State of M&A in Kansas City 2021

State of M&A in Kansas City 2021

The St a t e o f M&A i n Kansas C i t y CC CAP I TAL ADV I SORS 2021

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.

TO P D E A LS I N 2021*

LOCAL BUYER, LOCAL SELLER, OR BOTH

TRANSACTION GEOGRAPHY

CROSS BORD E R 9 Transactions

$31.0 billion — $28.3 billion — Sale of Cerner (Nasdaq:CERN) to Oracle Corporation (NYSE:ORCL) $10.0 billion — Sale of QTS Realty Trust (NYSE:QTS) to The Blackstone Group (NYSE:BX) $4.6 billion — $2.3 billion — Sale of NIC, Inc. (Nasdaq:EGOV) to Tyler Technologies (NYSE:TYL) Sale of Kansas City Southern (NYSE:KSU) to Canadian Pacific Railway (NYSE:CP) Reverse Merger of Northern Genesis Acquisition Corp. and Embark Trucks, Inc. (Nasdaq:EMBK)

Local Buyer and Local Seller 39 Deals

MISSOURI 86 Deals

KANSAS 158 Deals

Local Buyer 94 Deals

I N T E RNAT I ONA L 23 Transactions

253 TOTAL DEALS

Local Seller 120 Deals

Note: * This list of top deals is compiled from the limited number of transactions for which terms were disclosed. Many deals do not disclose pricing and thus are not included on this list.

34% Financial

STRATEGIC VS FINANCIAL

66% Strategic

DEALS BY INDUSTRY

51 36

48

253

HISTORICAL M&A ACTIVITY BY QUARTER

28 21

24

15

207

7 3

14

195

10

6

3 6 182

177

5 0

4 7

160

149 151

5 2

144

7 1

132 137

4 3

130

5 0

128 126

3 4

Architecture/ Engineering Construction

Consumer Products & Services

Energy/Utility & Infrastructure

Financial Institutions

Food/Agriculture & Animal Health

Healthcare/ Life Sciences

Manufacturing & Distribution

Professional Services/ Advisory

Technology/Media & Telecom

Transportation & Logistics

3 7

4 4

5 1

4 6

114

2 8

3 7

3 3

3 3

3 0

4 4

3 3

3 8

2 5

4 5

3 2

5 7

3 3

Q4 Q3 Q2 Q1

2 7 2 9

3 2

4 3

3 7

5 2

4 5

5 8

3 1

3 2

4 3

4 1

3 2

2 8

3 1

2 9

2 6

2 7 2 8

2 7 2 3

5 7

5 7

5 1

5 2

4 9

4 1

4 0

3 9

3 4

3 6

3 9

3 4

3 3

TOP DEAL MAKERS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

LOCAL M&A ACTIVITY BY MONTH

Mariner Wealth Advisors

14

6

Creative Planning, Inc.

28

253

26

25

25

25

4

Terracon Consultants, Inc.

23

20

19

4 4

ProPharma Group Holdings, LLC

17

16

15

14

Aria Care Partners

Monthly Deals Cumulative Deals

2

4

6

8

10

12

14

16

0

N U M B E R O F T R A N S A C T I O N S

JAN

FEB

MAR

APR

MAY

JUN JUL

AUG

SEP

OCT

NOV

DEC

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

INDUSTRY

INDUSTRY

SELLER

SELLER LOCATION

UNIT SOLD

BUYER

BUYER LOCATION

SELLER

SELLER LOCATION

UNIT SOLD

BUYER

BUYER LOCATION

Q1 FEBRUARY Professional Services/Advisory Wellington

Q1 MARCH Technology/Media/Telecom Employee Vitals

Overland Park, KS Entirety Lake Forest Park, WA Entirety Prairie Village, KS Entirety

Augeo

St. Paul, MN

Overland Park, KS Entirety

Selflessly, Inc.

Indianapolis, IN

Consumer Products & Services Town Center Hardware Professional Services/Advisory i. BossWell, Inc.

Westlake Hardware, Inc. Lenexa, KS

Focus Financial Partners (Nasdaq:FOCS) Terracon Consultants, Inc.

Financial Institutions

Prairie Capital Management, LLC Kansas City, MO

Entirety

New York, NY

Wayne M. Powell Winco Fireworks International, LLC

Kansas City, MO

Architecture/Engineering & Construction

Wholesale and Retail Divisions

GET Solutions, Inc.

