What determines acquisition activity within an industry?

Acquisitions in the UK have shown a steadily rising trend over recent years and one of the noticeable features of the current takeover wave is that it is concentrated in certain industry sectors. This article outlines five factors that may explain this variation in acquisition rates across industry sectors. An empirical investigation based on data from 200 UK industry sectors is then described which reveals that exposure to deregulation is in fact the most important single discriminator between industries with high and low acquisition activity. Industry concentration and industry growth rate are also supported as determinants of the takeover rate within an industry. The results suggest that external changes to industry regulation may act as a greater trigger to industry restructuring than internal industry dynamics, and raise important issues for policy makers given the contradictory findings on the economic benefits of M&A activity.