NEW YORK - Dealmakers expect merger and acquisition activity to pick up in the first six months of 2010, with manufacturing, health care and financial services positioned to benefit most in the near term, according to a survey released on Tuesday.

The Association for Corporate Growth (ACG) and Thomson Reuters compile a twice yearly survey of investment bankers, private equity professionals, lawyers and other dealmakers.

Around 82 percent of the 921 people surveyed believed merger activity will increase over the next 6 months. That is up from 56 percent six months ago.

Forty percent of those surveyed believe a quarter to half of the deals in that period would be distressed deals, while about 52 percent thought that less than a quarter of those deals would involve distressed assets.

The biggest expected obstacle to deals in the first half of 2010 is expected to be sellers who won't sell at current multiples, according to 37 percent of survey respondents. About 29 percent of those surveyed were more worried about the credit crunch.

Business owners are slowly realizing that valuations will not return to what they were several years ago. Private equity and strategic buyers are all too aware of this and are patiently waiting for sellers to come to grips with the new valuation paradigm and to take some money off the table, Harris Smith, a managing partner of private equity and strategic relationships at Grant Thornton and a past chairman of ACG, said in a statement.

(Reporting by Michael Erman; Editing by Phil Berlowitz)

Manufacturing