The emergence of a national market, closely linked to the technology of mass production, drove many companies into each other's arms. Industry titans and bold financiers created auto, electric utility, oil, finance, and other giant combines, culminating in the formation of U.S. Steel, the world's first billion-dollar company. One hundred years later, chief executive officers, caught in a fierce struggle for survival in a world of tough global competition, technological upheaval, and deregulation, are seeking merger partners at home and abroad to expand their global market share and improve earnings. But takeover booms always end, for many reasons. A common theme is that booms sow the seeds of their own destruction.
Early success breeds excess, as takeover prices escalate and any financial margin of safety recedes.
Even more important, corporate chieftains vastly overestimate their ability to knit together their new, extremely expensive, mega-enterprises. Corporate cultures clash, turf wars explode, bureaucracies expand, and customers are ignored. Corporate visions of synergy and market dominance turn into the reality of unwieldy dinosaurs and lost opportunities. The list of poorly managed deals grows, and divestitures become all the rage. Take the deal-mania of the 1980s.