Preheat oven to 350 F. Using an electric mixer, cream peanut butter and butter in a mixing bowl until smooth. Add brown sugar; beat until combined. Add eggs and vanilla, and continue beating until creamy.
In a separate bowl, whisk together flour, baking powder, and salt. Gradually add dry ingredients from step 2 to wet ingredients in step 1, beating on low speed.
Prepare baking sheet by lining it with parchment paper or lightly greased aluminum foil. Place granulated sugar on a plate. Roll spoonfuls of cookie dough into balls, rolling each ball between your hands. Roll balls in sugar to coat them completely.
Place cookie balls 2 inches apart on a prepared baking sheet. Bake until cookies begin to puff up slightly, about 7 minutes. Remove from oven. Press several M&M candies on top of each cookie. Return to oven; continue baking for about 5 more minutes, until cookies just turn golden brown and chocolate begins to melt. Remove from oven and let the cookies cool at least 10 minutes on baking sheet before transferring cookies to rack to cool completely.