M&A boardrooms know they need to act before the election: top Morgan Stanley banker

Brian Sozzi
·Editor-at-Large
·2 min read

Leaders of some of the biggest companies in the world are trying hard to look beyond the fog of the Nov. 3 presidential election and ongoing COVID-19 pandemic and act on longer term ambitions and goals, argues a top Morgan Stanley executive.

“Corporate clients are beginning to act,” Morgan Stanley institutional securities group chief Ted Pick told Yahoo Finance’s The First Trade. Pick oversees Morgan Stanley’s largest division — which includes investment banking and sales and trading — and sits on the company’s executive committee. “The M&A boardroom was quiet for six months, now it’s alive again. People see that there may be a change in environmental policy and may be a change in tax regime. They need to act.”

Morgan Stanley is practicing what it preaches.

Earlier this month, Morgan Stanley closed on its $13 billion acquisition of E-Trade. The transaction is expected to boost the company’s wealth management business. Along those lines, Morgan Stanley also said this month it will acquire asset management firm Eaton Vance for $7 billion.

FILE - In this Tuesday, Oct. 18, 2011, file photo, the Morgan Stanley logo is displayed on its Times Square building, in New York. Morgan Stanley reports financial results Thursday, Jan. 16, 2020. (AP Photo/Mark Lennihan, File)
FILE - In this Tuesday, Oct. 18, 2011, file photo, the Morgan Stanley logo is displayed on its Times Square building, in New York. Morgan Stanley reports financial results Thursday, Jan. 16, 2020. (AP Photo/Mark Lennihan, File)

Both deals are expected to position Morgan Stanley to compete more aggressively with rivals JPMorgan Chase and Goldman Sachs.

But to Pick’s point, signs of execs stepping up during a period of heightened uncertainty to reimagine businesses for the next decade are building. Third quarter investment banking revenue surged at big banks such as Bank of America, Goldman Sachs, JPMorgan and Morgan Stanley.

A total of 36 deals worth north of $5 billion (a record) were announced in the third quarter, according to Refinitiv data.

And the deal-making looks set to continue into the fourth quarter.

Chip giant Advanced Micro Devices is reportedly in talks to acquire rival Xilinx. Monday brought news of ConocoPhillips spending $9.7 billion to acquire shale rival Concho Resources.

And when companies aren’t buying rivals to transform themselves coming out of the pandemic, they are restructuring workforces to meet new demand levels. In other words, handing out the pink slips.

Disney, AllState, Royal Dutch Shell and United Airlines are some of the big names announcing thousands of layoffs in recent weeks. The moves will shore up cash flow and margins in the near-term, and set them up for strong bottom line rebounds once demand returns in force (whenever that may be).

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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