M&A Poised to Gain Momentum

Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley, discusses the anticipated multi-year increase in global merger and acquisition (M&A) activity. He highlights several factors contributing to this trend, including declining policy uncertainty and interest rates, potential reductions in bank capital requirements, a more accommodative regulatory environment, significant private equity dry powder, and a surge in capital expenditure indicating rising corporate confidence. Morgan Stanley forecasts substantial increases in global M&A volumes, projecting $7.8 trillion by 2027, with particular growth expected in Japan and specific sectors like healthcare, biotech, banking, media, business services, metals and mining, telecom, and aerospace and defense. The analysis suggests a strong case for larger companies acquiring smaller ones due to valuation discounts.