(April 2): Companies are pushing ahead with acquisitions despite geopolitical uncertainty, volatile energy markets and the uneven effects from the rise of artificial intelligence, Morgan Stanley’s Tom Miles said in a Bloomberg TV interview.
“Companies are setting their long-term strategies, M&A is definitely a part of that,” said Miles, the bank’s global co-head of M&A.
He added that during tumultuous times, M&A has benefited companies, and management and boards are implementing their strategic initiatives despite the uncertainty.
The rapidly growing use of artificial intelligence throughout the economy is a key aspect of that trend.
“The AI front is a tale of two cities,” he said. “You have a number of sectors, companies seeing unprecedented demand, M&A has to be a part of it.” The broader build out of data center infrastructure needed to scale AI, for example, requires M&A, according to Miles.
The flip side is that AI is disrupting certain business models, particularly in software, where valuations have already undergone a reset, he added.
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M&A deal volume hit a record US$1.3 trillion high in the first quarter, according to data compiled by Bloomberg.
Energy markets remain a key risk, according to Miles. “If you have elevated oil prices, for example, for a longer time,” he said, “that will have to impact valuations and cost structure.”
However, boards are assessing whether elevated oil prices are temporary, he added. They and corporate management teams understand that if higher prices prove short-lived, they will return to a point where, having completed that M&A, the long-term value of those deals will ultimately be recognised, he said.
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Miles said cross-border interest is also continuing as companies pursue growth and adjust supply chains, making business resilience-driven deals more compelling for larger international buyers.
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