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Chapter 14. Mergers and Acquisitions (M&... > The Scope of the Phenomenon

The Scope of the Phenomenon

Mergers and acquisitions are among the most exciting areas in the world of corporate finance. After the wave of acquisitions of the 1980s subsided, Wall Street experienced another M&A period in the mid-1990s. This wave emphasized strategic mergers and acquisitions, as opposed to the late 1980s' wave, which was characterized mainly by leveraged buy-outs (i.e., acquisitions financed with high-yield debt) by financial players.

In recent years, we have witnessed a wave of extremely large mergers and acquisitions; when such deals concerned the mergers and acquisitions of young high-tech companies, their dollar values were even higher than the amounts raised by such companies in stock exchanges. For instance, the total value of mergers and acquisitions which took place in the United States in 2000 exceeded $1.6 trillion as opposed to equity offerings of only $110 billion, as reported by the law firm Hale and Dorr. Approximately 9,500 mergers were announced, as compared with around 300 IPOs. The technology sector constitutes a principal component of this field, with around 2,500 deals executed in the computer software, supplies, and services industry. However, it is important to note that of this considerable number of deals, the largest 200 accounted for more than $1 trillion, the biggest of all being the merger of AOL and Time Warner (a merger worth $160 billion), which was approved by the authorities only in 2001.


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