Pictured above: Stephen Bottley

Deal volumes are set to rise, with the Midlands joining in the improvement, according to a new survey.

The majority of deals are expected to be valued at less than £150 million, in the sort of range where regional professionals have honed their expertise.

The upbeat message follows research from law firm DLA Piper and corporate finance advisory business Hawkpoint.

Stephen Bottley, a partner in the Finance and Projects group at the Birmingham office of DLA Piper, said: "At last there is a sense that things are moving. But it is a case of proceed with caution.

"Mergers and acquisition activity will take time to return. However, there is a feeling that we are definitely over the worst."

Mr Bottley said the £50-150 million deal was the "sweet spot" for the Midlands finance community.

He noted: "Everyone is working hard to make things happen. However, while there is movement, getting a deal from opportunity to completion is still quite a hard job.

"There remains a lot of fear that something will fall over along the way - the vendor will pull out, maybe some issue will arise during due diligence, or perhaps the bank credit approval will be hard to obtain at the desired pricing/multiple so some compromise will need to be reached.

"Nationally, you have the imminent general election, the economy is yet to bounce back, so confidence is fragile. However, regionally, banks and professionals work together and do have confidence in each other. And at the levels we are talking about they are very capable of delivering."

The European Acquisition Finance Debt Survey reveals nine in ten institutions expect deal volumes to improve.

Healthcare and professional services are set to be at the forefront of the M&A rebound.

The survey, which polled a wide range of the most influential participants in the lending and private equity market including Alchemy Partners, HSBC Bank, Investec, Lloyds Banking Group, NM Rothschild and RBS, found that 88.2 per cent anticipated growth in deal activity in 2010 compared with 2009.

More than seven in ten (71 per cent) of respondents stated that healthcare would see deal activity whilst the second most popular choice - business & professional services - appealed to nearly two thirds (62.4 per cent).  There was scepticism, however, over the real estate and leisure sectors, with only 5.4 per cent and 14 per cent of respondents predicting significant deals would be concluded in 2010.

The consensus is that most activity will be seen at the mid to low value end of the market.

Three quarters (75.4 per cent) of respondents felt that the most active size-range for deals would be below £150 million, with the £50-100 million sector being where the highest proportion (29.3 per cent) believed things would be done.

More than 75 per cent believed that the UK would remain Europe's most active jurisdiction for M&A.

In terms of capital structure, almost 90 per cent believe senior debt leverage will remain under 3.5 times and equity contributions will be a minimum of 45 per cent. Six in ten say liquidity for senior debt will never return to 2007 levels.