Morgan Stanley unlikely to seek major M&A

Morgan Stanley is unlikely to seek out M&A deals exceeding $5 billion within the next couple of years, Chairman and CEO James Gorman said during an investor conference.

Morgan Stanley has pulled the trigger on some large deals in recent years. In 2021, the company completed its $9.15 billion purchase of Eaton Vance Corp., and in 2020, it completed an $11.72 billion transaction for E*TRADE Financial LLC.

"I think it's unlikely right now we'd be doing something like that," Gorman said at the event. "We're not going to use a lot of capital on deals."

Gorman added that few in the industry have the confidence to approach investors with major M&A proposals while the market is so volatile.

From an operational standpoint, Gorman said a recession is not likely to be severe or a major issue for Morgan Stanley because the company is designed for this kind of environment. While inflation and rising Fed interest rates pose challenges, consumer balance sheets remain strong and consumers are generally employed and in good shape, Gorman said.

"I think eventually the Fed will get ahold of inflation ... but it's going to be bumpy," Gorman said. "People's 401(k) plans are going to be down this year, but we're unlikely at this stage to go into a deep or long recession."

Additionally, Morgan Stanley's wealth management and investment management businesses remain stable, Gorman said.

"We've talked a lot about the wealth management business," Gorman said. "It's gone through incredible change going back to 2006 when we really started on the journey of making it Morgan Stanley caliber and earning the respect of the rest of the institution."