The energy, finance, technology and healthcare industries are expected to be the hottest areas in a dealmaking market that in 2010 is likely to expand gradually from this year's depressed levels.

This week's move by Exxon Mobil Corp to buy XTO Energy Inc for $30 billion in stock may be a harbinger of activity to come in 2010 as companies flex their stronger share prices and release pent-up deal demand.

The XTO takeover followed other corporate mega-deals, such as the $26 billion cash-and-stock deal for Burlington Northern Santa Fe by Warren Buffett's Berkshire Hathaway and Comcast Corp's $30 billion planned purchase of NBC Universal.

"We're encouraged by the current activity. The pipeline for the early part of 2010 is improving -- 10 to 15 per cent growth for the year is possible. Both engines of activity -- private equity and corporates -- are now active," said Jeffrey Kaplan, global head of mergers, acquisitions, financial sponsors and corporate finance at Bank of America Merrill Lynch.

"You need a sustainable economic recovery," he said. "You cannot expect the M&A market to flourish without favorable economic conditions. The best deals often are done at the beginning of a recovery. Post-bubbles create opportunities to get great values but are not always the best times for sustained M&A activity."

M&A totals $1.968 trillion so far in 2009, down 32 per cent from full-year 2008 and down 53 per cent from the record high in 2007, according to data from Thomson Reuters.

The United States, which suffered a six-year low in mergers and acquisitions, still squeaked ahead of Europe for the first time in three years. Bankers expect flat-to-modest growth for 2010.

"We're expecting $2 trillion for M&A for 2009. If you look deeper into 2009 and you back out rescue financings, which were counted as M&A transactions, we're closer to $1.6 trillion in traditional M&A. So much of this year has been nontraditional M&A and a few mega healthcare deals," said Paul Parker, head of global M&A at Barclays Capital.

"We expect $2.1 trillion in 2010, but with more traditional M&A playing a larger role," he said. "The numbers may look flat on paper, but when you take out a lot of the noise of this year, it really indicates more traditional merger transactions and a healthier market," Lee LeBrun, co-head of Americas M&A at Swiss bank UBS, said.

"There are a number of factors which create a tailwind for M&A volumes to rebound: CEO confidence is high, capital markets are accommodative, balance sheets are stronger with high levels of cash. And given the interest rate environment, cash hasn't ever had a lower opportunity cost." But he added, "One potential headwind is the regulatory environment. How the regulatory risk is shared between parties and reverse break fees will become more important discussions in merger negotiations."

Joseph Frumkin, a partner with law firm Sullivan & Cromwell, said the market remains quite cautious, with deals taking months to assemble, rather than mere weeks for some deals during the M&A peak.

Morgan Stanley topped the global M&A league table in 2009 for the first time since 1996, benefiting from working on each of the five largest deals this year. Morgan Stanley's win is a big upset for Goldman Sachs, which until this year held the No. 1 ranking on the list of announced M&A deals for the last 12 years without interruption.