Decreased appraisals for marijuana companies are resulting in a shift in the method capital raises and merger and acquisition activity is taking place in the cannabis space. Viridian Capital Advisors President & & Founder Scott Greiper shared the patterns that are moving in the space.
Early Capital In Cannabis: Viridian Capital was the very first investment bank in the cannabis space in June 2014 at a time when 6 states were legalized.
” Around $400 million [was] raised that first year, [and] in the very first nine months this year, $8.5 billion,” Greiper informed guests at the current Benzinga Cannabis Capital Conference in New York City.. Greiper discussed a decrease in capital raises and mergers and acquisitions in the area with panelist Javier Hasse, the Managing Director of Benzinga Cannabis.
” Capital ended up being limited. Decline in public market assessments caused a decline in M&A.”.
2021 Activity And Trends: Through the first 9 months of 2021, there has been $8.5 billion in capital raised in the cannabis sector and $21.1 billion in mergers and acquisitions.
” Its never been much better,” Greiper stated.
Greiper said the trends have shifted to public companies purchasing public business, something that wasnt done in previous years.
” Public companies need to feed the beast.”.
Six of the 10 biggest M&An offers in 2021 were public business purchasing public companies, Greiper informed the Benzinga conference..
In previous years, when evaluation decreased for publicly traded companies, there was less activity since they couldnt utilize an inflated stock cost to acquire smaller sized business, he stated..
” Usually you see a decline in evaluation, decrease in capital, decrease in M&A; we have not seen that this year.”.
Smaller sized $50-million and $100-million market capitalization business are getting purchased up, according to Greiper.
Another trend is new sectors of the market like software companies getting bought up. In previous years, nine out of 10 offers were MSOs purchasing a private single state operator.
” Thats the metric weve seen for practically six years.”.
Cannabis SPACs: Another topic gone over by Greiper and Hasse was the rise of SPACs targeting the marijuana space.
” SPAC purchasers are really particular buyers,” Greiper stated.
The fascinating aspect of the SPACs in the marijuana area is that they trade on the NYSE or Nasdaq and cant acquire a plant-touching business due to listing constraints.
Greiper said he was amazed to see Greenrose acquire marijuana companies and after that downlist from the Nasdaq to the OTC.
In general, SPACs in the cannabis area have assisted open up chance for personal business to exit, he said..
” Its juiced the level of transactions in the sector.”.
This content was originally published here.