Canada’s M&A climate heated up in 2004, with an increase of 38% in value and 6% in deal volume in the first three quarters, according to the Investment Dealers Association of Canada.

In a commentary released today, the IDA says the pick up in activity reflected a surge in cross-border, mega deals, which are transactions valued over $1 billion.

While industry advisory fees shot up 15%, the flurry of M&A activity did not translate into gains for all firms, the IDA says. Advisory fees for integrated firms fell 7% compared to the strong increase of 19% for the institutional players.

According to the IDA, the discrepancy in advisory performance can be traced to the different types of M&A transactions between the two industry groupings. Wall Street’s big firms have competed aggressively against the Canadian integrated players for the large-sized, cross border deals.

Meanwhile, the M&A business of institutional firms has been maintained at a torrid pace. While these deals are typically smaller-sized and lower profile, they continue to benefit the institutional firms and are an important revenue source for the industry.