It is generally accepted that the 1990s merger movement has been motivated by different
factors from earlier ones in the 1960s or the 1970–80s. Researchers in earlier periods
found specific characteristics of merging companies, measurable with financial ratios.
Factor analysis and logit regression are used to identify characteristics of merging firms
that disclose motives for mergers in the 1990s. Results show that acquiring companies in
1996 are significantly more profitable than both target companies and nonmerging
companies. Findings support views that modern mergers are primarily motivated by
companies with above average margins seeking profit improvement, by rapid expansion
of sales.