Global mergers and acquisition activity will soar this year, and several names could benefit from the comeback, according to Morgan Stanley. The firm expects global M & A volume activity to rise by 50% this year compared to 2023. It also forecasts a multiyear secular recovery, data from a new survey of 150 industry teams across the bank shows. Health care, real estate, consumer staples and technology are the most favored sectors for M & A within private markets, according to the survey. “We believe that a cyclical and structural rebound in M & A is coming,” Morgan Stanley said in a note titled “Stocks with Elevated Likelihood of Receiving an Offer,” which was released Monday. “The structural case is driven by dry powder, private markets, regional shifts and new innovations … rising demand for AI capabilities, the clean energy transition, innovation in life sciences, reshoring and geographic diversification in a multipolar world should structurally support M & A over the next cycle.” A comeback this year would mark a sharp reversal from record-low global M & A volumes in 2023, which was partly caused by higher interest rates that drove up funding costs and led to declines in global equity markets. Morgan Stanley pointed out that 2021 to 2023 could have seen a drop of activity worth between $4 trillion and $11 trillion. The firm expects a reversion to normalized activity levels by 2026, with Europe leading the recovery. Necessity and opportunity should drive more M & A activity in non-listed private companies, the firm said, noting that more than 1,200 unicorns are currently valued at $4 billion or more. “Global listed non-financials hold US$5.6 trillion in cash while private market investors sit on US$2.5 trillion of dry powder, providing fuel for activity,” the note said. The firm used quantitative models to screen for the stocks that have an elevated chance of receiving a deal offer in the next year. Take a look at some of the U.S. names below: Stocks that…
2024-03-05 11:15:00
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