While the number of deals in the United States was flat in 2011, these factors, along with an increasing interest in healthcare, power & utilities, and technology have brought a strong focus on acquisitions.

"Fundamentals are now driving middle market M&A activity," says Rich Jackim, Managing Director of MidCap Advisors' Chicago office.  "We are working with a number of strategic buyers who believe this is an ideal time to make strategic acquisitions to secure future growth."

Large publicly traded companies are holding over $2 trillion in cash. Access to credit has also steadily improved since 2009. According to the Ernst & Young survey, international companies believe credit markets are strong enough to support growth plans and 68% of respondents say credit availability is stable to positive.

In addition to available capital and easing credit markets, buyer and seller value gaps are narrowing and valuations are stabilizing. Most strategic buyers in the US expect valuations to remain at current levels over the next six months which bodes well for overall M&A activity.  Just over a third of US respondents say they expect to close on an acquisition in 2012, according to the Ernst & Young survey.

"With available capital, easing credit markets and improving valuations we expect to see a surge in M&A activity over the next 12 months, " says Douglas Hendrickson, co-Founder of MidCap Advisors.   "We already see more deals in our pipeline."

While the total number of M&A transactions was flat in 2011, the power & utilities and healthcare sectors saw double digit growth year over year in deal volume. Along with technology, activity in these sectors is expected to increase in 2012. The financial services sector is also undergoing fundamental changes and is an area in which MidCap Advisors expects to see an increase in transaction activity in 2012.