Market Overview

Capital Raise, M&A Activity Remains Light Heading Into 2020

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Capital Raise, M&A Activity Remains Light Heading Into 2020

The Viridian Cannabis Deal Tracker provides the deal data/terms/valuations/structures and market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital and M&A strategy.

Each week the Tracker analyzes/aggregates all closed deals and allocates each transaction to one of twelve 12 key industry sectors in which the deal occurred (from Cultivation to Brands), the region in which the deal occurred (country or U.S. state), the status of the company announcing the transaction (public vs. private) and th type of deal structure (equity vs. debt).

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $45 billion in aggregate value. Find it exclusively on Benzinga Cannabis every week!

INVESTMENT AND M&A ACTIVITY IN THE CANNABIS INDUSTRY

01/01/2020 - 01/10/2020

CAPITAL RAISES

  • Capital raise activity is light heading in to 2020 with 7 deals to begin the year compared to 15 to start last year. However, the average deal size in this year’s period is more than 2.5x the same period for last year.
  • Asset-backed debt remains a popular form of financing as exemplified by Subversive Capital raising $200 million to finance real estate. Sale leasebacks will likely remain a popular option for established companies to raise operating capital. 
  • Existing operators continue to raise capital to build out infrastructure in order to cultivate with the scale required to compete in today's market. 

MERGERS & ACQUISITIONS

  • The decline in M&A transactional activity we reported on throughout 2019 continued in 2020, with only 1 reported deal this period vs. 12 for the same period in 2019.
  • The long awaited acquisition of Origin House by Cresco was completed in Week 2, although at a reduced valuation to what was originally agreed upon. Deals are mostly being cancelled or reworked as the cannabis industry continues to recalibrate to more reasonable valuations. 
  • We expect 2020 to see more merger activity than acquisitions, as consolidation remains necessary to drive scale, efficiency and profitability. However, cash remains tight. Cannabis industry acquisitions have evolved from a land grab mentality to one focused on accretive financials and operational efficiency. 

WEEKLY SUMMARY

CAPITAL RAISES-WEEKS 1 AND 2

MERGERS & ACQUISITIONS - Week 2

See Also: Despite End-Of-Year Spike, Cannabis Capital Raises For 2019 Lagged Compared To 2018

YEAR-TO-DATE SUMMARY

CAPITAL RAISES

 

Capital Raises by Week

Capital Raises by Sector

MERGERS & ACQUISITIONS

M&A Activity by Week

M&A Activity by Sector

Photo by Javier Hasse.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.\

Posted-In: Cannabis Deals Cannabis M&A Scott Greiper Viridian Viridian CapitalCannabis News Markets Best of Benzinga

 

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