Davos: Why M&A won't go away

Merger M&A
M&A to make or break markets in 2015?   

Activist shareholders in 2014 helped the mergers and acquisitions (M&A) landscape finally return to the pre-credit crisis days of 2007 – and they'll continue to make news over the next year.

"You're going to see a continuation and continued sophistication of the activist movement," John Studzinski, global head, Blackstone Advisory Partners, who has advised on deals like the global restructuring of AIG, told CNBC.

"The activist movement is a proper asset class now – a group of alternative assets. Those people are going to continue to be active regardless of the nature of the stock market."

Probably the most high-profile activist tussle of 2014 was the battle for control of Botox maker Allergan, which activist investor Bill Ackman of Pershing Square tried to take over with the help of Valeant Pharmaceuticals. It concluded, however, with another pharmaceutical group, Actavis, buying Allergan in a $66 billion deal but not before Ackman and Pershing Square made a tidy profit from their investment.

A clinical technician holds a syringe and a vial of Allergan Botox, produced by Allergan.
Jason Alden | Bloomberg | Getty Images
A clinical technician holds a syringe and a vial of Allergan Botox, produced by Allergan.

The value of M&A deals around the word reached $3.60 trillion in 2014, up 26 percent from 2013 and the third highest volume on record, according to Dealogic.

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This year, the "continued revitalization of leveraged buyouts will continue," according to Studzinski -- but company's boards may become more cautious as the global economic uncertainty continues.

Policy and regulation could also be a key reason for the decision to launch a takeover. Some U.S. companies, including Pfizer in its bid to buy AstraZeneca, came under fire for attempting deals motivated in part by tax inversion, which involves buying an overseas company and then moving your base overseas for tax purposes, so that overseas revenues will be taxed at a lower rate, in 2014. This may halt if promised changes to U.S. tax laws come through.

Tax inversion anyone? A year in M&A deals

"What was really behind this wasn't venal corporates stashing money abroad, it was the failure of the US tax system," Mark Malloch-Brown, senior advisor at FTI Consulting, told CNBC.

"This is a problem Washington created for itself, and a problem I hope they can address, because otherwise a surge of American investment overseas will be accompanied by domestic controversy."