Place the cereal in a large mixing bowl; set aside.
Place the chocolate candy melts, peanut butter, butter and vanilla in a microwave safe bowl.
Microwave on high for 30 second increments, stirring in between, until chocolate is melted.
Pour the melted chocolate mixture on top of the cereal and stir to combine.
Place 1/2 of the powdered sugar into a gallon sized zip top bag.
Add cereal mixture to the bag and top with the remaining powdered sugar.
Close the bag and shake until all of the cereal is coated in the sugar.
Place in a large bowl and stir in M&Ms.