NEW YORK ( TheStreet) -- Wall Street may have kicked things off this week with a good, old-fashioned Merger Monday, but it's still way too soon to say market conditions are even inching closer to a return to M&A's heyday in 2007.

While the headline deal -- Prudential plc's ( PUK) $35.5 billion purchase of the Asian life insurance unit of American International Group ( AIG) -- had all the hallmarks of a bubble-era transaction, including a premium valuation, a healthy debt component and a mammoth rights issue to raise the necessary funds, it was an outlier in terms of size.

Fueled by cheap debt, global M&A totaled $4.62 trillion in 2007, according to Dealogic, and the year featured seven plus-$20 billion acquisitions, including the takeover of TXU Corp. for $43.2 billion by a consortium led by private equity firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group in the largest leveraged buyout on record. After the bubble burst, takeover activity fell to $3.18 trillion in 2008 before slumping down to $2.39 trillion in 2009.

By comparison, only one other takeover bid announced so far this year has crested the $20 billion mark, and it's Simon Property Group's ( SPG) hostile pursuit of bankrupt General Growth Properties (GGWQ.PK), which is valued at around $30 billion but includes the assumption of $21.8 billion in existing debt obligations.

It's early but despite Monday's flurry of deals and some hopeful outlooks in the wake of Berkshire Hathaway's ( BRK.A) nearly $36 billion acquisition of Burlington Northern, 2010 is tracking in line with 2009, the weakest year for M&A since 2004.

Through February, global M&A totaled roughly $404 billion, again according to Dealogic data, compared to $386 billion in the first two months of 2009. In other words, things are a little better, but not much.

The holdup to large-scale M&A is easy to explain as financing for mega-deals just isn't available. The economy is in the initial stages of its recovery and the markets remain sensitive to being roiled by potential systemic problems, such as the recent Greek debt crisis.

The other big difference between the climate today and in 2007 is private equity and mega-deals are on the outs. That too is a function of lenders staying on the sidelines, but it also reflects the difficulties that buyout firms are having with the targets they bought at the top of the market, such as Energy Future Holdings, the former TXU; Hilton Hotels, a portfolio company of The Blackstone Group ( BX); and KKR's First Data, whose earnings are barely staying ahead of interest expenses these days.

Back in 2007, the top five deals were all heavily leveraged buyouts with valuations north of $20 billion. By contrast, so far this year, the biggest PE-backed deal appears to be acquisition of U.K. pet supplies retailer Pets At Home by KKR for $1.55 billion in cash in late January.

Some numbers from industry data provider Pitchbook put private equity's diminished activity in perspective. In 2009, capital invested by PE firms totaled just $43 billion, down from $205 billion in 2008, and $575 billion in 2007. And, of the deals that did get done in 2009, more than 90% were lower- and middle-market deals, generously defined in most quarters as those below $500 million.

While the return of the mega-deal is years away, it's possible that the recent spike in activity is an indication that a rash of small- and mid-size acquisitions could be in the offing.

Brian Belski, chief investment strategist at Oppenheimer, believes the stabilization of the U.S. economy and the recovery of corporate earnings over the past few quarters has at least set the stage for an M&A revival as companies who have been fiscally prudent throughout the recession may decide to combat weak organic growth by making strategic purchases.

"Trends in balance sheet cash, free cash flow and share repurchases over the past several years have been increasingly positive," he writes in a recent note to clients. "These factors put companies in an excellent position to explore potential merger and acquisition possibilities."

Belski also believes the depressed M&A activity since the bubble burst has caused some pent-up demand to build, and he's compiled a list of 34 companies from the S&P 1500 universe that look like attractive takeover targets based on criteria like a market capitalization of less than $5 billion, no losses over the past three years, positive earnings growth in 2009, and others.

Among the names on the list are Tupperware Brands ( TUP), Green Mountain Coffee Roasters ( GMCR), and FactSet Research Systems ( FDS).

>>>>Click here to see Oppenheimer's full list

The sectors he sees as most ripe for M&A are Consumer Discretionary, Consumer Staples, Health Care, Industrials, and Information Technology.

The wild card in Belski's theory is of course the economy but he's optimistic.

" Barring any significant setbacks in the economy or financial markets (neither of which we expect), M&A activity should exhibit a noticeable improvement in the coming months," Belski says. The headlines this coming Monday will be the first step in telling whether he's right and M&A momentum is really starting to build.

-- Written by Michael Baron in New York.