Mega-deal party is back, but let's keep a sober note

In the space of two days, we've had Kraft bidding for Cadbury, Orange merging with T-Mobile, Xstrata thought to be contemplating a crack at Lonmin, British Airways said to be mulling a swoop for bmi and fashion veteran Harold Tillman landing Aquascutum. The bid is back. Indeed Citigroup says so in a paper titled, funnily enough, The Bid is Back.

So while we prepare to commemorate the passing of Lehman Brothers a year ago and the start of the global slump, the City's rainmakers are celebrating. There's no doubt that a degree of economic confidence has returned - hence the timing. Companies want to get in early, in the lull before recovery really kicks in and prices rise.

It would be foolish, however, to suppose that we will see a return to the M&A madness of before. There is plenty of scope for takeovers financed by equity and cash.

But those would-be buyers who hope to borrow their way to glory are likely to be frustrated - leverage is still a dirty word in the City, and the banks that fuelled so many of the private-equity plays of the past few years, are not interested.

The party is starting up again but everyone is much saner and wiser, and determined to remain sober.