OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Mergers & Acquisitions
Mergers & Acquisitions Summary
Each week, Viridian publishes insights and analysis on completed M&A transactions in the prior week. Our analysis includes:
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- M&A Market Commentary
- Public and Private Companies
- Buyers & Sellers
- YTD M&A Analysis
- M&A by Industry Sector
- Deal Structure and Valuation Analysis
- Pending Deal Risk Arb Analysis
- Valuation Gap Analysis
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Transaction Activities
Week ended 03/21/2025
- No M&A deals closed during the week ended 3/21/25.
YTD Activities
- LTM, 59 M&A transactions have closed with a total disclosed value of $1.12B, down from the 113 deals for $1.75B in 2023. M&A activity has not yet rebounded from 2024, which had the lowest transaction volume in the last six years.
Pending Risk Deal Arb Analysis
Valuation Gap Analysis
- The Valuation Gap
- The Valuation Gap measures the difference between the EV/ NTM EBITDA multiple for the largest MSOs and the same multiple for the next smaller group. This measure has been a significant driver of M&A activity since a larger gap creates an opportunity for more accretive transactions.
- The companies used in the large-cap index now include Cresco (CL: CSE), Curaleaf (CURA: CSE), Green Thumb (GTII: CSE), TerrAscend (TSND: TSX), Trulieve (TRUL: CSE), and Verano (VRNO: CSE). The small company index now includes Ascend (AAWH: OTCQX), AYR (AYR.A: CSE), Cannabist (CBST: Cboe), Front (FFNT: CSE), Jushi (JUSHF: OTCQX), and Schwazze (SHWX: OTC)
- The gap declined by 122bp to -2.276 on 3/21/25, the lowest reading since we began tracking this series. Following the DEA announcement, the gap reached a recent peak of 3.55 on April 30. At -2.276, the gap indicates that, in the aggregate, the climate is inhospitable for transactions in which Tier 1 MSOs purchase Tier 2 MSOs. This may not be the case for individual combinations, however, as there are broad valuation metric spreads between the companies in each tier. For example, TerrAscend, GTI, and Curaleaf all trade well above the Tier 1 average, while Ascend trades well below the Tier 2 average.
- Historically, the vast majority of M&A transactions in cannabis have been public companies buying private companies, and the recently announced Vireo transaction continues this trend. The recently closed Cansortium/RIV transaction provides an isolated counterexample.
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