In the 1960s a typical merger takeover transaction was a friendly takeover, usually paid for with stock of the acquiring company rather than cash. Such mergers were mostly undertaken by a large corporation or a smaller public or private company; and the target companies were outside the acquiring firm's main business sector. Such unrelated diversification was common among large companies. The critical feature of 1960s acquisitions, then, was unrelated diversification. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay However, by the 1980s a large number of mega corporations or conglomerates formed as a result of the merger and acquisition wave of the 1960s were performing poorly, especially in the aftermath of the energy price shocks of 1974 and 1979. Takeover activity began to accelerate in the early 1980s and grew for much of the decade. The acquisitions of the 1980s were characterized by massive use of financial leverage. Companies bought other companies through leveraged buyouts, borrowing instead of issuing new shares, or using only available cash. Other companies have restructured, taking on debt to buy back their shares. Finally, some companies have been taken private through leveraged buyouts (LBOs). In an LBO, a group of investors, often allied with mandatory management, borrow money to buy back all of a company's publicly owned shares and take the company private. The use of junk bonds increased substantially throughout the 1980s along with leveraged buyouts. In the mid-to-late 1980s, more than 50% of junk bond issues were related to takeovers or mergers. In this period, isolated diversification was widespread among large companies. Furthermore, the share of conglomerates without dominant activities increased from 7.3% to 18.7%. There has also been a notable movement towards diversification among companies that have retained their core business. The driving force of the 1960s wave was high corporate stock valuations and large corporate cash flows. However, management was not willing to pay the high cash flows in the form of dividends and, on the other hand, was able to issue shares at attractive terms, so it turned its attention to acquisitions. The size of the average target in the 1980s had increased significantly from the modest level of the 1960s. In 1989, 28% of the Fortune 500 companies were acquired, and many transactions, especially large ones, were hostile. Furthermore, the medium of exchange in the acquisitions was cash rather than shares, and they were characterized by heavy use of leverage. Companies were bought by other companies through leveraged buyouts, by borrowing rather than issuing new stock, or using only cash on hand. Other companies have restructured, taking on debt to buy back their shares. The 1980s were also characterized by the latest forms of takeovers, which included "bust-up" takeovers. The failed acquisitions resulted in a substantial portion of the target's assets being sold off to other companies. Another form of merger occurred around this time: the hostile takeover. Hostile takeovers attract strong positive and negative reactions. They typically result in wealth gains by major shareholders of target companies. They exist,.