Free Exchange: Surf’s Up

The Economist, May 19th 2012

“Merger waves mean that markets can consolidate rapidly.  The next one is coming…

In 1900 America had aound 500 carmakers; by 1908 it had 200.  In 1960 Britain had 16 banks; ten years later it had just six.  From soft drinks to steelworks, plenty of other industries have seen similar patterns.  Mergers happen in waves, so the number of firms collapses suddenly rather than dwindling over time.  And the next one may soon crest… 

These findings suggest conditions are now aligning for a perfect merger wave.  A global shock has hit most industries, and there is plenty of spare capacity.  Many businesses, particularly in Europe, face deregulation as lagging economies seek to boost competitiveness through structural reform.  The merger impulse is there.”

Watch for the perfect wave so you can surf it properly!

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