About $1.04 trillion of takeovers were announced so far this year, almost 10% more than the $950 billion of deals in the first quarter of 2006, according to data compiled by Bloomberg.
The largest LBO was unveiled last month when Kohlberg Kravis Roberts & Co and Texas Pacific Group agreed to buy Dallas-based power producer TXU Corp for $31 billion.
The biggest acquisition of the first quarter was Prosche AGs bid for Volkswagen AG, which values Europes largest carmaker at 35.8 billion euros ($47.8 billion).
All the stars are aligned for strong M&A activity, said Gavin MacDonald, head of European mergers and acquisitions at Morgan Stanley. Private equity is going to be a very important part of this.
LBO firms have announced more than $160 billion of takeovers since the end of 2006, up 24% from a year earlier, Bloomberg data show.
Kohlberg Kravis Roberts & Co and Italian billionaire Stefano Pessina on Friday raised their bid for Alliance Boots Plc to 10.1 billion pounds ($19.8 billion), and the UKs largest drugstore chain indicated it may discuss a deal.
Texas Pacific, the buyout firm founded by David Bonderman, is considering a 3.4 billion-euro ($4.5 billion) takeover bid for Iberia Lineas Aereas de Espana SA, Spains largest airline.
The pace of M&A was fastest in the Asia-Pacific region during the first quarter, with the value of transactions rising 19%, Bloomberg data show.
This year will set a new high for M&A activity on a global basis, surpassing the previous high of more than $3.6 trillion, which was set in 2006, said Tony Burgess, the London-based co-head of global mergers and acquisitions at Deutsche Bank AG.
The utilities, mining, consumer and banking industries are fueling the increase in deals, he said.
Morgan Stanley ranks as the worlds top M&A adviser, with $301 billion in deals, Bloomberg data show.
New York-based rival Goldman Sachs Group Inc was No 2, followed by Citigroup Inc and JPMorgan Chase & Co.