When UK shoe design company, Jimmy Choo, was sold last week for £500m, it marked a return to confidence in the merger and acquisition sector. Choo was set up in 2006 by a former editor of Vogue, Tamara Mellon and shoemaker, Jimmy Choo. Previously owned by a private equity group which paid £185m for the firm in 2007, Choo’s was acquired by luxury brands group Labelux, based in Vienna, Austria. Its former owner had considered a stock market listing in Hong Kong for the high-end shoe firm, which would have valued the company at £650m.

Another firm raising finance and its profile by floating on the stock market is LinkedIn. The social networking site for business professionals was thought to be valued at around $3.3bn before the flotation on the New York Stock Exchange. However, on the launch day last week, the company’s share price more than doubled, leaving the firm notionally valued at almost $9bn. It reminds stock analysts of the bubble that developed around technology firms at the turn of the millennium. That episode wound up in a ‘crash’ in share prices. A repeat would not seem out of the question given that while LinkedIn generated revenues close to $250m last year, it does not expect to make a profit in 2011.

These deals come on the back of increased merger, acquisition and flotation activity, with one of the most high profile deals having taken place earlier this month with Microsoft’s $8.5bn takeover of Skype. The internet phone company was formerly owned by eBay which paid $2.6bn for it in 2006. Microsoft is thought to have paid such a high price for Skype because of its potential to help Microsoft diversify its business away from PC software and into communication, information and entertainment.

This is a welcome return to form for some, as the financial sector including investment banks and market advisers stand to make large earnings on the back of increased merger and acquisition (M&A) activity. In 2008 this area was badly affected by the credit crunch which made access to finance difficult or expensive. 2009 saw little recovery in mergers and acquisitions, with the number of deals falling slightly but their value cut even more, compared to 2008. In 2010, M&A activity recovered a little faster with deals rising by almost a quarter. It appears in 2011 that recovery is being maintained, with the emerging markets showing faster growth, especially in China and Brazil.

As firms look for strategic tie-ups, increases in scale to compete more effectively, or access to funding streams to boost expansion, confidence appears to be returning. In the UK, though, lending to small and medium enterprises (SMEs) is failing to reach targets set under Project Merlin. This scheme was the outcome of an agreement between the UK government and the top five UK banks designed to spur investment and drive economic growth. At this stage Merlin seems unable to magic a return to bank funding for SMEs and the government is threatening to take further action, perhaps by increasing tax rates on banks. I'll be keeping tabs on the topic of funding for business all this week.