The hedge fund industry has been thriving recently, putting the financial crisis behind it. We've noted, however, that current market dynamics favor large funds, which seem to be getting larger every month. This may prompt more funds to want to grow via mergers.

In 2010, 101 alternative M&A deals were noted by investment bank Freeman & Co, according to MarketWatch. That was more than double the 49 transactions that closed in 2009. Traditional manager deals, involving mutual-fund firms, totaled 85 in 2010, down from 88 transactions in 2009. This year, these trends will likely remain in place, as alternative investment firms continue to drive activity.

The advantages of size are just too compelling, though strong performances certainly do not hurt. Big institutional investors, more so than families, are the focus these days. And they have special needs in terms of compliance and other expensive programs that are perhaps more likely to be offered by large funds.

It's unclear what the deal trend has done to valuations, but you would have to think they have risen. Now may be the best time to seek out a partner. You've got to do your due diligence though. A lot of would-be partners are in the marriage market for the sake of survival.

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