- A series of mergers since 2015 has left many industries dominated by a few global giants.
- The semiconductor, health care services and media industries have seen the most consolidation.
- Consolidation brings benefits of scale, but also can draw regulatory scrutiny.
As a wave of mergers and acquisitions has swept the business world in recent years, more industries have come to be dominated by just a few massive companies. In many sectors, competitors have joined forces to build scale and drive innovation amid mature growth.
But the long-run success of these mega-companies is likely to vary. Consolidation delivers economies of scale but can make it harder to react nimbly to new competition or shifts in technology. Merged companies also may find themselves in the crosshairs of regulators concerned about concentrated market power.
We take a closer look at the merger wave in five charts:
1. Global M&A activity has been high for four years.
Corporate consolidation has gained pace steadily since the global financial crisis, driven by a combination of cheap money and balance sheets boosted by a strong stock market. Although the sheer number of deals is not new, the size of the deals is historic and creating dominant companies.
This year is on track to be an unprecedented fourth consecutive year with more than $2 trillion in proposed M&A transactions. There have been more than two dozen deals valued at more than $10 billion each this year, most notably megadeals between Disney and 21st Century Fox, CVS and Aetna, and AT&T and Time Warner.