Wall Street is giddy about the prospects for mergers and acquisitions for the rest of the year. The first quarter was enough to raise expectations sky high. Driven by AT&T's $39 billion deal for T-Mobile, first quarter deal volume rose 58 percent year-over-year. That's apparently the best first quarter since 2007, according to data from Thomson Reuters.

Prices are definitely inching up, reflecting a hot market. Acquirers paid a median 9.2 times earnings before interest, taxes, depreciation and amortization for companies in the period, the most since the second quarter of 2008, according Bloomberg.

A recent survey has found that nearly half of deal-makers view the return of CEO and board confidence as the main driver of deal activity, an increase from 36 percent last year. A further 26 percent pointed to an improving economy as the primary reason for the uptick. These factors far outweighed concerns around the availability of cash on company balance sheets (11 percent) or access to credit (11 percent).

Most expect the deal environment to draw out more strategic buyers as well as financial buyers. The survey found that private equity is expected to be much more active this year and will account for 22 percent of deal volume, compared with just 8 percent in 2010 and 5 percent in 2009.

The fact is companies have built quite a cache of cash, and they are under more pressure to put that cash to good use.

For more:
- here's the Bloomberg article

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