Financial institutions have predicted a recovery in the volume of deals in the European acquisition finance market in 2010, with healthcare and professional services expected to be at the forefront of the M&A rebound, according to research published by a national law firm today.

The European Acquisition Finance Debt Survey, carried out by national firm DLA Piper and independent corporate advisory firm Hawkpoint, revealed that almost 90% of respondents anticipated a growth in deal activity in 2010 compared to 2009. Only 1% predicted a decline.

The online poll of 93 companies in the lending and private equity market, including HSBC Bank, Lloyds Banking Group and RBS, found that 71% expect the healthcare sector will see the most deal activity, followed by the business and professional services sector.

Most felt the real estate and leisure sectors would remain relatively inactive, with only 5% and 14% of respondents respectively predicting significant deals in those areas in 2010.

Despite the generally optimistic mood, the consensus was that most activity will be seen at the mid-low value end of the market. Three-quarters of respondents predicted transactions with values under £150 million would be the most active.

In terms of geography, 77% believed the UK would remain Europe’s most active jurisdiction for M&A.

Philip Butler, partner and head of leveraged finance at DLA Piper, said: ‘The European acquisition finance market had its annus horribilis in 2009, with market activity declining dramatically.

‘Optimism is on the rise with deal activity having increased considerably towards the end of the last quarter of 2009 and into early 2010, with some significant mid-market transactions being completed,’ he said.

But he added: ‘While these deals demonstrate the underlying strength of the private equity market, it may well be that they are the exception rather than the rule in 2010 as the market is still characterised by challenging conditions that will continue to limit the amount, structure and availability of debt for many transactions.’