Mergers and acquisitions are likely to be back on the agenda around the world in 2010 as the business climate improves, leading consultancy group KPMG has said.

The mergers and acqusitions (M&A) market looks re-set for growth, after a tough 2009 in which most companies overestimated earnings potential, KPMG said today (18 January).

Its comments follow a similar prediction from UK-based food and drink sector analyst group Grant Thornton LLP last week.

"The latest company earnings forecasts look far more sensible, suggesting reality has finally caught up with the market," said David Simpson, global head of M&A at KPMG. 

"With feet firmly planted back on terra firma and earnings forecasts reset to sensible levels, the M&A market is set to make a modest return in 2010 both in the UK and globally." 

KPMG's global M&A predictor service shows that companies are cutting debt and that forward price to earnings ratios are now 7% higher compared with last year's adjusted figure, "suggesting a gentle increase in corporate appetite for deals".

Last week saw the first piece of major M&A activity in the global drinks industry, when Heineken announced that it would acquire FEMSA Cerveza, Mexico's second largest brewer, in an all share deal valued at EUR3.8bn (US$5.5bn) minus debt.