Chief executives got their deal-making confidence back in 2014, emboldened by a clearer outlook for their businesses to take the global value for mergers and acquisitions (M&A) to their highest annual level since 2007.

The total was boosted by a rush of large deals in the telecom, healthcare and consumer sectors, with transactions, some of which had been contemplated for years, promising to cause a chain reaction as rivals move to defend their territory.

In the latest example British telecoms group BT's move to buy mobile operator EE is expected to put pressure on rivals to seek their own tie-ups as fixed-line and mobile networks and pay-TV services converge. "The need to stay competitive and strengthen the core business is the main catalyst," said Wilhelm Schulz, head of M&A in Europe, Middle East and Africa (EMEA) at Citi.

Global deal volume to December 11 hit $3.27 trillion, up 40% from the same period last year, according to Thomson Reuters data. This was the highest level since 2007, when the total was $4.12 trillion during a leveraged buyout boom which saw private equity firms sign multi-billion-dollar cheques and load companies with debt. In contrast deals in 2014 were mainly driven by more cautious company boards, using shares rather than debt to fund purchases. Executives haven't lost all their post-crisis inhibitions and still prefer safe bets rather than bold adventures such as French telecoms group Iliad's attempt to buy T-Mobile US. "The market is rewarding tried and tested deals, driven by synergies," said Paulo Pereira, a partner at Perella Weinberg.

GEOPOLITICAL RISK

But expectations that the pace of deal-making will keep up in 2015 have taken a knock from the oil price slump and deepening Russian economic crisis. "The geopolitical risk remains a concern for 2015," said Gilberto Pozzi head of M&A for the EMEA region at Goldman Sachs.

"If the oil crisis further deteriorates and political tensions escalate, M&A activity could suffer as CEOs would become more risk averse." Comcast Corp's $45 billion bid for Time Warner Cable will give the pair a near 30% share of the US pay TV market, while telecoms giant AT&T is looking to acquire satellite TV provider DirecTV in a $48.5 billion deal. Both deals are still under review with US regulators.

In Europe, Lafarge and Holcim aim to complete their merger next year, having secured European Union approval, to create the world's biggest cement maker with over $40 billion in annual sales.

However, some other potentially major deals barely got off the drawing board, such as brewer SAB Miller's approach to family-controlled Dutch rival Heineken. "There is no stigma to deal-jumping any more," said Chris Ventresca, JP Morgan's global co-head of M&A. "Companies have greater confidence and can withstand a bump in the road because there is less uncertainty on their prospects," he added.

EUROPEANS BIDDING IN US

Expanding abroad has been a key motivator this year for European companies looking to escape from the continent's sluggish economies, with the United States a prime target.

In September Germany's Siemens struck a $7.6bn allcash deal to buy US-based Dresser Rand. "The largest world economy is open for transactions and is growing in a more predictable way than many other geographies," said Severin Brizay, head of M&A in EMEA at UBS. At the same time US firms are becoming more cautious about Europe.

"They need to see that the economies in Europe are stabilised and going up, but there is not a big consensus on that," said Ventresca. Some also had to think again after the US Treasury moved to deter so-called "inversion" deals whereby companies were making acquisitions to reincorporate abroad to avoid high taxes at home.