NEW YORK (

TheStreet

)--The surge in merger and acquistion activity is driving up shares of small investment banks that specialize in advising on those deals.

Despite a weak overall market, shares of

Greenhill

(GHL) - Get Report

,

Evercore

(EVR) - Get Report

and

Lazard

(LAZ) - Get Report

were all up over 3% Friday capping a week filled with big deals, including

Intel Corp.

(INTC) - Get Report

's $7.7 billion takeover of

McAfee

( MFE) and

BHP Billiton

(BHP) - Get Report

's $39 billion offer for

Potash Corp.

(POT)

.

Greenhill also got a boost Friday morning from a Morgan Stanley report saying shares of the company "will rise relative to the industry over the next 30 days," and assigning a "70-80% probability" to such a move. The impetus for the rise, according to the report, is a "perception of deal activity in the market."

Morgan Stanley said the report was a "short-term trading idea and not a change to our long term view." Lead analyst Celeste Brown has an "underweight" on the stock, arguing its multiples of 27 times 2010 earnings and 18 times 2011 earnings are a "premium to peers."

Brown also questions whether the M&A uptick is sustainable, given the "choppiness in the market."

Rochdale Securities analyst Dick Bove, however, argues the preponderance of companies trading below book value would seem to bode well for increasing M&A activity.

"What is created is a situation where it is better to liquidate a company than operate it. And if you can buy a company and liquidate it, or if you can buy a company below book value, you can get an immediate addition to your earnings."

Bove published a report Friday noting that 36 of the 62 largest U.S. banks are trading below book value. He argues many those trading above book value will acquire ones trading below book.

"You would think that there would be a major acquisition wave that's coming and I think reflecting that, all the M&A advisory companies are doing pretty well."

--

Written by Dan Freed in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.