28/04/2003

The appearance of mergers and acquisitions shows its first marks in the world industrial scene at the end of the 19^th century. Particularly during the period 1885-1920 there is an increasing course for mergers and acquisitions in the manufacturing and mining enterprises in the United States of America, which seem to unthread the 1200. On the contrary the major increase of mergers and acquisitions in the United Kingdom came during the decade of 20s. The development of techniques of massive production gave a new form to productivity and companies like Unilever and ICI that were dominating in the British industry, associated with smaller companies. So the great blooming in the industry at that time was mainly due to the mergers and acquisitions of that period and of the internal development of the country.

But until that time mergers and acquisitions were geographically restricted. There were no multinational companies or mergers of firms that corresponded to different foreign markets. So the enterprises wished that could enter into new markets and approach a new and unknown to them public. The most tempting but also at the same time the most demanding market for that period was Europe. So after the crisis of 1929 and the industrial and economic recession, mainly in Europe, due to the 2^nd World War, a new wave of mergers and acquisitions appears in the world market in the decade of 60s. This second raising of the phenomenon was a crucial indication of the internationalization of the world economy. Hence it was inevitable that a tendency was created towards the structure of greater firms in volume but also in profits, that would play an important role in the national competition. Some characteristic examples are the British Leyland, which was created from the merger of some British motorcycle manufacturers and ICL, which was established to be the major company in the computing industry in Great Britain.

The third and largest wave of mergers and acquisitions was observed during the decade of 80s. The basic element of this raising of the phenomenon was the requirement of the market for entire control. At this point the management of each enterprise is considered to be as a “merchandize” towards selling. In this decade the disagreements were put behind so as to be confirmed that mergers do not continue to satisfy the need for improvement, but presuppose the adequate commanding for effective use of the capital that will come into their possession after the completion of the merger. A good example of such a case is the successful merger of General Electric with RCA in the USA.

All of the above waves of mergers and acquisitions occurred in different time periods and for various reasons. But all of them have a common characteristic. In all three periods of the rising of the phenomenon a crucial increase in the level of the stock prices at the stock market is observed. This association of the stock level prices with M&A, was not only observed in the long run, but also in the short run. The increase in the number of M&A was followed by a sudden increase in the level of prices in the stock market. So the M&A in the decades of 1920s, 1960s and 1980s were not only beneficial for the advisors, but were also directly beneficial for the shareholders of the companies.

What prevails today for Mergers and Acquisitions

In the early beginning of 90’s a programme for internal market is applied in Europe that creates many changes in the economic conditions of the present European Community. This has a consequence of the rising tendency in the total value of mergers and acquisitions in the total value of mergers and acquisitions in the European area.

In 1996 it was a very important year for the world economy and especially for the American. At that year more than 10000 mergers have been agreed, making the total number of mergers almost double as compared with the year 1989. Two years later, in 1998, the number increases to many thousands, with the important characteristic that in the ending of that year a significant number of the biggest ever mergers in the world economic history were fulfilled.