Consolidating industry need that

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In the early 1900s, the first wave saw the mergers that created steel and oil monopolies, while there was massive deregulation in the 1980s and 1990s that led to the sixth wave in banking and telecommunications. 2015 saw the biggest year ever for M&As: There was .7 trillion in announced mergers and acquisitions, nearly doubling the amount from 2014.

That trend continued in 2016, led by notable deals between AT&T and Time Warner, and Bayer and Monsanto. In recent years, the Federal Reserve has kept interest rates very low, which has boosted stock prices despite the weak economy.

It tends to be these companies that get the ball rolling in the process of industry-wide consolidation.

This, however, does not always mean doom and gloom for the smaller companies and industry players.

The ebb and flow of the business cycle creates a dynamic environment across many different industries.

But when larger competitors merge with fellow large companies, small businesses have even less leverage and support in the marketplace. Fewer competitors in an industry means consolidated businesses can first lower prices to squash smaller competitors, then raise them without worrying about losing customers.Once that dominance is established, it’s more difficult for entrepreneurs to enter that sector—a trend we’ve seen, as the rate at which new businesses are created in the economy has Of course, we’ve seen all kinds of economic trends ebb and flow throughout time, including waves of M&As.There’s reason to expect consolidation to at least slow in the coming years.Instead of fastidiously joining in this resistance band, it is suggested that smaller companies understand the trends, and the way that the industry is moving.By gathering an understanding of the direction moving forward, these businesses can better prepare themselves for what is to come, solidifying their ability to take on challenges as they arrive.

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