Merger waves: a survey of the literature

I survey the empirical and theoretical literature on merger waves, beginning with the very early work on aggregate waves and moving on to the study of industry-level waves and finally cross-border activity. I argue that although there is no single explanation for merger activity or waves-and there is room for market misvaluation to play a role-the bulk of the evidence points to the conclusion that merger waves are the response to shocks to industries’ operating environments, facilitating efficient asset reallocation, where the clustering is largely driven by the necessity of conducive financing conditions for the mergers. I conclude by discussing some promising areas for future work on the consequences of merger waves.