Podcast Summary: Thoughts on the Market – "M&A Poised to Gain Momentum"
Host: Andrew Sheets, Head of Corporate Credit Research, Morgan Stanley
Date: October 29, 2025
Episode Overview
This episode provides a concise analysis of the current outlook for global merger and acquisition (M&A) activity. Andrew Sheets explores why M&A is gaining momentum, identifies key drivers behind this resurgence, and highlights sectors and regions where activity is expected to be robust. He connects macroeconomic conditions, regulatory shifts, and corporate behaviors to present a compelling case for a multi-year wave of deal-making.
Key Discussion Points & Insights
The Case for a Multi-Year Uplift in M&A (00:17)
- Continued Conviction: Morgan Stanley firmly believes in a significant, multi-year uptrend in global M&A activity.
- Current State: Activity has begun to pick up, but remains below what fundamentals suggest and has further room to grow.
“M&A has now returned and importantly, we think there’s much further to go.”
— Andrew Sheets (00:42)
Drivers of Increased M&A Activity
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Declining Policy Uncertainty (01:00)
- US tax legislation is now settled; tariff rates are finalized.
- Reduced uncertainty boosts corporate confidence.
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Falling Interest Rates (01:23)
- Anticipated rate cuts by the Fed, ECB, and Bank of England should further ease financing conditions.
-
Possible Loosening of Bank Capital Requirements (01:38)
- Easing requirements could unlock additional lending for M&A transactions.
-
More Permissive Regulatory Backdrop (01:54)
- Both US and Europe are experiencing a more accommodative stance, potentially marking the “most permissive regulatory window for transactions” in years.
“We think that companies may think that this is going to be the most permissive regulatory window for transactions that they might get for some time.”
— Andrew Sheets (01:59)
-
Private Equity “Dry Powder” (02:12)
- Over $4 trillion in available capital.
- Wide open credit markets facilitate deal financing.
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Surge in Corporate Capital Expenditure (02:28)
- Rising capex signals increased corporate confidence and urgency to undertake strategic actions beyond share repurchases.
Quantitative Forecasts & Regional/Asset-Class Implications
-
Projected Global M&A Volumes:
- 32% increase in 2025
- Over 20% increase in 2026
- $7.8 trillion in total global M&A volume by 2027 (02:51)
-
Regional Highlights:
- Growth to be broad-based, especially pronounced in Japan.
-
Cross-Asset Relevance:
- M&A activity is a key contributor to US high-yield bond outperformance.
“MA already being one of the biggest drivers of bond outperformance within the US high yield market.”
— Andrew Sheets (03:04)
Macro & Micro Perspectives
- Analyst Polling: Majority of Morgan Stanley sector analysts foresee increased M&A within their coverage areas (03:15).
Sector Highlights & Opportunities (03:25)
- United States:
- Healthcare and biotech expected to see uptick in M&A.
- Europe:
- Banking and media stand out for deal potential.
- Global:
- Business services, metals & mining, telecom, aerospace, and defense seen as prime sectors for activity.
- Strong case for large companies acquiring smaller, undervalued peers.
“Morgan Stanley analysts generally see the strongest case for activity in larger companies acquiring these smaller ones.”
— Andrew Sheets (03:54)
Notable Quotes & Memorable Moments
“We forecast global MA volumes to increase by 32% this year, over an additional 20% next year, and reach $7.8 trillion in volume in 2027.”
— Andrew Sheets (02:51)
“All of these favorable conditions together argue for activity to push even higher.”
— Andrew Sheets (02:40)
Timestamps for Important Segments
- 00:17: Introduction – Recap of M&A momentum and outlook
- 01:00: Policy clarity and corporate confidence
- 01:23: Interest rates and financing conditions
- 01:54: Regulatory environment shifting positively
- 02:12: Role of private equity
- 02:28: Capital expenditure as a signal of confidence
- 02:51: M&A forecasts and global/regional trends
- 03:25: Sector-specific opportunities
- 03:54: Larger companies likely to acquire smaller peers
Tone & Takeaways
Andrew Sheets delivers the episode in a direct, analytical style, confidently outlining why M&A is poised for sustained growth. The discussion is optimistic but grounded in multi-faceted data and first-hand polling, providing actionable intelligence for investors and industry insiders.
This summary ensures listeners who missed the episode can quickly grasp the major themes, data, and sector insights around the evolving global M&A landscape.