Cannabis Investor Mandate: What a Public Roll-Up Wants
Cannabis Investor - Investor Mandate Interview
Cannabis operators and supply chain owners who want to understand what an acquirer looks for and how to prepare for diligence.
Quotes from the session
"You've got to have your books up to date so that we can then transact."
"The sale of a business is not like the sale of a house."
"It is a portion cash and a big portion stock."
What you will hear
Paul leads mergers and acquisitions at a cannabis company that recently went public. Its plan is to consolidate profitable smaller operators in three mature markets: Colorado, Oregon and Alberta. He says about 1,500 smaller operators sit in those markets. The company looks across the supply chain, from cultivation, manufacturing, delivery and dispensaries to nutrients, packaging and software.
Paul also covers how deals work. The company says it can close in 30 days using a two-stage process, with approval steps handled separately. Sellers should bring their books fully up to date, since the team reviews the trailing 12 months. Payment is part cash and a large part stock, so sellers can share in the public company's upside.
Facts from this talk
- Paul says about 1,500 smaller operators exist in the company's three core markets.
- The company says it can close deals in 30 days using a two-stage closing process.
- Paul says small businesses are typically worth two to four times EBITDA, while public companies can reach 10, 20 or 30 times.
- Paul says the company buys businesses at about half to one times revenue.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Cannabis Investor - Investor Mandate Interview. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around license transfer process, stock deal structure and acquisition agreements. Do not use AI to write your own legal agreements.
What to take from this talk
- Only mature markets, only profitable assets. Paul's company focuses on Colorado, Oregon and Alberta. He says newer markets can take a while to settle, which can be costly for operators.
- The full supply chain is in scope. Targets include cultivation, manufacturing, delivery and dispensaries. The company also wants supply chain pieces such as nutrients, packaging and software.
- Unprofitable companies still get a conversation. Paul says the company works with partner funds focused on startups and venture. Those partners can back an unprofitable asset, and his company hopes to be first in line to acquire it once it is profitable.
- Get the books current first. Paul advises sellers to update their accounting software and have an accountant review it. The team looks at the trailing 12 months, so stale books slow everything down.
- Deals mix cash and public stock. Paul describes a portion in cash and a big portion in stock. He says owners who stay in can take some money off the table and still share in the public company's upside.
- 1Update books in accounting software
- 2Cover the trailing 12 months
- 3Confirm the asset is profitable
- 4Close in two stages
- 5Complete approval steps
Related questions
- How do I close a funding round?I close a funding round by focusing on investors who fit the opportunity and moving each interested prospect through clear, consistent follow-up.
- What documents do investors request during due diligence?Prepare a clear, organized package covering your operations, investments, compensation, team, and track record.
- How do I raise capital for my business?I raise capital by building a repeatable system for attracting the right investors, establishing credibility, and developing relationships before asking for money.
Questions about this video
Which markets does this cannabis acquirer focus on?
Paul names three founding markets: Colorado, Oregon and Alberta, Canada. He says the company prefers mature, established markets.
How fast can a deal close?
Paul says the company can close in 30 days using a two-stage process. Some approval steps can take longer, and many sellers talk to an attorney about timing.
What should a seller prepare?
Paul says to get financial books fully up to date, since the team reviews the trailing 12 months. He notes that smaller operators often update their books only quarterly or yearly.
Put this into practice with the data room checklist. See all investor mandates resources.
