Firms are hoping for further recovery in 2011 but are casting the net wider

"It wasn't a bad year, you just don't look back at any really standout UK deals," comments one M&A partner at a magic circle firm. In fact while global M&A levels may still be a way off even 2008 standards, let alone the heady heights of the 2005-07 boom, the 2010 figures from Mergermarket show there is reason for legal advisers to be relatively optimistic about 2011 - even though a surge of Kraft/Cadbury-type UK deals looks unlikely.

Deal volumes globally increased by 23% year on year between 2009 and 2010, with the value of M&A increasing by 24% to $2,113bn (£1,393bn) during 2010. There was greater growth within the crucial European M&A market, where volume increased by just over 25% and value by 40% to $644bn (£413bn), with European M&A as a percentage of global deals also increasing marginally over the year.

As expected, private equity made something of a comeback after seeing volumes plummet between 2007 and 2009, with buyouts of companies like Pets at Home for almost £1bn helping to increase global buyout volume by 43% and value by 91% on 2009. Admittedly, these positive numbers need to be seen against the context of some of the lowest M&A levels by both value and volume since 2003, but things are at least going in the right direction.

As Freshfields Bruckhaus Deringer London corporate head Mark Rawlinson (pictured) says: "2010 wasn't disastrous but it wasn't great so I hope 2011 will be better. We need positive economic indicators, but many corporates are ready to do deals, private equity houses are looking to make investments and the money is available for the right deals. I think things will be looking better by Q3 of 2011."

Travers Smith corporate head Chris Hale takes a similar view: "I'm certainly cautiously optimistic that it will be quite a good year, with more deals being done in the private equity space than in 2010 and outside the buyout market."

As in 2010 when it accounted for around 25% of both global and European M&A deals, partners expect energy, mining and utilities to be the busiest industry sector in 2011 - particularly if anything comes of rumoured deals such as a takeover of BP or a multibillion-pound listing by commodities trader Glencore. Meanwhile, a general increase in initial public offerings within the first half of 2011 is expected to give further impetus to the deal markets.

Still, even the more bullish partners concede that the deal market remains extremely vulnerable to shocks - as witnessed by the torrid last 12 months for public offerings. Dubai's economic crisis helped fuel a 25% drop in deal volumes across Africa and the Middle East from Q4 2009 to Q4 2010 and partners are swift to point out it wouldn't take much happening within the eurozone to further destabilise deal markets in the region.

Meanwhile, marquee deals involving UK companies were few and far between - though UK corporates were involved in three of the top 10 largest M&A deals by value in 2010 -and the total value of UK M&A fell by 4% to $124.6bn (£80bn) and some expect this trend to continue. As one partner at a major City practice says: "What surprised us was how little UK-on-UK activity there was. I don't think it would be a nice time to be at a firm that wasn't strong in Europe." Given the sluggish domestic market, 2011 is sure to be another year when law firms are thinking globally.

Firms are hoping for further recovery in 2011 but are casting the net wider

"It wasn't a bad year, you just don't look back at any really standout UK deals," comments one M&A partner at a magic circle firm. In fact while global M&A levels may still be a way off even 2008 standards, let alone the heady heights of the 2005-07 boom, the 2010 figures from Mergermarket show there is reason for legal advisers to be relatively optimistic about 2011 - even though a surge of Kraft/Cadbury-type UK deals looks unlikely.

Deal volumes globally increased by 23% year on year between 2009 and 2010, with the value of M&A increasing by 24% to $2,113bn (£1,393bn) during 2010. There was greater growth within the crucial European M&A market, where volume increased by just over 25% and value by 40% to $644bn (£413bn), with European M&A as a percentage of global deals also increasing marginally over the year.

As expected, private equity made something of a comeback after seeing volumes plummet between 2007 and 2009, with buyouts of companies like Pets at Home for almost £1bn helping to increase global buyout volume by 43% and value by 91% on 2009. Admittedly, these positive numbers need to be seen against the context of some of the lowest M&A levels by both value and volume since 2003, but things are at least going in the right direction.

As Freshfields Bruckhaus Deringer London corporate head Mark Rawlinson (pictured) says: "2010 wasn't disastrous but it wasn't great so I hope 2011 will be better. We need positive economic indicators, but many corporates are ready to do deals, private equity houses are looking to make investments and the money is available for the right deals. I think things will be looking better by Q3 of 2011."

Travers Smith corporate head Chris Hale takes a similar view: "I'm certainly cautiously optimistic that it will be quite a good year, with more deals being done in the private equity space than in 2010 and outside the buyout market."

As in 2010 when it accounted for around 25% of both global and European M&A deals, partners expect energy, mining and utilities to be the busiest industry sector in 2011 - particularly if anything comes of rumoured deals such as a takeover of BP or a multibillion-pound listing by commodities trader Glencore. Meanwhile, a general increase in initial public offerings within the first half of 2011 is expected to give further impetus to the deal markets.

Still, even the more bullish partners concede that the deal market remains extremely vulnerable to shocks - as witnessed by the torrid last 12 months for public offerings. Dubai's economic crisis helped fuel a 25% drop in deal volumes across Africa and the Middle East from Q4 2009 to Q4 2010 and partners are swift to point out it wouldn't take much happening within the eurozone to further destabilise deal markets in the region.

Meanwhile, marquee deals involving UK companies were few and far between - though UK corporates were involved in three of the top 10 largest M&A deals by value in 2010 -and the total value of UK M&A fell by 4% to $124.6bn (£80bn) and some expect this trend to continue. As one partner at a major City practice says: "What surprised us was how little UK-on-UK activity there was. I don't think it would be a nice time to be at a firm that wasn't strong in Europe." Given the sluggish domestic market, 2011 is sure to be another year when law firms are thinking globally.