During the third merger wave (1965-1989), corporate marriages involved more diverse companies. Acquirers more frequently bought into different industries. Sometimes this was done to smooth out cyclical bumps, to diversify, the hope being that it would hedge an investment portfolio.
Starting in the fourth merger wave (1992-1998) and continuing today, companies are more likely to acquire in the same business, or close to it, firms that complement and strengthen an acquirer’s capacity to serve customers.
Buyers aren’t necessarily hungry for the target companies’ hard assets. Now they’re going after entirely different prizes. The hot prizes aren’t things—they’re thoughts, methodologies, people and relationships. Soft goods, so to speak.
Many companies are being bought for their patents, licenses, market share, name brand, research staffs, methods, customer base, or culture. Soft capital, like this, is very perishable, fragile, and fluid. Integrating it usually takes more finesse and expertise than integrating machinery, real estate, inventory and other tangibles.