Morgan Stanley Expert: M&A Normalization Delayed to 2026 Amidst Economic Uncertainty

M&A Normalization Outlook

• 🎯 Morgan Stanley's Betsy Graseck has revised the expectation for M&A normalization relative to GDP from 2023 to 2026.
• ⚠️ This delay is attributed to initial flatlining of activity levels, partly due to tariff talks.
• 📈 Despite initial quiet, activity has been picking up with recent acquisition announcements.

Impact of Big Tech Acquisitions

• 💡 The recent Google acquisition of Wiz and other smaller deals could signal a potential green light for further acquisitions, especially from Big Tech.
• 🔑 This trend may give boards confidence to pursue M&A opportunities.
• 🚀 Graseck anticipates a building of M&A announcement activity throughout the year.

Key Drivers of M&A Activity

• 📊 M&A volumes in 2023 were at a 30-year low relative to GDP.
• 🧠 Key drivers for M&A include CEO confidence and equity market values, which serve as currency in transactions.
• 📈 Stable interest rates, even at current levels, are not considered a deterrent to M&A.

Political Factors and CEO Confidence

• ⚖️ Political factors, particularly tariffs, are seen as the single biggest question impacting industries and the overall economy.
• ✅ The expectation is that CEO confidence will build as these uncertainties are addressed, driving M&A announcements.