MJBizMag January 2021 - 60

Landing a
Buyer
Vita said Columbia Care focuses on four primary factors when
determining whether a company is a good merger or acquisition
target:
* The operation's resources and assets.
* Its business strategy.
* Corporate ethos and financial conditions.
As part of the M&A process, Vita's team also assesses the strength
of a target's leaders and employees as well as its supplier list, customer
base and other physical and intangible assets. Companies looking to
be acquired by larger conglomerates may position themselves well by
creating a presentation deck that includes such details.
" Some companies bring with them real expertise in cultivation, "
Vita said. " Others bring specific types of licenses; others bring brands
and products. "
Columbia Care also focuses on how a target's business is being
run, such as whether it has procedures in place to follow compliance
regulations, pay taxes and fulfill financial obligations.
The firm looks for companies that can help Columbia Care achieve
its national goals, such as by complementing its existing operations
or adding additional revenue opportunities. These targets also must
show they can help Columbia Care " get deeper and more embedded
into the leadership position " that it would like to achieve in the
markets where it operates.
BEING PREPARED
Thoughtful Brands, a Vancouver,
Canada-based CBD and e-commerce
retailer, makes similar assessments
when identifying companies and
brands to add to its operations.
" We look to acquire e-commerce
CBD brands with existing customers
and revenue, " Thoughtful Brands
CEO Ryan Hoggan said. The
company is particularly interested in
brands with more than $500,000 in
annual revenue.
" At the moment, we are looking
Vetting Potential Buyers
Sensitive information is shared during the
acquisition process, and those selling a cannabis
business must ensure that they are working with
a credible buyer.
" There are a lot of lookie-loos in the cannabis
industry, " said Ryan George, founder
of California-based 420Property.com,
CannabisMLS.com and other sites that list
marijuana businesses and assets for sale.
" You don't ever really see a business put its name
out there when they're up for sale. It's more or
less something like, 'There's a business for sale in
the Denver area. These are the general figures
that it's doing per month, and here's the price,' "
George said. " If you want more information,
you have to fill out a (nondisclosure agreement)
and provide proof that you have the capacity to
purchase that business. "
Ryan Hoggan
for traditional direct-to-consumer
brands and also brands with retail distribution-usually regionally, "
he said of potential acquisition targets. " Another appealing factor is
if a brand has a unique product or delivery mechanism that, with
our resources, we can help grow. "
Thoughtful Brands, which formerly operated as Mota Ventures,
announced last January that it completed the acquisition of U.S.-based
CBD brand Nature's Exclusive. The company subsequently announced a
series of deals, including the September acquisition of Kentucky-based
hemp-extraction company American CBD Extraction Corp.
Hoggan recommends companies looking for a buyer put together a
due-diligence folder with critical information about their business as
well as a presentation deck showing their unique selling propositions
and intellectual property.
60 Marijuana Business Magazine | January 2021
PROTECTING CONFIDENTIAL
INFORMATION
Owners with active listings should be aware that
companies and individuals sometimes inquire
about a business listed for sale just to get more
information about the industry, to investigate
area competition or other purposes not related
to proper due diligence. Cultivation facilities
and other operations with plants and products
on-site also must be careful about sharing
information from a security standpoint.
Brokers can serve as the gatekeepers to sellers
and keep their proprietary information safe until
the appropriate time.
California-based Cannabis Business Brokers
asks prospective buyers to provide either
a bank statement, letter from a financial
adviser, balance sheet or some other financial
documentation before sharing a seller's
confidential materials or contact information.
" When we bring somebody to our sellers, we
have to know that the potential buyer can close
the transaction, or we're doing them a disservice
and ourselves a disservice, " said Karen Muller,
founder of Cannabis Business Brokers.
TWO-WAY STREET
New York-based Columbia Care welcomes
companies that it is considering for acquisition
to perform their own due diligence of its
corporate culture and operations, CEO Nicholas
Vita said. This happens both through a sharing
of documentation such as investor pitch decks
as well as walk-throughs of business operations
and discussions during the negotiation process.
" Our job is to make sure that the people who
partner with us trust us with their reputations
and with the value they've created in their own
businesses. That's a very serious responsibility, "
Vita said.
- Adrian D. Garcia
http://www.420Property.com http://www.CannabisMLS.com

MJBizMag January 2021

Table of Contents for the Digital Edition of MJBizMag January 2021

MJBizMag January 2021 - 1
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