This article presents an overview of the necessary conditions for the formation of shape memory alloys (SMAs) and how these must overlap with the occurrence of ferromagnetism so that ferromagnetic shape memory alloys (MSMAs) may be formed. The electronic, elastic, and geometric conditions permit an understanding of the occurrence of Cu- and Fe-based SMAs as well as NiMnGa Heusler MSMAs except that the naively determined critical electron concentration for the latter, 7.3, disagrees with the values of 1.5 and 8.6 accepted for the Hume–Rothery phases and certain Fe-based systems.