More and more entrepreneurs are entering the cannabis industry with an exit strategy in mind, and to develop a business that is attractive to buyers or investors it is important to develop a strong brand with a solid financial track record showing not just growth, but future growth potential. Here are a few things to consider before the sale to avoid complications and make sure everyone walks away happy.
Historically it takes about nine months to sell an established business in the traditional market, but because cannabis has now become a serious conversation in the “real business world” businesses that work directly with cannabis and others that provide ancillary products and services are extremely lucrative to ganjapreneurs and investors looking for a a quick way into an increasingly-crowded space.
Making your cannabusiness attractive to a buyer
If you are looking to develop an exit strategy for your cannabusiness, a potential investor or purchaser’s primary concerns will be the financial track record of the business as well as the potential for a good ROI by forecasting future potential profit. In the business of cannabis and cannabis-related goods the thriving market provides some solid advantages to business owners looking to sell. If you are an entrepreneur who built your business from the ground up no then one knows your business better than you, so it would be advantageous to create a “road map” for prospective buyers, which would include a clear history of your company from inception until now, as well as your ideas for future growth and expansion.
In working out the terms of the sale, some key issues to consider include whether you’ll sell the business entity and customers only, or if the purchase includes assets such as real property, business equipment, inventory, office systems or vehicles. It is important to establish a clear purchase price and detailed division of assets. Most business owners should consult an accountant for help in setting a sales price and developing the most advantageous tax strategy. It is always best to have an accountant who knows your business or product well, but one who does not rely on your business for the bulk of their income.
Cannabis Business Brokers
Some cannabusiness owners will hire a business broker to handle the marketing and sale of their business, which enables them to concentrate on running and growing their business while someone else looks for a buyer. The downside is that a broker typically retains between 5% and 15% of the final sale price, so this option may not be feasible for business owners who are beholden to investors or business partners. In addition, an attorney is typically necessary in order to draft a sales agreement, which will include all assets, real property, clientele, intellectual property and goodwill that will be transferred in the sale of the business.
List your cannabis related business for sale
Seeing the need for a forum that would enable cannabusiness owners to list their businesses for sale, and potential buyers to view these listings and communicate with sellers, WeedBiz has developed a cannabusiness listing database that allows owners to market their business for sale. Our database is available for any business that either works directly with cannabis or provides goods or services to the legal cannabis industry, and listings are free for a limited time during our beta testing period. No signup is required to list or view businesses for sale.
To learn more and view current cannabis industry businesses for sale please click here.