According to Freehills Perth-based partner Simon Reed, debate surrounding the Resources Super Profits Tax (RSPT) and the subsequent Minerals Resources Rent Tax has had a dampening effect on M&A activity in the energy and resources sector over recent months.

Meanwhile, continued uncertainty surrounding the formation of the next Australian government is also hitting short-term M&A prospects.

"The election uncertainty will have a short-term effect," Reed said. "However, overall, provided the strength of the Australian economy continues to hold, there is an overall trend upwards of M&A activity from the lows of FY2009, and we expect to see that continue."

Reed added that he expects to see the market make allowances for the continuing political uncertainty, with bidders looking to introduce a number of conditions to their deals.

David Friedlander, an M&A and securities partner with Mallesons Stephen Jaques, also acknowledged the uncertainty surrounding the election, and the associated changes in policy to an MRRT in dampening short-term M&A work.

However, in a similar vein to Reed, he is optimistic about the future of the M&A market.

"We have a pretty good pipeline [of deals] at the moment, unlike the last few years when we were scraping along the bottom," he said.

In particular, Friedlander spoke of the increasing cash reserves of global corporations, with those reserves set to be deployed globally as the market improves, and the recent $5.2 billion bid by the Queensland Coal Industry Rail Group (QCIRG) to control Queensland's coal rail network.

Reed notes his own research in declaring that a strong resurgence in the Australian M&A market is likely, referring to the Freehills 2010 Public Mergers & Acquisitions Report that examined 95 M&A deals involving ASX listed companies announced during the financial year.

The report found there was a strong resurgence in the public Australian M&A market for FY 2009/10, with bidders publicly committing to offers worth a total of $78 billion, compared to just $19 billion for the previous year.

But the Freehills analysis, which looked at 95 M&A deals involving ASX listed companies for the 12 months between 1 July 2009 and 30 June 2010, stands in contrast to other recent reports into the Australian M&A sector.

According to Thomson Reuters, M&A activity in Australia decreased by more than one third as compared to January to June 2009, from around $108 billion to $71 billion. Bloomberg, which excludes open market transactions, reported a 21 per cent drop over the same period..

Reed puts this contrast down to the fact the year has been "a tale of two halves.".

"During the first half of the last financial year (July to December 2009) we were on track to see activity rise to pre GFC levels ...

with a number of factors behind that," Reed said, noting that the RSPT and the MRRT both played a role in dampening demand.

The Freehills report indicated that there were 61 deals in the first half of the last financial year, and only 34 in the second half.

The Report also found that the resources sector was the prime driver of domestic M&A activity, and accounted for more than 50 per cent of deals.

The Report also found there was more than twice the number of "friendly" deals as opposed to hostile takeovers without the support of the target board during the researched period, and that there was a 55 per cent success rate on announced deals, slightly up from last year (49 per cent).