Mergers and acquisitions have surged this month with megadealsfor iconic companies such as Dell Inc. and H.J. Heinz Co., fuelingoptimism that more buyers are ready to embrace $10 billion pricetags.

Almost $40 billion in deals were announced yesterday, led byHeinz's $23 billion takeover by Berkshire Hathaway Inc. and 3GCapital, data compiled by Bloomberg show. Transaction volume hasincreased by 27 percent so far this year compared with the sameperiod a year earlier, signaling buyers are willing to spend againfollowing last year's mergers slump.

Record corporate profits and cheap borrowing costs areattracting buyers even as stock prices soar to a five-year high,with more than $140 billion of announced M&A deals this month,data compiled by Bloomberg show. The past two weeks alone haveyielded at least four deals worth more than $10 billion each,including the Heinz and Dell buyouts and Comcast Corp.'s $16.7billion purchase of General Electric Co.'s stake in NBCUniversal.

“The Goldilocks era of post-crisis M&A has never been an if,but a when,” said JPMorgan Chase & Co. Vice Chairman James B.Lee, whose firm advised on Dell, Heinz and GE, as well as LibertyGlobal Inc.'s proposed $16 billion takeover of Virgin Media Inc.“CEOs are declaring that day has come.”

Last year, M&A shrank about 8 percent to $2.21 trillion,according to data compiled by Bloomberg. The one bright spot: Thefourth quarter, which was the strongest for deals since 2008,buoyed by Softbank Corp.'s plan to take control of Sprint NextelCorp. and the proposed combination of T-Mobile USA Inc. andMetroPCS Communications Inc.

The completion of the U.S. Presidential election in November andeasing financial turmoil in Europe have helped set the stage forlarger purchases.

“The Euro zone dynamics, the U.S. elections, the fiscal cliffand debt ceiling, while not in the rear-view mirror, have all takena back seat to improving fundamentals,” said Paul Parker, BarclaysPlc's head of global corporate finance and M&A.

“Big deals tend to be transformational for industries and thesecond-order consequences can be very meaningful, often requiring astrategic offensive or defensive response,” he said. Barclayshelped Silver Lake Management LLC finance its bid for Dell and isadvising on US Airways Group Inc.'s merger with AMR Corp.'sAmerican Airlines.

Debt Capacity

Easy access to cash may help solidify that. Borrowing costs withhigh-yield bonds, which investors typically use to fund leveragedmerger deals, reached a record low in late January. Yields droppedto 6.41 percent on Jan. 25, compared with an average 9.27 percentover the past decade, according to the Bank of America MerrillLynch U.S. High Yield index. High-risk, high- yield bonds, alsoknown as junk, are rated below Baa3 by Moody's Investors Serviceand lower than BBB- at Standard & Poor's.

“The trigger is that capacity in the debt markets is much biggerthan we've seen since 2007,” said Mark Stephanz, vice chairman ofthe global financial sponsors group at Bank of America Corp. “Weremain very optimistic about continuous growth in deal volumesthroughout the year based on the liquidity we see.” His bank servedas an adviser on the Heinz transaction.

Corporate confidence also may play a role in the rebound.Companies in the Standard & Poor's 500 Index reported earningsper share of $101.38 in the past 12 months, 20 percent more thantheir level in 2007, the tail end of the previous buyout boom, datacompiled by Bloomberg show. About 74 percent of the 386 companiesin the S&P 500 that have released results during the earningsseason have exceeded profit projections, the data show.

The rebound also means big paydays for Wall Street firms. Banksincluding Centerview Partners, Bank of America, Lazard Ltd. andMoelis & Co. may make as much as $97 million advising on theHeinz deal, valued at $28 billion including debt, according toestimates from Freeman & Co.

Centerview and Bank of America provided guidance toPittsburgh-based Heinz, while Moelis acted as adviser to thecompany's transaction committee. They stand to make as much as $60million from their work, according to estimates from Lam Nguyen, adirector at New York-based research firm Freeman.

Lazard served as lead adviser to the investment group takingover Heinz, while JPMorgan and Wells Fargo & Co. also providedadvice. They may receive as much as $37 million, according to theFreeman estimates.

The sale boosts JPMorgan to the top of the M&A league tablethis year, displacing Goldman Sachs Group Inc., data compiled byBloomberg show. New York-based JPMorgan has advised on an estimated$96.2 billion of buyouts this year including all of the fourbiggest, the data show. Goldman Sachs, which wasn't involved in theHeinz sale, is credited with helping to arrange $75.7 billion ofM&A deals this year, the data show.

Centerview has jumped to fourth in market share of announcedM&A deals so far this year after advising on Heinz and onComcast's purchase of GE's NBC stake, data compiled by Bloombergshow. The New York-based advisory firm's share of M&A advisorybusiness so far this year is estimated at $52.8 billion, or 19percent of all business, compared with $38.5 billion, or less than2 percent, for all of last year, the data show.

If M&A continues at this pace through the rest of February,it could be the strongest month for transactions since October2012, according to data compiled by Bloomberg.

“Deals we are seeing today could be reflective of a growingappetite for larger deals,” said Martyn Curragh, U.S. deals leaderat PricewaterhouseCoopers LLP. “Momentum is building on positivetrends we saw developing last year in low-cost debt, a more stableequity market and continued interest from foreign investors.

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