00:00You've been a little bit of a busy man over the past three months. I mean are you optimistic that
00:05this pace can continue despite all of the global disruption that we're currently living through.
00:10There is certainly a lot of global disruption and uncertainty out there. But as you just saw the first quarter
00:16has been a very active one. And that uncertainty existed the entire first quarter.
00:21So as I think about it companies are setting their long term strategies. Their M&A is definitely a part
00:28of that. If we go back in history and we look at the dot com bubble bursting and then we
00:32look at the financial crisis.
00:33Then we look at covid and some of the intermediate factors in between. Every time you've come through one of
00:41those events you know doing M&A being bigger has proven to be better for companies.
00:46And so I think you've got corporate leaders and board members who are setting their strategies for the long term.
00:51And M&A is absolutely a part of that strategy.
00:53And they're they're implementing those strategies in times of uncertainty as well as in times of you know I'll say
00:59more risk appetite a positive risk appetite.
01:01Well the fact that we've had questions of is AI going to change everything we know continued supply chain disruptions
01:07from tariffs and now a war. Can anything stop this. Can anything disrupt the M&A train that we're on
01:13right now.
01:14What I'd say is the on the AI front as an example. That's a tale of two cities. You have
01:19a number of sectors and companies who are seeing unprecedented demand for what they do.
01:25And in order to meet that demand M&A has to be a part of that. So when you think
01:29about building out the infrastructure the data center infrastructure the all the things that it's going to take to build
01:34AI to where people think it's going to be.
01:36Those kind of companies are using M&A to grow. And that's that's been driving in the first quarter and
01:41previous quarters a lot of activity. On the other side of that you have disruption from AI in certain business
01:47models.
01:47And the most sort of commonly talked about one is software where you've had a valuation reset perhaps that's pretty
01:54broad across all software that makes it harder for buyers and sellers to agree on valuation in that particular sector.
02:01So you have some positive factors some negative factors. But you add you add that all together and we're seeing
02:07an increasing market.
02:08And I do think that that those strategies those ability to sort of implement the strategies that the companies have
02:15sort of put in place is you know has has had a bigger positive effect than some of the headwinds
02:21that you're seeing.
02:22And that you mentioned in terms of the the more uncertain times.
02:25Well what about the war in Iran. You know I had spoken to Paul Taubman a couple weeks ago said
02:29it's time to put the pom poms away energy prices are elevated.
02:33They're falling this morning but still around a hundred dollars a barrel. What happens if we stay there.
02:37Well again I think I can only talk to what we see. And what we see is an increase a
02:42continued increase in dialogues between companies from an M&A perspective and a growth perspective.
02:47Remember companies are trying to create incremental value. They've got to drive growth.
02:51And M&A is as I said before M&A is absolutely part of that. And you know if you
02:56have an elevated oil price as an example for a longer period of time that will that will have to
03:02impact things.
03:02It will impact valuations. It will impact cost structures. What we're seeing in the current environment is is you know
03:08corporate management teams and boards not necessarily looking through it completely.
03:13But understanding that if this is temporary we're going to get back to a moment where you know that having
03:18done that M&A is going to be positive for their long-term value creation.
03:21And it is a long-term question. And if if we have oil prices at this level for a long
03:27-term it will it will change things.
03:28But at the moment that's not what we're seeing people act.
03:31What's the level or what's the dividing line between corporate boards saying this is short-term and planning for that
03:38versus complacency. Is any complacency creeping in.
03:42People are laser focused on day-to-day movement. So I wouldn't say it's complacency. I'd say they're making educated
03:50decisions.
03:51They're making decisions about their strategies and their long-term sort of visions with the information they have.
03:57If that information changes you're going to see different decisions. But as we sit here today that information hasn't slowed
04:02down the M&A market as you said before.
04:05And it's as I said it's it's it's fairly broad based. We've seen a lot more the uptick in cross
04:10-border activity. I know it's something you like to talk about.
04:14We've seen this quarter. And again I don't want to level set on one quarter. M&A is a long
04:18-term business. But this quarter has seen an uptick in cross-border activity which we've talked about for a while
04:24as something that makes sense. International companies looking to grow as I said drive growth but also looking to make
04:31their supply chains more resilient more efficient.
04:33So as you think about covid as you think about the tariff infrastructure that happened. Those two events shine a
04:40light on on that part of it.
04:41So growth and supply chain sort of resiliency makes sense for larger international companies to buy. The U.S. has
04:48been the principal place they've got the biggest market for people to invest into
04:52because we've got a big market a growing market and one that's sort of easier to operate than many around.
04:57How are you positioning the business and all that.
04:59I know in the fourth quarter Morgan Stanley outpaced Goldman Sachs JP Morgan in terms of being able to grow
05:04the advisory business. Are you able to keep gobbling off a bigger piece of the pie.
05:08Why. We're a global we're global firm. I think that the you know many of the trends we talked about
05:14sort of play into what we you know we're very strong at.
05:17We are very well connected global firm whether it's in Asia whether it's in Europe or in the U.S.
05:23And you know candidly the the companies that are doing these these transactions as I said that the larger transactions
05:30are companies that have been long term clients of Morgan Stanley.
05:32And so we have found that to be an area where you know we get people look to us to
05:38provide that you know trusted advice and and that has been going well for us certainly.
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