Shakeout is a term used in business and economics

Economics

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 to describe the consolidation

Consolidation (business)

Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...

 of an industry

Industry

Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

 or sector, in which businesses are eliminated or acquired

Mergers and acquisitions

Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...

 through competition. It may also refer to a situation in which many investors exit their positions

Position (finance)

In financial trading, a position is a binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, for a given price....

, often at a loss, due to uncertainty in the market

Financial market

In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...

 or recent bad news circulating around a particular security or industry.

Shakeouts can often occur after an industry has experienced a period of rapid growth in demand followed by overexpansion by manufacturers. Large, diversified companies are often most able to endure a weak business climate and can benefit from shakeouts. A shakeout of investors and internet businesses occurred during the dot-com bubble

Dot-com bubble

The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...

.