Christian Ryan, managing director of boutique financial services firm Beulah Capital, said there is currently more confidence among company boards to instigate corporate activity.
"The lower Australian dollar is also making Australian companies more attractive to overseas-based suitors.
"Takeover candidates will often take up to 18 months to receive a bid, and will often rally by about 20 per cent in the lead up to a bid," Mr Ryan said.
Beulah Capital runs a takeover strategy that looks to take advantage of share price rallies in anticipation of takeover bids.
A 'stellar' recent example is the bidding war for internet services company iiNet, with the company immediately rallying 27 per cent following TPG Telecom's $1.4 billion takeover bid last March, he said.
"After rival telecom provider M2 made a counter-bid in April, iiNet’s share price reached a high of $10.16, meaning a total appreciation of 49 per cent since the first bid," Mr Ryan said.
Mr Ryan said his company is seeing increased interest from financial planners, SMSFs and retail and institutional invetors for its takeover target portfolio.
"We like to keep it simple and look at key indicators such as the presence of a strategic shareholding. If you reacted to every rumour you would end up chasing chickens," he said.
But the prospect of takeover is not enough reason to hold a stock on its own, Mr Ryan said.
"We only look for stocks we would be happy to hold regardless of a bid," he said.
