2021 KANSAS C I T Y AR E A T RANSACT I ONS
Trends to Consider M&A RECORDS WERE SMASHED IN 2021 AS DEAL VOLUME AND VALUATIONS REACHED UNPARALLELED HEIGHTS. The pandemic motivated many sellers to contemplate a sale sooner than they may have otherwise. A market filled with an abundance of determined buyers flush with cash matched with motivated sellers has driven valuations upward. Despite record-high valuations, we expect dealmaking to continue as companies utilize record cash balances to turn to M&A as a means for growth and to remain competitive in their respective markets. Additionally, fears of potential tax increases motivated sellers to execute deals prior to year-end. Any upcoming tax legislation proposals will be worth monitoring and could impact M&A activity again in 2022. This year will bring new opportunities and challenges as record valuations, evolving monetary policy, the labor market, and supply chain constraints take center stage as central issues and trends:
INDUSTRY
SELLER
SELLER LOCATION
UNIT SOLD
BUYER
BUYER LOCATION
Q1 JANUARY Healthcare/Life Sciences
IntelligeneCG, LLC
Olathe, KS
Entirety
Ardiah Group, LLC
Overland Park, KS
VersaFlex Incorporated (Kansas City, KS)
PPG Industries, Inc. (NYSE:PPG)
Manufacturing/Distribution
DalFort Capital Partners
Dallas, TX
Pittsburgh, PA
Technology/Media/Telecom GEOS Worldwide Limited Consumer Products & Services Cranney Companies, Inc.
Montgomery, TX
Assets Entirety
Garmin International, Inc. Olathe, KS
Danvers, MA
The Flint Group, LLC
Kansas City, MO
Consumer Products & Services TITLE Boxing Club International, LLC Overland Park, KS Entirety
BoxUnion Holdings, LLC Santa Monica, CA
54 Wendy's Restaurants
Consumer Products & Services NPC International
Leawood, KS
Yellow Cab Holdings
Thorndale, PA
Healthcare/Life Sciences
Knit-Rite, Inc.
Kansas City, KS
Entirety
Thuasne SAS
Levallois-Perret, France
USI Insurance Services, LLC South Western Communications, Inc.
Financial Institutions
Creative Planning, Inc.
Overland Park, KS Creative Planning Benefits Division
Valhalla, NY
Architecture/Engineering & Construction
All Systems, Inc.
Kansas City, KS
Entirety
Newburgh, IN
RECORD VALUATIONS Strong U.S. GDP growth, large corporate cash balances, and a continued low interest rate environment have helped foster a sustained M&A appetite. Private Equity buyers remain active and will likely continue to be so in 2022. The amount of dry powder and capital from new funds available to deploy remains at record highs. The competition amongst the large pool of enthusiastic buyers has led to a willingness to “pay up” for acquisition assets, contributing to the continued rise of valuations to these record levels. INFLATIONARY PRESSURES After years of quantitative easing and aggressive government spending, the Federal Reserve’s response to price increases will be one to watch, as it focuses on balance sheet tapering and multiple rate increases throughout this next year. Rising interest rates would lead to increased financing costs for acquirers. The looming threat of increasing rates could impact acquirers that rely heavily on financial leverage to complete acquisitions, likely motivating them to complete deals sooner rather than later. Over time, increased interest rates will impact stock market valuations, which would likely translate to lower M&A valuations. LABOR Across many industries, a shrinking workforce has been a concern for business owners. Workers taking early-retirements, an evolving post-pandemic employee landscape, and a labor force that has been leaping to better paying jobs have all shaped a tightening pool of workers. Employers are faced with the challenge of
attracting workers from a decreasing pool of willing and skilled labor, driving wages up and resulting in slower growth and lower profitability. With this shortage in the skilled labor market, many companies will turn to M&A as a near-term solution to fill their employee base via acquisitions. SUPPLY CHAIN CONSTRAINTS Supply chain disruptions have played a key role in inhibiting growth for companies. Logistical obstacles in the market, a rebound in consumer demand, a shortage of supply chain labor to fulfill demand, and a shortage of shipping containers have all led to massive bottlenecks for the flow of goods. Companies have been forced to adapt to supply chain challenges, and businesses could turn to M&A as part of vertical integration strategies to mitigate supply chain risk in the future. Despite any headwinds that emerged in the latter half of 2021, the overall economy is trending positively, and M&A activity continues to point towards strong activity and valuations in 2022. So how can business owners navigate this ever-changing environment? Do you have a strategy in place to take advantage of historically high valuation multiples? Is your business prepared for a pending transition? There are many challenges to confront and factors to evaluate when contemplating the purchase or sale of a business. If your company is considering a transaction in 2022 – or just looking for strategic advice on succession planning or raising capital – be sure to engage a qualified advisor who can help provide the integrity and experience you need to make important growth decisions.
Unknown Ownership Stake Doosan Bobcat
Manufacturing/Distribution
Ainstein AI
Lawrence, KS
Seoul, South Korea
Architecture/Engineering & Construction
Burleson Consulting, Inc.
Marina, CA
Entirety
Terracon Consultants, Inc. Olathe, KS
Western Capital Resources, Inc.
Manufacturing/Distribution
Swisher, Inc.
Warrensburg, MO Entirety
Omaha, NE
Kendall Pointe Surgery Center, LLC
Healthcare/Life Sciences
Oswego, IL
Entirety
ValueHealth, LLC
Leawood, KS
Atonix Digital, LLC (Management Buyout)
Technology/Media/Telecom Black & Veatch Holding Company Overland Park, KS
Group of Investors
Overland Park, KS
American Safety Council, Inc. MGP Ingredients, Inc. (Nasdaq:MGPI)
Professional Services/Advisory S/P2
Overland Park, KS Entirety
Orlando, FL
Consumer Products & Services Luxco, Inc.
Saint Louis, MO
Entirety
Atchison, KS
Technology/Media/Telecom Catholic Faith Technologies, LLC Overland Park, KS Entirety
Nelnet, Inc.
Lincoln, NE
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