being important. Significant merger activity took place in petroleum, primary metals and food products.The third period started in the 1940’s, after the Second World War. Over that period a striking change in the form of merger took place. Horizontal and vertical mergers have declined in importance while conglomerate mergers have become predominant.Fourth Wave and the Leveraged BuyoutAs the conglomerate wave began to ebb, a new vehicle surfaced for giving dissatisfied shareholders an opportunity to sell their stock in underperforming assets. The tender offer enabled buyers to bypass CEO’s and boards of directors to appeal directly to shareholders. Typically, a tender offer gave shareholders the opportunity to sell their shares at prices substantially above the going market value, when a buyer, seeing the potential for increasing the value of the assets, was willing to pay a premium for them. In many cases, this would spell bad news for underperforming managers, who were likely to be replaced by the new owners. In other cases, buyers might retain managers, but under new restructured agreements or understandings about how the assets would be managed. Most often, the tender offer was associated with a corporate raid, or a hostile takeover attempt, that is, one resisted by the target company’s board of directors.The fourth wave was different from the previous ones in that both hostile takeovers and leveraged buyouts played a significant role, stimulated by aggressive investment bankers, corporate raiders, and heightened shareholder activism. The fourth wave was also characterized by increasing foreign participation, especially following the relative decline in the value of the dollar and the reduction of federal taxes on capital gains in 1986. During the merger and acquisition boom of the 1980’s, leveraged buyouts spurred a dual revolution in the American economy- one in corporate finance, another in corpor...
