How to Increase the Value of Your Marijuana Business
How does one increase the potential valuation of a marijuana business before a sale?
If you are looking either to sell your cannabis business in general, or to increase its valuation in particular, here are a few fundamental points that will help you maximize your sales price:
- Buyers of marijuana businesses, like buyers of most businesses, typically want to see a trend of increasing profitability.
- Buyers also want to see that the business has good potential to increase its future earnings.
- Obviously, by showing that the business is in compliance with all applicable local and state regulations is necessary but having organized documentation in regards to that compliance is a plus.
- Buyers of marijuana businesses want to know that the business has secured its trademarks and any other copyright/IP to protect its brand.
- Buyers want a marijuana business with a healthy, long-term lease arrangement.
- Many times, buyers want the management and/or master growers to stay on for an extended period of time in order to make the transaction/transition as smooth as possible.
There are many things management can do to add value to the business. You should take the potential buyers' motivations into consideration in your planning. Every buyer is different but there are normally many things you can do to start increasing the value now for an eventual exit.
We'll focus on the buyer side in a future blog post.