This signals a return of investor confidence, and I think that it is still the early moving «smart» money closing deals. This is also reflected in the fact that in many of the recent deals, both equity prices were rising, i.e. that of the target company and the acquiring company, says Beat Wittmann of Dynapartners.

Last year, companies mainly used excess cash to increase dividends and buy back shares. With the improving global cycle and increasing risk appetites, however, I expect an acceleration in merger and acquisition activity, IPOs, divestitures, and going private transactions in 2013.

Underperforming but high quality

The capital markets are ripe for more corporate transactions due to a range of factors. Firstly, underperforming but high quality assets combined with the more positive economic outlook are attracting investors who can improve efficiency and expand the offering and distribution (e.g. Tiffany and PPR in the luxury brands space).

Secondly, corporate balance sheets flush with cash and the very favorable debt markets allow for acquisitions with attractive dividend yields and inflation protection characteristics (e.g. Heinz and the consumer and health sectors in general). And last but not least, a merger and acquisitions boom will eventually draw in more players, although that stage is still some way off.

The winner takes it all

When it comes to stock selection across most sectors, at this stage of the capital market cycle we believe it is key to invest in the winners. It is never easier to gain market share and increase margins than when coming out of a downturn as a strong survivor and competitor. It is the strong management teams and strong balance sheets which can and are putting major deals on the table. Just watch Berkshire Hathaway, Swatch Group, and Comcast, to name but a few.

The same logic holds very much true for the financial industry. Interestingly – albeit not surprisingly – the 2013 investment banking league tables are led by a wide margin by the winners of the great 2008 crisis, namely J.P. Morgan and Goldman Sachs.

They are set to profit healthily from any further increase in corporate deal activities. Where are the rest? Lehman went under, Merrill Lynch was swallowed up, Morgan Stanley is struggling, and the investment banking units of the European banks have been relegated to the second league.