Reaching New Heights
THE PAST YEAR SAW CONTINUED OPTIMISM ON FINANCIAL FRONTS AS THE ECONOMY AND FINANCIAL MARKETS GAINED UNPARALLELED MOMENTUM DESPITE LABOR SHORTAGES AND SUPPLY CHAIN CONSTRAINT HEADWINDS THAT OCCURRED IN THE LATTER HALF OF THE YEAR. That optimism helped shape a banner year for M&A both domestically and globally, as record liquidity and favorable financing costs, coupled with confidence in the pandemic recovery, led to unprecedented deal volume and premium valuations. Given the current economic landscape, we expect dealmaking to continue at a high rate in 2022, with inflation and rising interest rates posing as potential threats to confidence in the economy.
The 2021 CC Capital Advisors State of M&A Report examined a record 253 transactions involving Kansas City-area companies, a year- over-year increase of 43%. Momentum that began building in the second half of 2020 continued throughout 2021 resulting in increased deal activity. The 253-transaction count is the highest in the 17 years of this report. Many of the macro factors seen in previous years continued to fuel deal-making, as ample liquidity, robust private equity dry powder, and a favorable lending environment combined with overall confidence in the pandemic recovery drove the record activity. Globally, M&A volume reached record highs, surpassing $5 trillion in deal value. The United States led the charge, with a record total deal valuation exceeding $2.5 trillion. Some of the top U.S. deals included a couple of local sellers: Kansas City Southern’s sale to Canadian Pacific Railway for $31 billion and Cerner’s pending sale to Oracle for $28 billion were some of the largest M&A deals nationwide.
Other noteworthy U.S. deals include: Discovery Inc.’s sale to AT&T for $43 billion, Medline Industries’ sale to Blackstone, The Carlyle Group, Hellman & Friedman, and others for $34 billion, and PPD, Inc.’s sale to Thermo Fisher Scientific for $17 billion. Locally, the M&A environment played out in a similar fashion to the broader global market, as Kansas City saw strong activity in the Financial Institutions, Technology, and Healthcare/Life Sciences sectors. Financial Institutions led the way with 51 transactions, Technology was a close second at 48, and Healthcare/Life Sciences tallied 36 deals. A few notable transactions from the past year, in addition to the aforementioned Kansas City Southern and Cerner deals, include the sale of QTS Realty Trust to The Blackstone Group for $10 billion, the reverse merger of Northern Genesis Acquisition Corp. with Embark Trucks, Inc. for $4.6 billion, and the sale of NIC, Inc. to Tyler Technologies for $2.3 billion.
YEAR IN REVIEW CC Capital Advisors had a record 2021 advising several high-quality local companies across a number of industries and transaction-types. The team advised nine successful transactions at a combined value of more than $350 million, as valuations continue to rise and companies search for growth.
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