We are now experiencing another wage of mergers across the board, cars, pharmaceuticals, telecommunications, finance, the list goes on. But from the academic studies, most mergers, like marriage, are a triumph of hope over experience. The real beneficiaries are the investment bankers who cobble together the deals and then pick them apart. It comes down to a mixture of fear, ego and business strategy. Many companies feel that safety comes through size, especially in markets that are becoming increasingly global, with the breakdown of trade barriers and the rise of the internet.
Companies merge for defensive reasons.
As it turns out the Disney-ABC deal has been far from an unqualified success. It is enormously difficult to graft one company's culture on to another. It took years for Time and Warner to learn how to operate with each other. At the beginning, officials from each company spent as much time fighting each other rather than working with each other. Running a massive company is also enormously difficult, although it can be done as Jack Welch proved at General Electric, a US conglomerate.