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Merger and acquisition (M&A) activity in the UK and other countries has demonstrated a
pattern of peaks and troughs throughout the twentieth century, with the last major
increase in the mid-1980s. Now, in the mid- 1990s, there is seemingly a fresh peak in
M&A activity. According to Dearlove (1995) the number of M&As submitted to the Office
of Fair Trade (OFT) in 1994 was 381, 23 per cent up on 1993, and the trend seemed to
activity, as in the past each merger boom was explained by different factors. In the 1920s it
was because of the switch to mass production techniques, companies wanting to achieve
economies of scale. In the 1960s it was caused largely by a “big is beautiful” image resulting
from the internationalization of markets. The boom in the 1980s, on the other hand,
was probably sparked off by a combative approach to corporate control whereby the
However, despite their differences, one factor appears common to most merger booms and
that is that they coincided with a surge in the stock markets (Dearlove, 1995). In the latest
craze for M&As, this trend has been broken. Dave Elliot, head of the OFT’s Economic
Branch, suggests that it is related merely to fashion, for example, a trend towards
conglomeracy
started in the 1970s, followed by a demerger pattern in the late 1980s early 1990s, and this
seems to be continuing (Dearlove, 1995). The privatization of many state industries has also
been a contributing factor in the latest M&A and demerger activity.
Much attention has been focused in the literature on M&As (Cartwright and Cooper, 1996;
Hogan and Overmyer-Day, 1994) which has emphasized that mergers are not the seemingly
easy route for organizational growth, diversification or continued survival (Datta, 1991)
which many managers believe. Rather than increased profitability, M&As have come to be
associated with a multitude of potentially costly employee problems.
Typically, M&As are considered to generate high levels of employee uncertainty, distrust
and resistance to change which adversely affects morale and leads to dysfunctional
behaviour, high labour turnover and stress. Increasingly, it has been demonstrated (Buono et
al., 1985, Cartwright and Cooper, 1996; Nahavandi and Malekzadeh, 1993) that problems of
Sources from: Simon C. Hoare , Sue Cartwright , “The human aspects of demerger:
a new agenda for research?