Excess capacity in many industries often drives M&A activity as firms strive to achieve greater economies of scale and scope, as well as pricing power with customers and suppliers.

Question

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Excess capacity can create fierce competition and drive down prices, leading firms to search for ways to achieve greater efficiency and market power through M&A activity. By combining their resources and operations, firms can reduce costs, increase output, and differentiate their products and services, giving them a competitive advantage over rivals. M&A can also help firms expand into new markets, acquire new technologies or talent, or consolidate their positions in a rapidly changing industry landscape.

Excess Capacity in Many Industries Often Drives M&A Activity as Firms