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ion by arguing that focused corporations which know their customers, have deep knowledge and understand their missions were better able to create value in contrast to companies that applied the diversification concept of value creation.

In summary of the merger and acquisitions activities in 1960s and 1980s, it can be assert that conglomeration and diversification were the dominant trends in 1960s contrast to specialization and consolidations phenomena of 1980s. However, empirical evidence on value creation tends to suggest that significant merger and acquisitions of 60s reversed subsequently and did not lead to profitability. According to Shleifer and Vishny (1994) many of the conglomerates created in 1960s were destroyed in 1980s, which provides the evidence of failure in notion of “merger & acquisitions and value creation” that was not expected in 1960s. 

The Current Wave, 1990-Present:

According to Gaughan (1999), in contrast to 1960s decade of conglomerates and 1980s period of Leveraged Buyouts (LBO), the dominant deals of 90s were designed with a view to fit strategically among merging firms. Moreover, the forces behind the merger and acquisitions activities were different than earlier periods and corporate sector seen some of mega-deals during that period. For instance in 1996, the top 100 deals of merger and acquisitions were worth more than $1 billion or approximately 53.5% of total transactions (see Sikora, 1997).

The era of 90s was said to the decade of Consolidation; which means combination of operating and management resources between two companies as well as their stocks, assets and liabilities (see Lipin, 1997).

Furthermore, in 1990s, stable economic environment, relax antitrust laws, stock market's favourable conditions and low cost of capital were the catalyst of merger and acquisition trends. However, still many firms failed to create shareholder value and according to study by Mercer Management Consulting Inc. (1997) 48 percent of mergers failed to generate shareholder value in 90s comparative to 57 percent failure of 1980s (p.39, cited in Smith and Hershman, 1997). Nonetheless, the firms in 90s believed that larger pools of assets are essential either to survive or to grow but the question remains that how to discover ways to create value for portfolio of firm's businesses? (see Goold and Luchas, 1993). To resolve this anomaly, three possible explanations have been identified:

Firstly, as shown by Porter (1985) that diversification should be limited to companies which have synergy potential and without synergy a diversified business is nothing more than mutual fund. He also suggested that synergies can be attained when the portfolio of businesses create values more than sum of its individual components. Besides, the notion of synergy should be based on economies of scale and cost saving strategies (see Porter, 1985).

However, in practice it has been found by studies such as Chatterjee (1992) that gaining synergy is not an easy task and most acquisitions and merger gains arise from either disposals of assets or from restructuring r本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。