New York Fashion Week may be more diverting, but inking the next luxury goods deal is more lucrative for Wall Street.

Although the industry isn’t at the pivotal moment it was in the 1990s when Vendome Group, LVMH, Gucci and Prada transformed the international scene into multi-brand, billion-dollar empires, Merrill Lynch analysts say the number of transactions has picked up dramatically in the past few years.

In vogue in coming seasons for either an IPO, full or partial sale are brands such as Bally, Roberto Cavalli and Ermenegildo Zegna.

“If history is any guide, and if our base case scenario of a further expansion of big cap multiples materialises in coming months, the number of transactions should also increase significantly in 2008,” writes Merrill Lynch’s Antoine Colonna. “However, as opposed to the millennium, we do not expect this acceleration in the number of transactions to come with a war of attrition as most of the deals we forsee are medium-sized unlisted targets.”

Investors should watch the predators rather than the targets, Merrill wrote. On the runway as companies potentially looking for targets or likely to do share buybacks include LVMH, Swatch and Bulgari. Sector predators are generally more likely to return cash to shareholders than rush into making a major acquisition, Merrill Lynch added.

Listed names that are perennially trendy as takeover chatter include Bulgari, Burberry, Hermes and Tiffany.

But rather than impulse buy, investors should play takeover targets as a “complement to an existing longer-term fundamental stance,” wrote Colonna. ”In other words, the implicit probability that the market assigns to a bid for one of those companies is high enough not to play this theme per se but rather the improvement of their fundamentals in coming months.”

(Picture Getty Images, from Mercedes-Benz FashionWeek website)