Business owners looking to cash up could be in luck this year but don't expect to see a return to the "irrational exuberance" experienced before the global financial crisis.
That's the prediction of law firm Chapman Tripp in its annual mergers and acquisitions trends and insights report.
The report says the gap between the number of cashed-up investors and the availability of good quality assets would see a sellers' market in 2017 resulting in strong price expectations.
But Joshua Pringle, a partner at the law firm, said past experience meant investors were hesitant to pay over the odds for businesses.
"We saw assets purchased prior to the GFC that went too far and they are still a fresh memory in the market."
While private equity funds were cashed up he said they were not desperate to deploy that money and would only do so for quality assets.
Pringle predicted a busy first half of the year but said most deals would be done by June 30 because of the election which meant it was unlikely to be a record year for merger and acquisition activity.
"We tend to have a somewhat slower year when it is election year."
But depending on the election result there could be an end of year burst in activity after September 23.
The law firm is also predicting an improvement in the overseas investment office process could result in less of a competitive advantage for domestic buyers.
In the past it has taken up to six months for an overseas buyer to get approval from the OIO but Pringle said if that was cut to three months it could shake-up the market.
"There has been a competitive advantage for domestic buyers. But if it is now reduced to three or four months that will have a tactical impact."
The report predicts there will be continued interest from Chinese investors especially in the natural health and nutraceuticals sector where Pringle said a number of smaller companies could be rolled up together.
He said the financial institutions sector was also likely to see activity as the need for a higher return on capital would see businesses shedding non-core assets.
The report predicts trade sales will be the preferred exit strategy for business owners over share market listing.