Summary:

Sales growth -> Industry life cycle -> Types and motivations of mergers.

Stage: Pioneer / development phase.
Characteristics: Firms need capitals to fund development as there is little or no profit.
Motivations: Acquiring unique capabilities and resources, such as capital and management talents.
Types of mergers: Conglomerate and horizontal mergers.

Stage: Rapid accelerating growth.
Characteristics: High profit margins, accelerating sales and little competition.
Motivations: Acquiring unique capabilities and resources, such as capital, to expand existing capacity.
Types of mergers: Conglomerate and horizontal mergers.

Stage: Mature growth.
Characteristics: growth potential still exists but few new entrants to the market.
Motivations: Cost synergy (economy of scale), increasing operational efficiencies.
Types of mergers: Horizontal and vertical mergers.

Stage: Stabilization and market maturity.
Characteristics: Increasing competition and capacity constraints.
Motivations: Cost and revenue synergies, external growth, increasing market power, unlocking hidden value.
Types of mergers: Horizontal mergers.

Stage: Deceleration of growth and decline.
Characteristics: overcapacity, declining profit margins and lower demand.
Motivations: All kinds of motivations.
Types of mergers: Horizontal, vertical and conglomerate mergers.