KC sets another record for M&A activity in 2022, but the deals were smaller

John Hense, managing Director of CC Capital Advisors, a subsidiary of Country Club Bank, stated that he tracked more deals in 2022 and 2021. This was a surprise to us. Some of these deals might have been pushed into 2022 because they couldn’t physically close the deals. We saw a huge Q1 in 2022, and then there was not much of an increase throughout the year. The fourth quarter was the worst. One thing stood out in the competitive deals was their smaller size. All five top deals were valued at more than $2 billion in 2021. 'That mirrors the trends we've seen in the country and what we hear from people in other countries,' Stephanie Siders, a managing Director at CC Capital Advisors. The slowdown in M&A is really the big deals. However, deals are still being done in the lower middle markets. Deals that exceed $100 million are more risky than smaller deals. The biggest driver of M&A in Kansas City is still the financial advisers. Creative Planning, based in Overland Park, closed 13 deals. This is the most for 2022. Mariner Wealth Advisors, based in Overland Park, came in second place with nine deals. Siders stated that this is a significant increase in private equity firms' ability to build larger companies. "Today, Kansas City has more private equity-backed businesses than ever before. This trend is only going to increase. Local sellers closed 109 deals while local buyers closed 127. Hense believes 2023 will be another year of strong sales, but not at the 2022 and 2021 levels. Hense stated that the stress factors of higher interest rates and volatility in the markets, which are seen in mega deals, are not as evident in the lower market. With 53 deals, financial institutions led the charge in 2022. 39 deals were closed in the life sciences and health care sectors. With 36, consumer products and services ranked third.