Yesterday it was announced very loudly that "my pal Warren" was going to acquire the 77.4% of the Burlington Northern Santa Fe (NYSE: BNI) railroad, that Berkshire Hathaway (BRK.A) does not already own, for $100 per share, offering about a $24 premium to Mondays closing price.

Talk about putting your money where your mouth is -- yikes! Buffett has gone all in, betting the economy is healing, and silencing anyone that questioned his integrity or motives for cautious optimism saying it was all talk!

Up until the credit crisis, private equity firms had it made. They had plenty of leverage to play with and could load up their acquisition targets with it. So, they could realize a fantastic return on equity, mitigate their own risks, and show that they were the studs of the Street.

Then, all that went away. Credit markets dried up, and private equity companies lost their acquisition fuel. The numbers aren't as big as they used to be, but it looks like the private equity market is back in action.

Twitter's much-hyped $100 million round of financing closed Friday, cementing the company's (illiquid) value at $1 billion, though Twitter itself would not confirm the amount. T. Rowe Price and Insight Venture Partners participated in the deal, as expected, which is believed to be a precursor to an eventual liquidity event -- such as an IPO or acquisition.

In a way, it feels like 1999, where you have investors rushing to invest in high-profile companies, despite the absence of revenue models. Yet, Twitter may not be as bad off as the traditional folks think, especially if the goal is an acquisition. The company does say that it's pursuing revenue via corporate accounts. But, it's been saying this for a while, and we haven't seen anything yet. Also, it's leaving open the possibility of running ads on the site, though this wouldn't happen within the next three months.

Some people join wine-of-the-month clubs. There are plenty of other programs out there, too, where your credit card is hit every month, and your purchase is sent to you directly. If only such programs were available for Google (NASDAQ: GOOG). . . .

The company's CEO, Eric Schmidt, said Wednesday that Google plans to pick up a small company a month as a way to get its acquisition head back in the game. With the worst of the recession behind us, Google believes, this is a great way to get moving.

Earlier today, the Street was abuzz with rumors that Kraft Foods (NYSE: KFT) was investigating the sale of brands such as Maxwell House and Oscar Mayer in order to raise capital to up its Cadbury (NYSE: CBY) bid to something a little bit sweeter (and one the confectionery giant might not reject).

Kraft responded to the rumors saying they were just that - unfounded conjecture - and noted that it would not in fact need to ditch hot dogs and coffee for creme eggs and Trident gum. A spokeswoman for the company told Reuters "The financing for this proposal does not require any divestitures." So where did these rumors get started, anyway? Is Kraft protesting too much?

Mergers and acquisitions are hitting the headlines. Walt Disney Co. (NYSE: DIS) just bought Marvel Entertainment for $4 billion. The biggest one recently is the Kraft Foods (NYSE: KFT) bid for Cadbury's at $16.73 billon. It wasn't accepted, but that doesn't mean it won't eventually happen. And Hershey Co (NYSE: HSY) certainly isn't going sit idly by and watch what happens. It may have ideas of its own for Cadbury.

You may think these big deals have no connection to your stocks since you don't own them. But you're wrong. This M & A activity has a very positive influence on all stocks, directly and indirectly. The more mergers there are, the better the stock market will do.

Mergers and acquisitions aren't delivering the fees that investment bankers used to enjoy, but fortunately, the money's coming from elsewhere. Data from Thomson Reuters reports a 29% increase in capital markets and M&A fees for the first time in more than a year. Share sales (e.g., rights offerings) were where dealmakers found the action. In the shrinking M&A space, Morgan Stanley (NYSE: MS) has taken the lead spot.

Since there are fewer banks in the marketplace than there were a year ago -- and they have less money -- the capital is starting to come from elsewhere. Because they aren't lending at their previous pace, companies are issuing bonds and equity to replenish their coffers. Pfizer (NYSE: PFE), for example, raked in more than $23 billion from the bond market to fund its acquisition of Wyeth (NYSE: WYE), and Roche nabbed Genentech with the help of a $30 billion debt issuance.

Several years ago, I heard a presentation from Laurence Fink, the mastermind behind the asset management giant, BlackRock (NYSE: BLK). At the time, he gave some frank advice; that is, he warned that investors needed to be very cautious.

Of course, it was spot-on (and saved me lots of money). And, I'm sure Fink's investors also appreciated the counsel.

Well, this week BlackRock became the king of asset management because of its $13.5 billion acquisition of Barclays Global Investors (NYSE: BCS). In all, the assets under management will now amount to $2.8 trillion.

With litigation, it seems that the winners are usually the attorneys. Perhaps this is one of the key reasons that Dow Chemical (NYSE: DOW) and Rohm and Haas Co (NYSE: ROH) agreed to come back to the table and find a way to strike a merger. If not, both parties were on a destructive path to an unpredictable trial.

Interestingly enough, the new terms of the deal reinstate the $78 purchase price, but, of course, there are some wrinkles. The Haas Family Trust and Paulson & Co. will get as much as $3 billion preferred stock in Dow. This will be a much-needed infusion of capital.

According to a report from Thomson Reuters, the global M&A market reached $4.2 billion in 2007. No doubt, this represented a lucrative source of fees for many financial institutions.

But last year, things dropped off significantly, with deal volume at $2.9 billion.

So, is dealmaking going to continue its deep descent in 2009? Well, BusinessWeek, writes this may not necessarily be the case.

After the initial rebuff of Swiss-based pharmaceutical giant Roche's offer to acquire the 44% of Genentech (NYSE: DNA) stock Roche does not currently own, DNA is coyly encouraging the completion of a deal at a higher price.

