the U.S., Europe, and Asia. He notes crossborder acquisitions accounted for more than 43 percent of the total value of all M&As by European firms and 13 percent of the total value of all M&As by American firms. The wave was mainly driven by demand from private equity firms. Due to the low interestrate environment, the use of debts to finance the mergers, once again, became vigorous during this period. Well-known mergers noteworthy in this wave are JP Morgan Chases acquisition of Bank One, Procter & Gambles acquisition of Gillette Co., and MCIs acquisition of Verizon (Reybern, 2010). Like the previous waves, the sixth merger wave came to an end with the globally financial crisis of 2007 and the economic recession of 2008.

Altogether, it is undeniable that mergers are crucial for business growth. Especially, when the economy is in the downturn, M&A is a strategy to overcome the crisis. However, commencement of a merger wave, to a certain extent, is an indicator of financial market crashes, also. In the future, it is likely that another merger wave will occur, thus, timing the next wave is important for businesses to design sound business strategies to cope with unexpected situations.

References
Yong Rin, P. (2011). Global M&A Market Outlook and Its Implications. Retrieved from

http://www.kcmi.re.kr/Eng/cmweekly/down1.asp?num=58&seq=1&filename=(20111213)Weekly_eng.pdf Gaughan, P.A. (2011). Mergers, Acquisitions, and Corporate Restructurings.5th edition. Wiley. Chand, G. (2009). Mergers and Acquisitions: Issues and Perspectives from the Asia-Pacific Region. Asian Productivity Organization, 2009. Retrieved from http://www.apo-

tokyo.org/publications/files/ind-38-m_a.pdf Reybern, S. (2010). The 12 Biggest Mergers in American History. Retrieved from http://www.billshrink.com/blog/6834/the-12-biggest-mergers-in-american-history