Focus on Profitability

Understand that most sales being closed
are based on a multiple of profitability or EBITDA. In addition, a
premium location of a retail operation adds value, as does quality
construction for a cultivation or manufacturing facility. If your
business is not profitable and will continue to require capital
investments for the foreseeable future, essentially any change of
ownership is a restructuring. In this scenario, you are looking for a
buyer to assume your liabilities.

Realize Market Dynamics

Recognize that the cannabis market is
saturated, with a large portion of businesses operating in the red.
Knowledgeable Buyers understand this dynamic, and the
accompanying risks involved in entering the market or adding to
their portfolio.

Reasons for Selling

Acknowledge truthfully the reasons behind
your desire to sell your business. Often the reasons are
retirement, exhaustion and/or owner disputes. This is one of the
first questions the Buyer will ask about. If you are selling because
you cannot get the business to profitability or don’t have the
capital to continue, say so. The Buyer will figure this out anyway
and would have to construct a turnaround plan. This plan, which
would involve capital spending, would be a cost that the Buyer
deducts from the purchase price.

Provide Financial Documentation

All Buyers will require accurate
P&L statements. PREPARED BY AN ACCOUNTANT. Cash flow
statements and balance sheets are also needed. Tax returns and

METRC reports would be provided after the purchase agreement
is signed but prior to a closing. Non-METRC revenue, if any, means
nothing to a BUYER, and you will not get credit for it in the offered
price.

Seller Financing

All Cannabis transactions involve some degree
of seller financing, as traditional borrowing methods are not
available. If a buyer is willing to pay all cash, be prepared for a
very significant discount.

Legal Representation

Experienced legal counsel must be in place
to document the sale. These transactions are not like the old-
fashioned sale of a pizza parlor down the block, where the
business broker inserts the assets involved into a form document.
Complex purchase and/or management agreements must be
drafted and must take into account the labyrinth of state and
local regulations regarding the cannabis license and other related
matters.

Hire an Experienced Business Broker

Experience and expertise
are sorely needed to navigate the brokerage of your cannabis
business sale. Cannabis Business Brokers, Inc. can be interviewed
to determine if we are an appropriate fit for you.

For further information please contact
Clint Sheer (CA License #02071075)
Cannabis Business Brokers, Inc.
(CA License #020664427) 1450 2nd  St
Santa Monica, CA 90401
518-321-3708
[email protected]
www.cannabis-brokers.com