The numbers coming out of the first quarter of 2014 paint a cautiously sunny picture. Some data pointed to a stellar outlook. Deal value soared, with the first three months of the year yielding total middle-market deal value of $66.9 billion -- the highest for the first quarter since 2008. And yet, closing many deals continued to prove challenging in the first quarter, as it was throughout the previous year.

At 506, the number of completed middle-market deals in the first quarter dropped to the second-lowest level it has been in five years, ahead of only the first three months of 2012, which produced 487 completed transactions worth $1 billion or less. (Watch video interviews with commentary on the first quarter on our video site and below.)

The news may soon get better. Signs that momentum is building came from Mergers & Acquisitions’ monthly surveys of middle-market dealmakers throughout the quarter. Participants polled in March reported the highest level of early-stage deal flow seen in six months, according to the Mid-Market M&A Conditions Index (MACI), a barometer created by Mergers & Acquisitions and published in partnership with PwC. Dealmakers also predicted activity will increase significantly over the next three and 12 months, as demonstrated by the positive sentiment expressed in the Mergers & Acquisitions Mid-Market Pulse (MMP), sponsored by McGladrey. (For a full list of completed deals from the first quarter, click here.)

“I’m bullish about 2014 being better than 2013,” said David Williams (pictured), CEO of Deloitte Financial Advisory Services LLP. “Economic conditions are certainly better,” said Williams, adding a mild warning that there is still a sense of uncertainty about the economy. And not all sectors are equal, Williams pointed out.

One sector that produced a lot of dealmaking activity in the first quarter is oil and gas. The quarter saw Atlas Resource Partners LP’s (NYSE: ARP) January purchase of a natural gas reserve that was being shopped by GeoMet Inc. for $107 million, followed by Regency Energy Partners LP’s (NYSE: RGP) February purchase of Hoover Energy’s Midstream assets for $290 million. Encore Energy Partners (NYSE: ENP) also completed a deal in February when it spent $549.1 million on assets sold by Anadarko E&P Onshore LLC.

There were also some bright spots in health care, as dealmakers note the continuing focus on medical devices, as well as alternative services outside of traditional hospitals. Toward the end of the quarter, Stryker Corp. (NYSE:SYK) wrapped up its $14 million acquisition of Patient Safety Technologies Inc., a maker of software used to improve patient safety during operations and reduce healthcare costs. There was also Global Healthcare REIT Inc.’s continuing focus on health care facilities. The company spent $2 million for a skilled nursing home in Tulsa, Okla., just one of several deals involving senior centers, as buyers look to capitalize on services for the country’s aging population.

Dealmakers predict M&A in the health care sector is expected to outperform the overall market, according to results from the MMP. In the financial services sector, New York Life Investment Management sealed a $511.9 million deal in early February for the fund management unit of Franco-Belgian lender Dexia SA after the two companies entered exclusive talks in September 2013. Private equity firm the Riverside Co. grew portfolio company Paradigm Tax Group on several occasions throughout the first quarter. The firm bought Pence & Associates, headquartered in Kansas City, Mo., to strengthen the tax group’s Midwest presence, for an undisclosed price. That deal followed two others in January, where Riverside bought AVS Tax Inc. and Hart Property Consultants, folding each into Paradigm.

Separately, Riverside’s rapid-fire pace of snatching up middle-market companies also points to yet another notable trend, and that’s the number of add-on acquisitions that took place among private equity firms, says Greg Metz, a partner at law firm Ropes & Gray.

“What you’re seeing is more of a willingness of private equity funds to do smaller add-on acquisitions to platform companies.” Cautious optimism is the mood, says Metz. “We’ve seen a real uptick in activity levels across the private equity group, and we stretched to be able to accommodate the deal flow.” For Metz, this is a position the firm hasn’t seen in a while, adding, “It seems like a nice bounce back from where we’ve been.”

Others agree, so long as the debt markets remain stable and there is no government shut down or regulatory overhang, explains Christopher Keefe, a partner at Nixon Peabody LLP.

“The market is still very much a barbell,” Keefe says. “But I’m sensing that it is going to be a better year.”

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