U.S. consumers put the brakes on dealmaking in 2010. They may be the accelerator next year.

Chief executives maintained record levels of cash this year as the recession-weary consumer fueled doubts about an economic recovery. While mergers and acquisitions topped $2 trillion in 2010 — the first increase in three years — the amount failed to approach 2007’s $4 trillion peak in global takeovers.

Shoppers may help bring 2011 closer to that total. Holiday sales jumped 5.5 percent in the U.S., the best performance in five years, on purchases of clothing and jewelry, according to MasterCard Advisors’ SpendingPulse. As spending rises, companies are more optimistic and willing to take on risk, according to Joseph Gromek, chief executive officer of New York-based Warnaco Group Inc., owner of the Calvin Klein and Speedo brands.

“There will be a very aggressive approach,” Gromek said. “The companies that have strong balance sheets with lots of cash on hand will try to be as opportunistic as possible.”

The 1,000 biggest companies worldwide, excluding financial- services industries, have amassed more than $3 trillion in cash and equivalents based on their latest filings, according to data compiled by Bloomberg.

Most companies and their boards stayed conservative this year, waiting to see how the economy rebounded before pursuing deals, he said. Warnaco invested in its operations and foreign distribution in 2010, and may now look at acquisitions, Gromek said. “Interest rates are very favorable,” he said.

‘More Prudent’

The Federal Reserve on Dec. 14 repeated its pledge to leave the benchmark interest rate low for an “extended period.” Former Fed Chairman Alan Greenspan predicts that in 2011 the U.S. economy may grow as much as 3.5 percent, and the jobless rate will begin to come down. Unemployment rose to 9.8 percent in November and has hovered near 10 percent for more than a year, the longest stretch since monthly records began in 1948.

“Companies feel like consumers have learned to be more prudent in their spending habits,” said Blair Effron, who is the co-founder of investment bank Centerview Partners and worked on the merger of InBev and Anheuser-Busch. “In turn, companies themselves are focused on fortified balance sheets and liquidity.”

Effron also advised on PepsiCo Inc.’s $3.8 billion agreed purchase of Russian dairy company Wimm-Bill-Dann earlier this month. He said large companies are willing to spend the equivalent of 10 percent to 20 percent of their market value on a deal, leaving room for so-called tuck-ins.

Passing on Deals

In the U.S., the busiest M&A market, consumer confidence remains subdued more than a year past the official end of the recession. CEO confidence, as measured by the Conference Board, declined 12 points in the third quarter. Consumer spending accounts for about 70 percent of the U.S. economy, according to Commerce Department figures.

“We have passed on deals recently because we couldn’t structure it in a way to protect us on the downside,” said Debra Cafaro, chairman and CEO of Ventas Inc., a Chicago-based real-estate investment trust with a market value of more than $8 billion. “You have to be cautious still because of the uncertainty in the economy and consumer spending.”

Her company in late October agreed to acquire most of the assets of Atria Senior Living Group, a provider of housing for seniors, for $3.1 billion including debt. Cafaro said she was willing to make that deal “because that business is less economically sensitive, not as tied to the consumer, as say, a bunch of shopping malls.”

“On one side of the ledger, the financing markets are very accommodating, giving you the green light to do a deal,” she said, “but you have a red light, the consumer and the economy, which holds you back.”

Fewer Megadeals

The 26 percent recovery in global M&A for 2010 didn’t live up to the expectations of some dealmakers after a dearth of megadeals. In 2010, only two takeovers topped $25 billion, fewer than the four announced in 2009, according to Bloomberg data. At the same time, the number of deals ranging from $1 billion to $5 billion in size jumped 52 percent to 369 in the same period, the data show.

Private-equity firms have made fewer large purchases in recent years, even though they have more than $430 billion to invest, based on figures from Preqin Ltd. There is, however, the capacity for more straightforward corporate takeovers that don’t involve private equity, said Andy Lipsky, head of Credit Suisse Group AG’s mergers and acquisitions for the Americas.

“$10 billion strategic deals are easy now if they make sense,” he said. Lipsky this year worked on Colombia-based Grupo Aval Acciones y Valores SA’s purchase of BAC-Credomatic GECF Inc. from General Electric Co.’s finance unit for $1.9 billion. He anticipates 2011 deal volume will rise about 20 percent in the Americas amid continuing direct investments in emerging markets, such as China and Brazil.

Failed Takeovers

Many of 2010’s biggest deals fell through, including BHP Billiton Ltd.’s $40 billion bid to buy Potash Corp. of Saskatchewan Inc. and Prudential Plc’s failed attempt to acquire American International Group Inc.’s Asian business for $35.5 billion. Buyout firms had to abandon plans to take private Fidelity National Information Services Inc. and disk-drive maker Seagate Technology Plc.

Those who succeeded in making the biggest bets were commodities, utilities and telecommunications companies. Carlos Slim orchestrated one of the year’s biggest takeovers when his America Movil SAB, Latin America’s largest wireless carrier, announced plans to take over two other Slim-controlled phone companies in a deal valued at more than $20 billion. Further down on the list, the biggest announced consumer goods deal was Coca-Cola Co.’s $12 billion agreement to buy its largest bottler. Companies focused mainly on smaller transactions, even though the year began with Kraft Foods Inc. completing its purchase of Cadbury Plc for about $18 billion.

Still Skeptical

“There’s still some skepticism that exists among CEOs in various industries that the economy is truly back on track,” said Jeffrey Stute, co-head of North American M&A at JPMorgan Chase & Co. “The consumer is an element of that skepticism, which in part leads to CEOs being reluctant to pull the trigger on a bet-the-company deal.”

Another banker, Barclays Capital’s global M&A head Paul Parker, anticipates a shift toward bigger transactions with worldwide M&A volume increasing by 15 percent a year on average through 2012. By number of deals, Europe lagged behind North America and Asia Pacific this year, with sovereign debt crises suppressing cross-border and domestic takeovers in the region.

“We have an expectation that these issues will abate over time, but they do cast some general overhang on the M&A market,” Parker said.

Asian Growth

For the first time in 2010, acquirers spent about as much in Asia Pacific as they did in Europe. Asia should again drive growth in the year ahead, and a pickup of economic growth in the U.S. would be a further impetus for dealmaking, according to M&A bankers. Morgan Stanley’s co-president of institutional securities, Paul Taubman, said what’s needed in 2011 is a few takeovers to set others in motion.

“There’s nothing like a handful of large M&A deals that get done and are well received to induce others to consider something similar,” Taubman said.

Through yesterday, Morgan Stanley had advised on about $469 billion in announced deals in 2010, according to data compiled by Bloomberg. That makes the bank the top M&A adviser for a second straight year, followed by Goldman Sachs Group Inc. JPMorgan Chase ranked third.