Mergers and acquisitions;

              Mergers and Acquisitions
by E. ROBERT BILLINGS Partner, Detroit Office
Presented before the Detroit and Kalamazoo Chapters of the National Society for Business Budgeting, Jackson, Michigan—April 1963
IN THE PAST DECADE, in fact ever since World War II, one of the phe-nomena of our business economy in the United States has been the increase in size of our business entities and the resultant decline in the proportionate volume of business conducted by our small corporations, partnerships, and individual proprietorships. There are many reasons for this, of course—economies of operation through volume purchasing, mechanized manufacturing processes resulting in lower labor costs and more defect-free and uniform products, ability to hire and retain more competent management because the higher cost of such management is spread over greater volume, more efficient research and development programs and departments—one could go on and on. We are not gathered here this evening, however, to dis­cuss
the relative merits of big business and small business—whether big business is good for our economy as a whole and whether we, as individuals, are the benefactors of this phenomenon through lower prices and improved products. Instead, let us take a look at some of the ways in which big business gets big and some of the problems and pitfalls to look for in the process, so that we can be forewarned and can plan ahead to meet intelligently or avoid and circumvent as many of them as possible.
EXPANSION
Basically, I think we can all agree that there are two principal means by which a business entity can expand in size—growth or expansion from within and mergers and acquisitions from without —it's as simple as that. But while it may be simple to say, either means is not simple to accomplish. Let us consider first, and rather briefly, growth or expansion from within, because I want to spend most of the time discussing mergers and acquisitions from without.
GROWTH FROM WITHIN
Growth from within can be accomplished either by expanding the market for present products or by developing new products, either entirely new or related to present products. One of the greatest single
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