Despite a proliferation in activist investing, one thing that's unlikely to repeat in 2015 is a version of Valeant Pharmaceuticals International Inc.'s (VRX) $60 billion-plus hostile takeover attempt for Allergan Inc. (AGN) , said Gregg Feinstein, head of M&A at Houlihan Lokey.
Feinstein spoke as part of a panel discussing the investment strategy during The Deal Economy Event at the Nasdaq Exchange on Thursday.
Feinstein said he had made two predictions when Bill Ackman said he was backing Valeant in its bid — first, the Pershing Square Capital Management LP founder would make money, and second, the target would do anything rather than sell to the Canadian pharmaceutical roll-up platform.
Indeed, in the face of the Pershing-Valeant assault, Allergan did sell — to Actavis plc (ACT) , for $66 billion — giving the hedge fund a potential unrealized gain of about $2.7 billion.
"If Valeant's goal was to own the company, they would have been significantly better off not having Ackman as a partner," the banker said. "It became a lightning rod."
Glenn Welling, founder of activist fund Engaged Capital LLC, said he thought the industry would see more private equity firms coming in as partners with activists to help "get assets moved to a place where they can be acquired." Private equity firms, "can't be aggressive in the public markets, and I think you will see some of that happen," he said.
There's another trend for PE firms though, that Welling, as an investor, has some misgivings about: companies bringing financial sponsors in as "white knights," to buy up significant minority stakes and act as a blocking force to the hedge funds.