When companies start disappearing, it's usually not a sign of economic recovery except when they re getting snapped up in mergers. That's what's happening now, and it s a positive development for investors, even if their portfolios don't include the latest dancers in the M&A waltz.

In the last days of summer, more than $24 billion worth of merger deals have been announced or proposed, including Kraft Foods rejected $16.7 billion takeover bid for U.K. candymaker Cadbury, Walt Disney $4 billion pickup of Marvel Entertainment and Procter & Gamble $3.1 billion sale of its prescription drugs unit to Warner Chilcott.

The pickup in deal-making is music to Howard Lanser's ears, particularly after the discordant screech of the capital markets grinding to a halt after the collapse of Lehman Brothers a year ago Sept 15. Lanser, the director of mergers and acquisitions at investment firm R.W. Baird & Co., called the period from November through March "the worst we've ever seen" for M&A activity.

The near-meltdown of the financial system not only froze the channels of capital that financed a frenzy of buyouts in 2007, but made future deals all but impossible as many companies stopped forecasting their own financial results on the brink of the economic abyss.

"We couldn't even forecast in 2009," Lanser said. "To do valuations, you need to have reasonable confidence in what you're buying, and this was a very big black cloud hanging over the market."

While deal volume is still well short of where it was a year ago, LPL Financial's chief market strategist Jeffrey Kleintop sees the resurgence as a sign the economy is well past its most dire point. The capital markets are lending again albeit at a higher price but the benefits won't just line the pockets of discredited investment bankers, Kleintop is telling clients.

"We believe the recent upturn in merger and acquisition activity may be a sign that the improvement in the economy and credit markets has been sufficient to restore enough confidence to lift business spending," he wrote in a Monday note to clients. "In the past, a revival in M&A deals was a sign that businesses were ready to prepare for growth by hiring workers. During the last cycle, job growth finally turned positive in the fourth quarter of 2003 the same time M&A activity revived."

Carsten Stendevad, head of the financial strategy group at Citigroup, said the time is ripe for a wave of hostile takeovers undertaken by the cash-rich survivors of a harrowing time for many companies. The value of hostile takeover bids world-wide hit $81 billion in the second quarter, more than six times that of the first three months of 2009.

"Corporate valuations remain low for many firms and takeover defenses have weakened considerably over the past few years in response to pressure from corporate governance reformists and activist investors," he wrote in a Thursday note. "At the same time, the reopening of credit markets has allowed buyers to raise substantial liquidity."

That means more deals are on the way. Lanser said strategic buyers -- companies looking to grow through acquisitions, such as Kraft -- will lead the resurgence.

Many companies in the pharmaceutical, technology, industrial, home building and consumer products sectors are exiting the recession with diminished balance sheets and much-reduced market capitalization values, so they'll be among the ripest fruit for stronger competitors.

Small investors, though, shouldn't try to cherry-pick the next buyout candidates they are the last ones to know about deals and rarely get all the upside of successful mergers but are exposed to plenty of downside risk for deals that don't happen. But Lanser says they should still take comfort and seek profit from a rising tide of recovery.

"It can be a leading indicator in times of recovery," he says. "People are making bets not only on these industries but on the U.S. economy. Look at Kraft. That's big, strategic, game-changing stuff. It's exciting."

Here s a look at some of the sectors with M&A activity:

Consumer Discretionary

This sector is particularly ripe for mergers, some of which could shake up the entire field of stocks, says Baird s Lanser. Kraft s rejected bid for Cadbury is only the latest headline-grabber. PepsiCo last month made a pair of offers worth $7.8 billion to bottlers Pepsi Bottling Group and PepsiAmericas as it sought to consolidate its operations. "This is the right time to be considering buying with valuations as they are," Lanser says.

Pharmaceuticals

Procter & Gamble $3.1 billion sale of its prescription drugs unit to Warner Chilcott comes relatively quick on the heels of the $68 billion Pfizer takeover of Wyeth. That was, as Lanser says, "a game-changer" as the largest big pharma and biopharma merger in world. There will be more deals coming soon, though it's unlikely they'll top that blockbuster, he says. "If you have the cash you're probably already healthy, and healthy companies can already access the capital markets," he says.

Telecommunications and Technology

There's been plenty of activity in this battered sector, with the latest big move happening overseas this week, as Deutsche Telekom (DT) and France T l com (FTE) announced a merger of their U.K. mobile operations. The massive deal between the third- and fourth-largest U.K. mobile companies would give the new company 28.4 million customers and a 37% market share, according to Gartner.

In another recent move, eBay unloaded a majority stake of Skype, its Internet telephony unit, to a group led by group led by private-equity firm Silver Lake Partners for about $2 billion.

Media

The world's largest mouse roared again, as Walt Disney announced at $4 billion takeover of Marvel Entertainment. That kind of consolidation is typical of the type of strategic merger Lanser sees dominating the M&A landscape for the next few quarters. "When you have a company that's in pretty good shape, the question is, 'Do I take on this competitor, or do I just try to buy him?'" he says.