Igor Kirman is a partner at Wachtell, Lipton, Rosen & Katz. Igor's practice focuses primarily on mergers and acquisitions, activism and takeover defense, corporate governance and general corporate matters. He has advised public and private companies, as well as private equity funds, in connection with mergers and acquisitions, divestitures, leveraged buyouts, joint ventures, cross-border deals, shareholder activism, takeover defenses and corporate governance matters.

The inversion boom of prior years has certainly dissipated in the face of regulatory action, but to quote one of my favorite lines from "The Princess Bride," there is a big difference between "dead" and "mostly dead." We are still seeing inversions, and most importantly, we are seeing the knock-on effects of prior inversions, with foreign companies (inverted or not) using their low-tax platform as a powerful catalyst for acquisitions in the US.

Companies such as Allergan (formerly Actavis), Endo, Mallincrodt and Valeant have gone on a buying spree, with more than $130 billion in such deals just for these four companies since 2014. In addition to cost and revenue synergies, US target companies now have to consider tax synergies as an important contributor of potential value creation, thereby giving inverted companies a leg up in a competitive M&A landscape. That, of course, makes previously inverted companies more likely to become candidates for inversion transactions, as large US companies seek to obtain the same advantage for future acquisitions.

These cross-border deals are likely to continue so long as the US tax regime provides the incentives, including its high corporate tax rates (currently 35%) and approach to territorial taxation. Ireland, meanwhile, has a 12.5% tax rate and allows its domiciled companies to shift some income to still-lower tax jurisdictions. There have been recent efforts in Congress to reform the corporate tax code, and in particular to provide some temporary relief for companies that want to bring back foreign cash into the US. These efforts, if successful, could certainly change the calculus of doing inversion and post-inversion M&A deals, but perhaps only at the margin. Until there is comprehensive corporate tax reform in the US, expect our home grown PLC's and Ltd.'s to get bigger at the expense of our Inc.'s.

Worries about tougher antitrust scrutiny of mergers have been front-of-mind ever since the Obama administration first came to power. The Obama antitrust cops have been aggressive in threatening and pursuing lawsuits to get better divestiture terms, such as in the American Airlines/United merger and also in the Anheuser Busch Inbev/Grupo Model deal.

In 2011, the government succeeded in blocking H&R Block’s purchase of TaxAct and AT&T’s deal for T-Mobile. As the second term began, a tougher breed of antitrust regulator showed up at the FTC and DOJ, and as the old Washington saying has it, "personnel is policy," with the Comcast/Time Warner and Sysco/US Food ex-mergers proving the point. Dealmakers are focused on protecting against these risks, with covenants getting more stringent and often more specific, and increasingly larger reverse break-up fees (AT&T paid T-Mobile $3 billion in cash and $1 billion in spectrum rights and the health insurers that have recently announced mega-deals have also agreed to pay large fees in case of deal failures).

In addition, parties are turning to pre-deal discussions with the government where this strategy is practical. In other cases, dealmakers are simply waiting for a new sheriff to arrive in 2017.

As we have seen with the inversion trend, the government is playing an outsized role in affecting business behaviour. The ACA is a prime example, and consolidation in the health insurance space has been Exhibit A. It is no coincidence, perhaps, that on the day that the US Supreme Court again ruled to uphold the ACA, stocks of insurers (and hospitals) skyrocketed and the game of merger musical chairs entered a frenetic phase. With Anthem's $54 billion July 2015 deal for Cigna (following an unsolicited approach), following on the heels of Aetna's $37 billion deal to buy Humana earlier in the same month, the big five health insurers in the US are poised to become the Big Three, with UnitedHealth rounding out the lot.

The consolidation reflects several trends. First, the ACA is expected to add 20 million new health insurance customers, and the race is on to capture their business. At the same time, the super-sized law is chock full of regulations that affect insurers, with stringent requirements to provide more coverage, while squeezing profits. The ability to drive efficiencies, and to diversify the risk pool in an industry that is largely regional, has become a catalyst for consolidation. Insurers are also likely to consider efficiencies through other channels, including vertical integration. For example, UnitedHealth, which had also earlier approached Aetna about a deal, just completed a $13 billion acquisition of Catamaran, a pharmacy-benefits manager.

Adding to the motivation is the consolidation among other players in the managed care system. The past few years have witnessed record activity in hospital and medical practice consolidations, with more than 100 deals in 2014 alone, as medical providers seek to better prepare for the new world of ACA opportunities and pressures. Pharmacies are getting bigger, too, with CVS agreeing to buy nursing home provider Omnicare for almost $13 billion (and Target's pharmacy business for $2 billion) and Rite Aid agreeing to buy EnvisionRx for $2 billion.

Each side has bulked up in part to negotiate better prices against the other, but it remains to be seen whether, when the dust settles, any party in the healthcare-provider chain will capture the sought-after efficiencies at the expense of others, or whether the record M&A activity among them all will cancel each other out. Recall the proverbial person in the stadium who seeks a better view by standing up; it only works so long as others don't do it also, or else everyone is standing and the view remains the same. On the other hand, when the person in front of you stands, there is only one thing left to do if you want to see the game.