NEW YORK ( TheStreet) -- The recent deals for Dell (DELL), Heinz (HNZ), American Airlines (AMRPQ) and Virgin Media (VMED) may indicate to some a return of the mega-deal, after years of post-crisis C-Suite caution.
It certainly is a fun exercise to speculate where Warren Buffett might aim Berkshire Hathaway's (BRK.A) M&A elephant gun, after the 'Oracle of Omaha' said in March that his failure to make a large acquisition was among his biggest 2012 disappointments.
But given a trend toward smaller mergers and buyouts by corporations and private equity firms, investors may do well to continue to focus their M&A speculation on small and mid-cap companies.
Rising valuations for corporations across the Russell 2000 Index (RUT) and the Russell Midcap Index (RMCC), a stabilizing economic outlook, an imperative for revenue growth and attractive financing, may continue to drive small and mid-cap deals in 2013, according to a March 4 screening of M&A targets by Citigroup analyst Scott Chronert.Last year, M&A removed about 5% of the Russell 2000's total equity value -- $58 billion -- and helped drive the 14.6% return for the index, with a similar amount being acquired from the Russell Midcap index, according to Chonert's calculations. "We continue constructive on the outlook for
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