MJBizMag November-December 2021 - 86

BestPracticesInRetail | Solomon Israel
In the context of the Ontario
cannabis market, Friendly Stranger's
real estate strategy also paid off. The
acquisition provided Fire & Flower with
retail locations that were already open
along with promising future locations.
Showing Your Work
Pure Green co-founder Matt Walstatter
advises would-be sellers to focus on
professional-level bookkeeping from
the outset.
" If you can't show your financials for
the life of your business, you can't get
bought, " he said.
Lynn said High Fidelity's acquisition
was simplified because the company's
investor notes were all structured in the
same, straightforward way.
" We didn't deviate from those notes
that we put out, " he said. " They were
the same for everybody. "
Going Steady
Working through an acquisition can be
" kind of like dating, " Lynn said.
" It takes a while to go through all
those conversations. Then you bring in
the lawyers, of course, and they bring
up all the things that you don't ask your
date ... and you start having those hard
conversations. "
Lynn observed that contentious
aspects of a negotiation can test
the relationship between a business
and its would-be buyer. But he found
success by " maintaining a positive
rapport throughout the process, even
when the lawyers were fighting with
one another. "
" We'd step back and be like, 'Let
them fight. We're still friends, and (we)
want to be business partners.' "
Matt Walstatter recommends finding
at least one adviser who's sold a
company and can serve as a sounding
board throughout the process.
Cash, Stock and Beyond
It's also worth carefully considering
how to be compensated for the
acquisition, Walstatter added. " If you
are taking a significant amount of
stock, you really need to be sure about
this company, " he said.
Stock might have more potential
upside than cash, but it can also lose
value rapidly and leave the seller
empty-handed.
Walstatter reminded would-be
sellers that cash or shares aren't the
only ways to get paid. For example,
he negotiated a one-year consulting
contract with C21, and Meghan
Walstatter received a yearlong
employment contract that paid her a
salary in line with the responsibility of
a district manager overseeing multiple
stores.
" I encourage people to be creative in
thinking about how you structure those
transactions, " Walstatter said.
Reasonable Valuations
Former Friendly Stranger President
Jesty recommends sellers set a
reasonable value on their business. He
added that Ontario business owners
are still asking for " really big dollars "
for their retail stores.
" If you're at the corner of Main and
Main, and you've got a fully built store,
maybe you've got a bit more of a price
(that) you can ask " for, he said. " But I
86 MJBizMagazine | November-December 2021
James Jesty
The former Pure Green cannabis store in Portland, Oregon, was sold to a larger company. Courtesy Photo
would say, if I was looking at it today,
I would love to cover my costs and
maybe make a bit of money. You're not
retiring on it anymore. "
Telling Your Staff
Generally speaking, a retailer's
frontline staff won't be aware of
an acquisition until it's publicly
announced. It's important for sellers to
be prepared for their reactions.
Jesty counsels " overcommunicating "
and being " clear and concise " about
what the sale means for employees.
Have answers from the acquiring
entity ready to go, he advised.
Matt Walstatter said transitions such
as an acquisition are likely to create
anxiety, and he emphasized the need
for honesty and accessibility.
" Once we knew what was going to
happen, we got everyone together,

MJBizMag November-December 2021

Table of Contents for the Digital Edition of MJBizMag November-December 2021