The firm highlighted a string of large deals this year - including Wood Group's $955 million (620m) purchase of Aberdeen-based rival Production Services Network this month - which took the number of deals completed to just over 1,000, up 11.4 per cent year-on-year.
Between January and November, disclosed deal values were up 19.4 per cent on 2009 to 118.3 billion.
Ernst & Young lead advisory partner Simon Pearson said: "Corporates and private equity houses got back in the mergers and acquisitions game in 2010. The market has continued to be polarised - strong demand for top-quality assets set against more opportunistic situations where creativity rather than competition is the key."
Pearson said many of the firm's corporate clients were looking to make cross-border deals, using their "strong cash reserves" to drive growth.
He highlighted mobile phone giant Vodafone's acquisitions of TnT Expense Management and Quickcomm in the US.
American Tower Corporation's investments in Ghana and South Africa and Tyco International's sale of its fire and security operations in Europe also highlighted the trend, he said. "The return of private equity indicates that 2011 looks set to have a stronger M&A market," he said.