Genentech is among the leading biotech companies in the world. It is engaged in the discovery, development, manufacturing and commercialization of pharmaceutical products intended for treatment of previously untreatable illnesses.

In 1990, Roche acquired a 56% stake in the company. Since that time, the relationship between the two companies has been a model for similarly structured combinations.

Roche's offer of $89 per share for DNA was characterized by DNA as significantly undervaluing the company.

But this was hardly a "hit the road, Jack" response. DNA's board of directors has been encouraging the two sides to continue discussions, and recent comments suggest that the deal could come together soon.

With the massive decline in equities, it would seem that M&A would be robust – as solid buyers find compelling deals. But, if you look at the history of M&A, recessionary environments tend to result in lower activity.

And yes, according to analysis from Bernstein Research, it looks like 2009 will remain a slow time for M&A. If anything, there won't be a comeback until 2010.

No doubt, this is bad news for deal shops like Goldman Sachs (NYSE: GS) and Greenhill (NYSE: GHL). Then again, the investment banking industry is undergoing lots of change right now (as top-tier firms becoming bank holding companies).

Essentially, Bernstein forecasts that M&A activity will be off by a quarter next year. If this happens, then the fall-off will be 45% from 2007 to 2010.

Sounds bad, huh? Well, this is actually normal stuff in the feast-or-famine M&A game.

Why? For the most part, companies do not want to take major risks during slow economic times. After all, how long will the recession last? If it continues for several more years, then making a commitment on a major deal could be harmful.

However, Bernstein still sees some positives. For example, counter-cyclical industries, such as healthcare, should still see strength in M&A. Oh, and expect distressed deals (where sellers have no choice but to sell out) as well as activity in the financial sector (as the federal government pumps up the sector with fresh cash).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Lately it's been very difficult for investors to get their bearings, but I can tell you that the winners in this game will be companies with little or no debt. Forget what stock values are doing now and focus on the future. You can take it to the bank that stocks gaining in value will have started from a very solid balance sheet foundation.

That said, I want to talk about Yahoo (NASDAQ: YHOO).

Yesterday the company was in the news again with reports that former AOL chief Jon Miller is seeking capital to purchase YHOO outright for a price that is reported to be in the $20 range.

YHOO shares rocketed higher on the news, immediately jumping up by nearly $1 per share, or approximately 10%.

My initial reaction, as you might expect, was skeptical. Jump on this news as a chance to dump shares. Management at YHOO, with or without Chief Yahoo Jerry Yang, has destroyed shareholder value so much that it would be hard to believe that anyone would pay a premium for the stock.

How could it be that a lone ranger from the failed AOL model be considered a serious alternative to YHOO going it alone? It makes no sense until you take a closer look at YHOO fundamentals. There the story starts to get a little more interesting.

For some reason this morning several high profile stories I have been ranting about in recent months have floated to the top of the headline heap again.

I just read that Yahoo! (NASDAQ: YHOO) CEO Jerry Yang is ready to return to the bargaining table with Microsoft (NASDAQ: MSFT) stating: "To this day, I believe the best thing for Microsoft to do is to buy Yahoo," Yang said Wednesday evening at the Web 2.0 summit in San Francisco.

ARE YOU KIDDING ME?! This has to be one of the biggest jokes in the investment world -- unless you are a Yahoo! shareholder. It was only last week I posted Yahoo rejects $30 to buy itself for $12?

Microsoft could now offer a 20% premium to today's stock price and still buy Yahoo for half what it offered last January. What do they say -- "good things come to those who wait". This is certainly a screaming example.

I would love to be in the conference room or on the call when Microsoft offers up a few crumbs to bail them out of a sticky situation. I was against MSFT doing the deal for a bloated price before, but it might make sense now. It could buy the company, and with Wall Street titan and M&A guy Carl Icahn on board, slice and dice this thing so that it cost them next to nothing to get the search advertising part of the company they coveted.

Yang looks like a child playing with grown-ups and his biography is taking one hit after another. Good thing he does not need food money and will never have to work again no matter what happens. By contrast, if Yahoo! took the $44 billion it would have been the deal of the year and Yang would look brilliant again. If I was a shareholder I would be really, really steamed!

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of MSFT or YHOO.

On November 29, 2007, IHOP, now DineEquity (NYSE: DIN), announced it had completed the acquisition of Applebee's, with CEO Julia A. Stewart commenting that "We are delighted to complete the acquisition of Applebee's as it represents an opportunity to create significant long-term value for IHOP shareholders over and above what we could have achieved on a standalone basis." On that day the stock closed at $52.29.

The stock closed at $23.97 Monday, and will likely fall farther today following CFO Thomas G. Conforti departure after nearly six years, a fact the company disclosed in a press release euphemistically titled DineEquity, Inc. Announces Chief Financial Officer Transition.

Mr. Conforti "resigned from the Company effective immediately to pursue other opportunities." What those opportunities are, we don't know, but apparently they're more exciting than working at a company whose stock has declined by more than 50% in the past year.

Of course, it's always a red flag when a company's CFO resigns, and investors would do well to be skeptical here -- the move was abrupt, and no permanent replacement has been named.

Back when the deal was first announced, I wrote that "IHOP's revenue in 2006 was lower than it was in 2002. So maybe this is a case of two drunken sailors trying to hold each other up. There's nothing much to get excited about for shareholders of either company."

So far that's been an understatement but I won't take too much credit. The fact is that company-changing mergers and acquisitions rarely create value, and in the long run, betting against them is likely to produce a pretty good track record.