2nd and 3rd Wave : Redefining corporates

2nd Phase 1916 to 1919

When the whole world was reeling under pain of 1^st world war U.S was seeing a change that gave birth to new structure in USA industrial arena. This was largely different from 1^st wave which was toward monopoly formation to an oligopolistic structure. This wave was due to booming stock market which made raising cash easier. At the same time being boomed by success against large monopolies like standard oil has lead to promote oligopoly. Thus Clayton act was passed which made anti-trust law stricter and anti monopoly which promoted oligopoly.  This wave was result of splurge in investment post WWI, rising stock prices and capital investment kept the investors upbeat.

This phase saw emergence of many automobile giant. Ford motors were formed by vertical merger from the finished car back through steel mills, railroads and ore boats to the iron and coal mines.  The wave ended suddenly with 1929 great depression when stock market crashed. It continued for long 13 years.  

3^rd Phase 1965 to 1969

It took nearly 36 years for companies to come to came back to the terms of merger and 3^rd wave was primarily the formation of big and large conglomerate. Most of these were diversified conglomerate merger. The amount of firms merged in 1968 was nearly twice the peak no. of firms merged earlier. From 1959 to 1966 nearly 1000 firms were absorbed every year. However in 1967 to 1968 there was sudden splurge in no. of merger when around 2400 mining and manufacturing firms merged and vanished. Many large firm were either acquired or acquiring firm. However, merger has taken signified tide since 1950’s.  

This wave synchronized with region of economic prosperity of USA and many firms got enough resources to acquire another firms. Major conglomerates like IT&T (Harold Geneen), LTV (Jimmy Ling), Teledyne (Henry Singleton) and Litton (Tex Thornton) were created. Messrs. Geneen, Ling, Singleton and Thornton were viewed as visionaries and heroes of the new concept of business organization.

With another anti-trust arsenal Celler-Kefauver act with Clayton and Sherman act third merger wave faced stricter anti-trust music. Johnson was stricter however in 1969 next president Nixon was relaxed.  However many of these conglomerate stock crashed and companies can’t take benefit from the diversification. However these stock crashes continued and this put a broke on the merger wave for the time being.  Many companies found that it is difficult to manage conglomerates which are spread over large market and large countries so many companies chose to divest or they failed miserably as there was no synergy in companies merged.