Covid Policies Have Caused Industrial Consolidation

by Fiona Harrigan and Peter C. Earle
The American Institute for Economic Research

Yet another side effect of the government’s response to Covid-19 is shining through in recent business headlines. In a widely-touted deal last week, Salesforce acquired Slack for over $27 billion. The purchase is one of the largest ever in the software industry and is the largest cloud software deal ever.

While the Salesforce acquisition is one of the highest-profile deals in recent memory, it is only one of the latest in a long chain of consolidations that have occurred during the pandemic. Since the pandemic began, the pace of corporate mergers, acquisitions, and restructurings has been accelerating. Firms normally take such actions when they see an opportunity to increase profits––for example, via economies of scale or increased productivity––or when the buy versus build proposition for a sought-after brand or product shifts.

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