Research Handbooks in Corporate Law and Governance series
Edited by Claire A. Hill and Steven Davidoff Solomon
Chapter 1: Mergers and acquisitions: a cyclical and legal phenomenon
Mergers and acquisitions (M & A) have a rich history in the American economy. Over the course of the past century and a half, merger activity has proceeded in waves, each wave inevitably followed by a regulatory and legal response. Modern merger activity emerged during the late nineteenth century. The succeeding trust era, characterized by monopolies and frenetic acquisition activity, resulted in new regulations in the 1890s and early nineteenth century. Merger activity created vast conglomerates during the 1960s. During the 1970s and 1980s, the leveraged buyout boom led to the development of modern M & A legal doctrine. The late 1980s and 1990s saw the embracing of new participants such as private equity firms. Today, the Internet Age and globalization have led to the current M & A market, characterized by transactions that are global, very large (multi-billion dollar), and sometimes both. The rich history of M & A, with its alternating cycles of activity and quiescence, illustrates an important role for law. The law is both a response to M & A activity, implementing ex post facto regulation, and a guiding force, spurring waves of M & A activity throughout. There is no doubt that as M & A continues its cyclical life, the law, lawyers and those who study the law will continue to play an important part in this economic phenomenon. From its origins – when law mattered little – M & A has become a highly regulated business.