After nearly two decades of taking a back seat to the U.S., Eurobankers finally reclaim their place at the head of the global M&A deal table. Will they be able to hold onto their newfound title?

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Forty-six-year-old Gordon Dyal has something in common with such historical figures as Paraguay’s El Supremo, celebrated 1940s French screenwriter and Nazi resister Jean Aurenche and even Fidel Castro.

No, it’s not that he considers himself to be an especially ­political creature — it’s that he knows what it’s like to sleep in a different bed every night. As the global head of M&A for Goldman Sachs, he is, de facto, the world’s top Eurobanker, jetting anywhere from Asia to South America. He’s always in motion.

Americans are still smarting from last year’s revelation that European deal values had outstripped those of the U.S. by $50 billion as of April 2007, amplified by the strength of leading European currencies over the dollar. But Europe’s players knew full well what was coming. Hailing from a smattering of Old World countries, they were trouncing their Wall Street brethren as leveraged buyouts, hostile bids and cross-border consolidations prompted M&A volumes to soar throughout last year.

“The reality is that the ­merger business is no longer the exclusive domain of Wall Street,” says Dyal, an American who now lives in London. “The largest deals are not done by ‘American’ companies anymore, but by global companies. They may be based in certain cities in the U.S., Europe or Asia, but they’re really looking at transacting on a global scale.”

Privately, some U.S. bankers scoffed at the idea that Europe could reclaim its throne after nearly 20 years of New World dominance (after all, the last time Europe bested Wall Street was in 1990 — the first full year of German reunification). But as subprime woes deepened and Europe’s lead over the U.S. swelled to $150 billion by the end of 2007 on $2.1 trillion of new deals, it appeared that Europe was undeniably back on top.

The dawn of a new year brings both hindsight and clarity. And it’s now clear that the credit crunch is not only squeezing the States worse than the Continent, but that Europe is poised to build on its newfound supremacy by capitalizing on the sizable gains it realized in 2007, led by a skilled cadre of multilingual, multicultural bankers ready to tackle deals that continue to emerge in the EMEA region.

While the subprime fiasco has slowed things down significantly, announced European transactions are still topping those in the U.S. (by 230 deals and $119.6 billion as of mid-March, according to Bloomberg data), and many bankers stationed overseas are predicting an uptick in international M&A for the second half. Already in 2008, Europe has produced a respectable haul of $303.2 billion in deals, against the U.S.’s paltry $183.6 billion (also as of mid-March), proving that, at least for now, megatransactions have trended east.

Dyal, along with a handful of other top European M&A stalwarts (who, for the most part, use London as their main base of operations), stands at the forefront of this trend. Key executives leading the charge for the choicest pieces of this market include U.K. native Gavin MacDonald, global head of M&A for Morgan Stanley; Piero Novelli, global head of M&A for UBS; and Carlo Calabria, head of European M&A for Merrill Lynch. Novelli and Calabria are both Italian; Dyal, a New Mexico native, was raised in California.

Last year, Morgan Stanley, Goldman and UBS (in that order) reaped the lion’s share of European M&A business, representing nearly 90 percent of the market, up from about 74 percent a year ago. But that’s only one indication of how quickly the major players are shoring up their market share. The next three firms in that pecking order — JPMorgan, Merrill and Citigroup — had a photo finish in 2007, with only a $3 billion difference in overall deal values among them, according to Bloomberg.

Out of the gate this year, UBS raced to the front of the pack near the end of the first quarter, with Citigroup and Deutsche Bank on its heels close behind. Since the next five dealmakers in that ranking led the field last year, bankers expect to see another white-knuckle round of league-table compe­tition in 2008.

With most of the world’s gargantuan transactions still emerging from Europe — ­remember, last year’s biggest headline grabbers were the $187 billion bid by BHP Billiton for London-listed mining company Rio Tinto (led by Dyal) and the $102 billion buyout of Dutch bank ABN Amro (advised by Novelli) — competing firms are teaming up increasingly often to get deals done.

As those deals grow larger and more complex, investment banks have invited a burgeoning number of competitors to lend a hand to share the financing risk — and the profit.

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