Characteristics of a consolidating industry
An investor faced with an opportunity to invest in two competing companies may reduce risk by simply investing in both and merging them.
Rollups are often part of the shakeout and consolidation process during an economic downturn or as new market sectors begin to mature.
However, as a general indication of industry consolidation, this provides a much better view than a simple time period comparison.
Note the potential data bias in comparing the number of companies today against the number of deals historically.
Rollups of complementary or unrelated companies are also done to: Kraft Foods (now renamed Mondelēz International) was an early example of a rollup, in the dairy industry.
In other words, if there are 1,000 widget makers in the world, but only five deals per year for those companies, that suggests that the industry for widget makers is fragmented and not consolidating.
Again, separated into four main clusters you can see a few industries that have a lot of deal activity relative to the number of companies, including Internet Software/Services, Prepackaged Software, and Contract Drilling.
Combining the two, then, with the ratio of deals to companies annually for each industry, we get a nearly impossible-to-read heat map, sorted by 2017 results to show current consolidation.
However, with increasing globalization and interconnectedness, an industry consolidating in one part of the world could easily trigger consolidation elsewhere.
Conversely, analysis at the sector level will widen the view. No one has a complete record of every single company in the world or every single deal over the last 20 years, so any analysis is more guideline than absolute.