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Remember when merger and acquisition activity was off the charts in the late 1990s?

Well, fasten your seat belts, because M&A activity is not only alive and well -- as we pointed out back in October -- but now it's adding legs to a bull market that was ready to take a pause.

Judging by JP Morgan Chase's $59 billion bid last month for Bank One and Comcast's spurned $50 billion bid for The Walt Disney Co., things seem to be heating up. And that heat is warming the hearts of Wall Street investment bankers who earn fees for arranging these marriages and lifting the animal spirits of investors who think that the market is undervalued.

The latest deal to ignite investor interest is the fight for AT&T Wireless, which was won by Cingular Wireless this week with a cash bid of $41 billion. If approved by regulators, the deal would create the nation's largest mobile phone company. As usual, the acquirers -- in this case, Cingular's joint owners, SBC Communications and Bell South -- saw erosion in share price, while AT&T Wireless shares jumped nearly 2 percent on Tuesday after the deal was announced.

And while Disney said "Thanks, but no thanks" to the Comcast offer, refusing to even consider the unsolicited bid that they considered too low, the Disney's board did say it would consider other "legitimate proposals" that would create shareholder value. That type of optimism, coming from corporate directors, lifts the stock market as it is seen as a sign of confidence in the economy and the market. Investors, big or small, are basically the same: When things look bad, they run for cover; when things look good they jump in with both feet, and sometimes create a speculative frenzy.

I don't know if we're at that frenzy point yet, but even if we are, it's still early in the game and as many companies look for new ways to increase profits, M&A activity will pick up speed. Just look at the banking sector, which so far this year has seen 48 deals worth more than $71 billion collectively, according to Thomson Financial. That's the best yearly start since 1998, when 503 deals worth $274 billion occurred over the same period.

Banks are rushing to the altar because they're flush with cash, and need to replace mortgage profits with core banking functions. Just this Tuesday alone, three more financial deals were announced:

• New York-based North Fork Bancorp will pay $6.3 billion for GreenPoint Financial.
  
  
• Ohio-based National City Corp will pay $2.1 billion for Provident Financial Group, National's second deal in four months.
  
  
• And New Jersey-based Sun Bancorp paid $83 million for Community Bancorp of New Jersey.

Of course, those purchases pale in comparison to last October's $47 billion bid by Bank of America for Fleet Boston. And generally speaking, acquisition targets aren't getting the massive premiums prevalent in the 1990s -- but that may be to their credit. It certainly signifies that CEOs are feeling very sanguine about future growth potential and the economy.

Some speed bumps could slow M&A activity. Justice Department staffers oppose the Oracle's hostile bid for PeopleSoft, citing antitrust concerns; that could kill the $9.4 billion deal before shareholders get to have their say. And no one asked wireless customers if they would accept reduced service so that Cingular can cut costs to pay for buying AT&T Wireless. But some customers may be willing to pay more for reliable service, but that's not going to happen immediately, as there are still worthy competitors in the form of T-Mobile, Verizon Wireless, Sprint and Nextel.

And don't forget the market for initial public offerings. Since the start of this year, 22 companies have gone public -- twice the number of IPOs for the entire first half of 2003. Clearly, things are heating up on Wall Street -- just make sure you don't get burned. And to make sure you're well informed, join us this Friday as we examine the recent merger mania, what it means for you and how you can profit.