Virginia Beach, VA

Entirety

Olathe, KS

Consumer Products & Services Victory Fireworks

Ellsworth, WI

Grandview, MO

Geriatric Practice Management Corp

Netsmart Technologies, Inc.

Essex, United Kingdom

Healthcare/Life Sciences

Asheville, NC

Entirety

Overland Park, KS

Manufacturing/Distribution

Durite Limited

Entirety

Safe Fleet Holdings, LLC Belton, MO

Retina Consultants of America ProPharma Group Holdings, LLC Penske Commercial Vehicles US, LLC

Technology/Media/Telecom KVG Partners; Reimagined Ventures

N/A

Paragon Mobile

Zego, Inc.

Kansas City, MO

Healthcare/Life Sciences

Retina Associates, LLC

Shawnee Mission, KS Entirety

Southlake, TX

Retirement Plan Division

Financial Institutions

Iron Financial, LLC

Northbrook, IL

Creative Planning, Inc.

Overland Park, KS

Diamond Pharma Services Limited

Harlow, United Kingdom

Healthcare/Life Sciences

Entirety

Overland Park, KS

Crimson Midstream Holdings, LLC Tortoise Acquisition Corp. II (Reverse Merger)

CorEnergy Infrastructure Trust (NYSE:CORR)

Energy/Utility & Infrastructure Carlyle Investment Management

Washington, DC

Kansas City, MO

Kansas City Freightliner Division

Consumer Products & Services Westfall O'Dell Dealer Group

Kansas City, MO

Dallas, TX

Volta Industries, Inc. (NYSE:VLTA)

Energy/Utility & Infrastructure Tortoise Sponsor II, LLC

Leawood, KS

San Francisco, CA

Consumer Products & Services Jay Hatfield Mobility, LLC Lee's Summit, MO Entirety

Mobility Works

Akron, OH

The Blueprint Insurance Services

Financial Institutions

San Diego, CA

Entirety

Lockton, Inc.

Kansas City, MO

Tranquil Lakes Investment Advisors

Ameriprise Financial, Inc. (NYSE:AMP)

Financial Institutions

Waddell & Reed Financial, Inc. Madison, WI

Minneapolis, MN

Tyler Technologies, Inc. (NYSE:TYL) Buyers Edge Platform, LLC

Technology/Media/Telecom NIC, Inc. (Nasdaq:EGOV)

Olathe, KS

Entirety

Plano, TX

Group Purchasing & Beverage Consulting Divisions

Consumer Products & Services Twilight Solutions, Inc.

Walnut Creek, CA

Entirety

Bravas, LLC

Overland Park, KS

Professional Services/Advisory Proairus Innovations, LLC

Lawrence, KS

Waltham, MA

PBMA Division of Piraeus Bank

Euronet Worldwide, Inc. (Nasdaq:EEFT)

Financial Institutions

Piraeus Financial Holdings S.A. Athens, Greece

Leawood, KS

Consumer Edge Research, LLC

Professional Services/Advisory Savvr, LLC

Kansas City, MO

Entirety

New York, NY

Financial Institutions

Kendall Bank

Valley Falls, KS

Entirety Entirety

Mark Emley Group

Overland Park, KS Mission Woods, KS

Technology/Media/Telecom Health Outcomes Sciences, Inc. Overland Park, KS Assets

Terumo Corporation GlynnDevins, Inc.

Tokyo, Japan

Manufacturing/Distribution

Realm Companies, LLC

Newton, IA

Great Range Capital

Technology/Media/Telecom Bluespire

Minneapolis, MN

Entirety

Kansas City, MO

DePere and Harvard Milk Processing Plants South American Plant Nutrition Business

Food/Agriculture & Animal Health

Dairy Farmers of America, Inc.

Kansas City, KS

NDSM Holdings

Dallas, TX

Food/Agriculture & Animal Health

Compass Minerals International, Inc. (NYSE:CMP) Overland Park, KS

ICL Group, Ltd.

Tel Aviv, Israel

Specialty Insurance Solutions, Inc.

RSC Insurance Brokerage, Inc.

Financial Institutions

Lenexa, KS

Entirety

Boston, MA

Aquiline Capital Partners; Stone Point Capital

Technology/Media/Telecom JLL Partners

New York, NY

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