consolidation

noun con·sol·i·da·tion \ kən-ˌsä-lə-ˈdā-shən \
Updated on: 13 Oct 2017

Definition of consolidation

1 :the act or process of consolidating :the state of being consolidated
2 :the process of uniting :the quality or state of being united; specifically :the unification of two or more corporations by dissolution of existing ones and creation of a single new corporation
3 :pathological alteration of lung tissue from an aerated condition to one of solid consistency
4 :the process by which a new memory is converted into a form that is stable and long-lasting
  • Initially fragile memories can gain stability via consolidation, but the extent to which sleep contributes to this process is unresolved …
  • —John D. Rudoy et al.

Examples of consolidation in a Sentence

  1. the consolidation of several intelligence agencies into one super agency

Recent Examples of consolidation from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'consolidation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of consolidation

15th century


Financial Definition of CONSOLIDATION

consolidation

What It Is

In business, consolidation refers to the merger of several companies in a specific industry, which typically concentrates market share in the hands of a few large companies.

How It Works

Perhaps one of the most obvious examples of industry consolidation can be seen in the evolution of public accounting over the twenty years. In 1986, nine large accounting firms dominated the industry. But in 1987, Klynveld Main Goerdeler (KMG) merged with Peat Marwick Mitchell to create KPMG Peat Marwick, reducing the number of top-tier players to the "Big Eight." Then in 1989, Ernst & Whinney merged with Arthur Young, and Deloitte Haskins & Sells merged with Touche Ross, further consolidating the industry to the "Big Six." In 1998, the merger of Price Waterhouse and Coopers & Lybrand created the "Big Five," and the dissolution of Arthur Andersen in 2002 left the "Big Four."

Another, more recent example can be found in the online brokerage business, where after several rounds of consolidation, three major competitors have emerged: E*Trade (following its acquisitions of BrownCo and HarrisDirect), Ameritrade (which recently won a bidding war for TD Waterhouse), and Charles Schwab.

Why It Matters

One of the driving forces behind consolidation is the operating efficiencies that often arise from mergers. Because the merged entities can merge existing operating structures and reduce any overlap, there is usually an opportunity to realize significant cost savings, as well as related revenue synergies. There are numerous other reasons which might cause a company to acquire a rival, like gaining an expanded geographic reach, a larger customer base, a broader product line, etc.

Like oligopolies, duopolies, cartels, and other environments in which a few companies control all or a significant portion of an industry, consolidations alter the balance of power in an industry. Investors should carefully consider the ramifications that merger and acquisition (M&A) activity might have on the competitive landscape.


Medical Dictionary

consolidation

noun con·sol·i·da·tion \ kən-ˌsäl-ə-ˈdā-shən \

medical Definition of consolidation

:the process by which an infected lung passes from an aerated collapsible condition to one of airless solid consistency through the accumulation of exudate in the alveoli and adjoining ducts
  • pneumonic consolidation
; also :tissue that has undergone consolidation
  • areas of consolidation


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