Growth can come through the acquisition of businesses at the grassroots level.
“We are buying to continue to grow.”
That's according to Olivier Blechner, who joined the Benzinga Cannabis Capital Conference Thursday in Miami Beach, Florida, to talk about scaling through M&A and retail expansion.
Blechner, who is the executive vice president of business development at Jushi Holdings Inc JUSHF, joined moderator Steve Miles, the CEO at Sharp Capital Advisors; M&A and integration vice president TJ Cole of Cresco Labs Inc CRLBF; MariMed’s CFO Jon Levine; and Qualcan’s director and founder Michael Cristalli.
Drivers Of M&A: Among the factors behind a lot of the M&A in cannabis are cost and regulation.
“It takes time to generate revenue when building from the ground up,” Levine said. A preferred approach is to seek existing license holders with successful operations and, then, “try to roll them into MariMed.”
Blechner echoed Levine’s comments.
Ultimately, the industry will consolidate down to “five or six players,” Levine said, and based on current trends, that’s where the industry is heading “in the foreseeable future,” according to Miles.
Things To Watch: When consolidating, it’s important to watch for a business’ revenue growth and margin efficiency, Cole explained.
“Strategic depth and breadth are part of our core,” he says. It’s important to find sellers that are “extremely like-minded.”
Cristalli added that he looks for “good operations and strategic partnership.”
Properly Valuing: Miles asked whether the public market’s view impacted the value of businesses up for sale.
It really comes down to affording what makes a seller happy. As a market participant, you want to be “really good at buying cash flow businesses.”
Beyond purchasing businesses with cash, giving sellers stock and notes works too, says Levine.
Those are “incentives that help people understand” and participate in the upside. Ultimately, you’d opt-in wanting sellers to “stay on.”
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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