Impact of US Election on Mergers and Acquisitions Landscape: Morgan Stanley Analysis

The upcoming US election is not only a hot topic in the political arena but also in the world of mergers and acquisitions (M&A). According to Morgan Stanley, the outcome of the election is expected to have an impact on the M&A landscape, but regardless of whether a Democrat or Republican wins, a robust M&A cycle is anticipated.

Morgan Stanley analysts believe that a Democrat win would likely support the current strong economy, which is a key driver for M&A activity. On the other hand, a Republican win could potentially lead to a more supportive regulatory environment for M&A deals.

Despite the political uncertainty surrounding anti-trust enforcement and geopolitical implications, Morgan Stanley remains confident that the “return of M&A” will not be halted. In fact, after witnessing the lowest level of global M&A activity in over 30 years in 2023, analysts are already seeing a significant reversal in the trend, with activity increasing year-to-date.

Looking ahead to 2024, analysts expect M&A volumes to continue rising, driven by strong equity markets, open new issue markets, incoming rate cuts, and positive industry expectations. Historical data on presidential election cycles shows mixed impacts on M&A announcements, with the bank noting varying results from past election cycles.

Morgan Stanley also suggests that a hypothetical Trump win could potentially ease anti-trust enforcement, which might encourage higher levels of large-cap M&A deals. However, they also point out that there may only be slight differences between a second Trump term and a Biden administration in terms of anti-trust enforcement, but removing the uncertainty of the election outcome could boost large-cap deals in the future.