Mergers & Acquisitions
Cannabis Industry Mergers & Acquisitions: Relationships Make the Deal
Finding buyers and negotiating deals. It sounds simple enough. It is also simple enough to leave money on the table or overlook unique complexities when cannabis considerations are layered on top of exit strategy.
With the current headwinds facing the cannabis industry, many operators are considering their next move. For some, that path will lead to a merger or acquisition. Cannabis license holders and operators who are contemplating the M&A process will benefit from the powerhouse combination of Jay Czarkowski and Kris Krane.
Together, Jay and Kris harness their vast relationships across the industry to connect cannabis entrepreneurs with potential buyers of cannabis businesses and licenses. Known as trusted advisors and industry influencers, their combined perspective is unmatched for connecting the pieces and players that line up for a profitable exit for cultivation, processing, or dispensary operations.
Success for Getting Cannabis Entrepreneurs In – and Out – of the Industry
Having worked with clients and helped win licenses in close to 40 states and internationally, Jay and Kris are already intimately familiar with the various state programs, rules, and unique considerations for M&A planning and negotiations.
They add value by determining if businesses are compliant and financially sound, or if there are partnership issues or ownership complications that arise from regulatory compliance.
With the expertise of getting countless cannabis entrepreneurs into the industry, Jay and Kris are the perfect duo to get you out when the time is right.
How to Plan for a Cannabis Merger or Acquisition
Exclusive Representation: 8 Phases
For the cannabis M&A process, we typically work with sellers on an exclusive representation basis. In this scenario, we know that multiple companies will want to acquire your license or operation.
The formal exclusive representation process includes these 8 phases of finding buyers and negotiating deals:
- Evaluate pricing range
- Set bid deadline
- Leverage key industry contacts for outreach to potential buyers
- Take bids
- Review bids
- Select top 2 or 3 bids
- Negotiate one round
- Select winner
The exclusive representation scenario is most common in markets with a limited number of licenses.
More appropriate for depressed or distressed markets, this non-formal process includes leveraging our vast network of potential buyers and reviewing bids as they come in.
NOT FINANCIAL ADVICE.
Content is for informational purposes only and is not intended as and shall not be construed as financial advice, legal, tax, investment, or other advice. M&A services are limited to representing sellers. Services do not include any formal financial advice and are limited to finding potential buyers and negotiating details and terms of the sales agreement.
Which Cannabis Businesses are Viable for M&A
Cannabis businesses at any phase of operations or any part of the vertical are viable options to put on the market for a merger or acquisition.
Selling a Cannabis License
Licenses, themselves, can be sold as a stand-alone asset before any work has been done to open or operate the related business. An example scenario is a business owner who won multiple licenses in a state where there are a limited number of licenses available. That owner later decides to open a business for only one of the licenses and is just holding onto ownership of the unused licenses. Selling the valuable asset does require regulatory compliance – which our team is equipped to navigate – but is often one of the most straightforward and in-demand options for M&A activity within the cannabis industry.
Selling an Operational Cannabis Business
Cultivation, processing, dispensary, or vertically integrated cannabis businesses that are currently operating bring a different set of buyers and dynamics to the M&A table. With leadership experience of an MSO and vertically-integrated operations on our team, we know the nuanced considerations for deal terms and structures that only come with cannabis operations.
Selling Cannabis Brands and Product Lines
Competing in the evolving cannabis market will require cannabis operators to build and offer strong brands and product lines. Often, operators and MSOs looking to jumpstart their growth into new markets will look to acquire cannabis manufacturing/processing businesses that are already operational and established.