The Herbert Smith Freehills Asia Pacific M&A Review 2017 noted that 2016 was dominated by large infrastructure deals including Ausgrid, Port of Melbourne and Asciano.
While the large deals meant that overall Australian 2016 M&A activity was steady on 2015, they masked the softer M&A market at lower value levels.
Looking forward to 2017, Herbert Smith Freehills singled out mining and infrastructure to be the "top picks" across the sectors in 2017.
"The hopefully green shoots in some mineral prices might spur confidence with positive M&A driving the sector," said the report said.
"We also suspect that high levels of interest in the renewables sector will continue, and that property might see some M&A activity," it said.
There are also likely to be more consortium bids in 2017 for regulatory reasons, whether they relate to the Foreign Investment Review Board (FIRB) or the Australian Competition and Consumer Commission (ACCC), said Herbert Smith Freehills.
"We expect FIRB considerations to remain a significant part of transactions across a wide array of sectors (not least infrastructure, utilities and agribusiness)," said the report said.
Herbert Smith Freehills also anticipates more inbound M&A activity from China and North America, especially given that Australia remains a "friendly destination for foreign and Chinese investment".
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