This time last year two bankers from Goldman Sachs walked into the Umbaba Club in London’s West End and announced that they wanted the most expensive cocktail in the world. Head barman Giles Andreis eyed the men carefully and asked if they were serious. Deadly, said bankers, the finest ingredients and no expense should be spared in making the drink: they were celebrating their huge new bonuses.

That night Andreis created the Magie Noir — one shot Richard Hennessy cognac, a measure of Dom Pérignon vintage champagne, dash of Crème de Mure, some lemongrass, lychees, extract of yohimbine, presented in a crystal glass with a 24-carat white gold cocktail pin. At £333 each.

“We thought we’d seen a one-off,” said a regular at the bar. But with this year’s bonuses set to be even bigger than last year’s, the one-off is now on the cocktail list.

In New York and London, restaurants, bars, car dealerships and jewellers have similar tales to tell. London hotspot Chinawhite is preparing for a champagne-fuelled Christmas. Last year it sold £300,000 worth of champagne over the season. This year, it is doubling its orders.

Behind the bonus bonanza lies the biggest year for mergers and acquisitions (M&A) in history. According to market analyst Dealogic, the value of global M&A deals for 2006 has so far reached $3,368 billion (£1,774 billion), an all-time high.

The last year to rival such a bonanza was 2000, just before the dotcom bubble burst. This time things are different, argue bankers. But don’t they always say that?

IT has been a busy week for bankers on both sides of the Atlantic. The party season may have started, but they have hardly had time to loosen their ties. Clear Channel, the world’s largest radio company, is being taken private in a deal worth $18.7 billion. US Airways is making a hostile bid for Delta, a takeover that would create the world’s biggest airline. On Friday, BSkyB — part owned by News Corporation, ultimate owner of The Sunday Times — snapped up 17.9% of ITV, Britain’s largest commercial broadcaster. Brazil’s CSN offered $8 billion for Corus, formerly known as British Steel. At the end of the week there were rumours that America’s Nasdaq stock exchange might once more bid for the London Stock Exchange. In today’s environment, if it’s big and it’s listed, it’s in play.

“It’s been the busiest week ever,” said Brian Magnus, head of UK M&A at Morgan Stanley. “Corporates have got the money on their balance sheets, plus access to cheap capital and this gives them confidence to do the deals.”

He said the change in attitude towards M&A really began last year with Procter & Gamble’s $57 billion takeover of Gillette and French drink group Pernod Ricard’s £7.4 billion takeover of Allied Domecq. “These were genuinely risky deals that the market said, fine, let’s give them the benefit of the doubt.”

There are factors other than confidence at play. Russia, China and India are now major players in the M&A market. In 2000, Indian companies made 50 acquisitions worth a total of $957m, according to Dealogic. So far this year, they have made 146 acquisitions worth a total of $20.2 billion. Chinese companies bought 27 foreign firms in 2000 worth a total of $1.8 billion. So far this year they have bought 85 companies worth $15.5 billion.

The M&A boom is a truly global phenomenon. Of the top five deals this year only one, AT&T’s $83.4 billion acquisition of Bell South, is American. Eon of Germany’s $66.1 billion purchase of Spain’s Endesa is the second-largest deal, followed by French, Dutch and Italian takeovers.

One London-based hedge-fund manager said: “The advent of the euro changed everything — suddenly cross-border deals became possible. Now, as political co-operation has increased, this has also become probable. For example, Germany and France have been slow to rationalise old economies such as cars — this is changing. And look at banks — with the euro, what’s the point of having so many different brands and companies? The case for consolidation across the sectors is more than compelling.”

Nor is the M&A boom tied to a single sector, as it was in 2000. Then telecom deals dominated the landscape, accounting for $740 billion of the year’s total. This year telecom deals have so far totalled $366 billion, trailing behind finance and not far ahead of property, utilities and healthcare.