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Part 3: The Future

Part 3: The Future

Merger outlook: you haven't seen anything yet

The solid majority of the mergers and acquisitions which took place in 1998 and 1999 – especially the so-called mega mergers – involved at least one company based in the United States or the United Kingdom. Even today, the media in continental Europe occasionally refer to the swiftness, size and severity of mergers and acquisitions as an "Anglo-Saxon" way of doing business. But things are changing. The pace of corporate integration within and beyond the European Union continues to accelerate. M&A activity in Japan has also increased, although the focus remains on domestic deals.

Note

Suddenly, a world where truly global corporations may soon become more important and influential than nation states does not seem farfetched.


Will we have only three players per industry worldwide?

Within the next five to ten years – depending on the industry – consolidation will reach a peak, as will the merger and acquisition activity which will drive it. Beyond that time frame, only smaller acquisitions will occur, as major players augment their product, regional or skill portfolio. What does this mean for you? Be among the first or be left with the leftovers – this is entirely your choice.

Note

The dawn of the global conglomerate with $1 trillion in annual revenues is inevitable in the short- to medium-term.


When will we see the first truly global mega-merger?

Note

Instead of the old merger equation of "one plus one is more than two," we will see companies facing the challenge of combining "one plus one plus one" into more than three.


As we mentioned earlier, DaimlerChrysler marks not the end of an era, but rather a watershed. The result of this impending sea change will mean that the continuation of the current merger wave will see more European, American and Asian companies coming together. Instead of the old merger equation of "one plus one is more than two," we will see companies facing the challenge of combining "one plus one plus one" into more than three.

To what degree will mature industries be reshaped? And what is the future of "new" industries?

The meshing of companies from new, entrepreneurial industries and those from traditional or smokestack industries will occur for a variety of reasons, including:

  • providing new channels to buy and sell;

  • securing entrepreneurial staff to enable companies in older industries to transform themselves;

  • re-configuring value chains.

Will the value of the brand as a point for customer recognition increase tremendously?

Established brands will provide the consumers with a feeling of familiarity and stability in a rapidly changing world. This need or ppreciation of familiarity is having a significant impact on the business- to-business world as well. But as global brands spread, the name of a corporation that ultimately controls those brands becomes less important. Consumers are already identifying more with product brands such as Dodge, Mercedes, Tempo, Huggies, and Snickers than with the companies behind those products.

Note

Consumers are already identifying more with product brands such as Dodge, Mercedes, Tempo, Huggies, and Snickers than with the companies behind those products.


What does all this mean for post-merger integration?

The ultimate outcome of most corporate mergers will continue to depend on the success of the merger integration effort. That will not change. What will change are the most accurate measures of such success, given the trend toward growth mergers involving similarly-sized partners.

The pursuit of growth will create winners who distinguish themselves by expertly blending time-tested post-merger integration techniques with new but still unproven techniques. For others, the economies of scale they had hoped for may soon reach a point of diminishing returns: foreign cultures are much more likely to clash; complex product and service lines are in danger of becoming hopelessly entangled; and some household brand names of previous generations will disappear entirely.



  

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