Europe's private-equity mavens have recently proven more than a match for their Wall Street brethren when it comes to large-scale M&A activity, with total deal valuations on the Continent now outstripping those in the U.S. But even with their newfound bragging rights, can Europeans do enough to hold onto their lead?

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Forty-six-year-old Gordon Dyal has something in common with such historical figures as Paraguay's El Supremo, celebrated 1940s French screenwriter and Nazi resister Jean Aurenche and even Fidel Castro.

No, it's not that he considers himself to be an especially political creature -- it's that he knows what it's like to sleep in a different bed every night. As the global head of M&A for Goldman Sachs, he is, de facto, the world's top Eurobanker, jetting anywhere from Asia to South America. He's always in motion.

Americans are still smarting from last year's revelation that European deal values had outstripped those of the U.S. by £25 billion as of April 2007, amplified by the strength of leading European currencies over the dollar. But Europe's players knew full well what was coming. Hailing from a smattering of Old World countries, they were trouncing their Wall Street brethren as leveraged buyouts, hostile bids and cross-border consolidations prompted M&A volumes to soar throughout l

"The reality is that the merger business is no longer the exclusive domain of Wall Street," says Dyal, an American who now lives in London. "The largest deals are not done by 'American' companies anymore, but by global companies. They may be based in certain cities in the U.S., Europe or Asia, but they're really looking at transacting on a global scale."

Privately, some U.S. bankers scoffed at the idea that Europe could reclaim its throne after nearly 20 years of New World dominance (after all, the last time Europe bested Wall Street was in 1990 -- the first full year of German reunification). But as subprime woes deepened and Europe's lead over the U.S. swelled to £75 billion by the end of 2007 on £1.05 trillion of new deals, it appeared that Europe was undeniably back on top.

A new year, of course, brings both hindsight and clarity. And it's now clear that the credit crunch is not only squeezing the States worse than the Continent, but that Europe is poised to build on its newfound supremacy by capitalising on the sizable gains it realised in 2007, led by a skilled cadre of multilingual, multicultural bankers ready to tackle deals that continue to emerge in the EMEA region.

While the subprime fiasco has slowed things down significantly, announced European transactions are still topping those in the U.S. (by 230 deals and £59.8 billion as of mid-March, according to Bloomberg data), and many bankers stationed overseas are predicting an uptick in international M&A for the second half. Already in 2008, Europe has produced a respectable haul of £151.6 billion in deals, against the U.S.'s paltry £91.8 billion (also as of mid-March), proving that, at least for now, megatransactions have trended east.

Dyal, along with a handful of other top European M&A stalwarts (who, for the most part, use London as their main base of operations), stands at the forefront of this trend. Key executives leading the charge for the choicest pieces of this market include British-born Gavin MacDonald, global head of M&A for Morgan Stanley; Piero Novelli, global head of M&A for UBS; and Carlo Calabria, head of European M&A for Merrill Lynch. Novelli and Calabria are both Italian; Dyal, a New Mexico native, was raised in California.

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