Viridian Capital tracks all acquisitions by location of acquirer and target companies, and there have been significant shifts in the targeting of M&A activity between 2021 and 2022 YTD.
The top 5 states accounted for approximately 76% of total transaction value in both 2021 and 2022 YTD, but the top states have shifted considerably:
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The green line in the chart shows the percentage of the target state's 2022 YTD M&A Transaction value. The orange line depicts the percentage for 2021. The graph shows the ten most targeted states in 2022, arranged in descending order.
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The top target state for 2022 YTD is New York, with approximately 33% of the total transaction value. Two deals boosted the state's position in 2022: the $444M reverse merger of Leafly Holdings (NASDAQ:LFLY) into Merida Merger Corp and the $189M purchase of Etain NY by RIV Capital (CSE:RIV). New York was #14 in 2021. We expect more activity later this year as Cresco (CSE:CL) completes its acquisition of Columbia Care (CSE:CCHW) and Verano (CSE:VRNO) closes the Goodness Growth (CSE:GDNS) deal.
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Arizona was the number two state in both 2021 and 2022 YTD; it has been a hotbed of activity since the first adult sales in January 2021. We are seeing an ongoing robust level of deal activity.
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Texas is another state whose star has risen in the M&A firmament. The $282M acquisition of LED lighting company Fluence Bioengineering by Signify N.V. (ENTXAM: LIGHT) drove the #3 ranking.
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California dropped to #5 in 2022 from #1 in 2021. High-profile deals drove California's 34% share of total transaction value in 2021: $1.4B WeedMaps (NASDAQ:MAPS), the $560M founding transaction of Glass House (OTCQX:GLASF), and the $425M founding of TPCO (NEO: GRAM.U). We expect to see accelerating M&A activity in the rest of 2022 as well-funded companies target distressed sellers, and the market finally begins to consolidate.
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Pennsylvania and New Mexico are states that weren't on the top 10 list in 2021 but should stay hot in the remainder of 2022.
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Investors should follow the M&A dollar flow to find states with future revenue acceleration.
The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from the Viridian Cannabis Deal Tracker.
The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy. The Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis, CBD, and psychedelics industries. Each week the Tracker aggregates and analyzes all closed deals and segments each according to key metrics:
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Deals by Industry Sector (To track the flow of capital and M&A Deals by one of 12 Sectors - from Cultivation to Brands to Software)
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Deal Structure (Equity/Debt for Capital Raises, Cash/Stock/Earnout for M&A) Status of the company announcing the transaction (Public vs. Private)
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Principals to the Transaction (Issuer/Investor/Lender/Acquirer) Key deal terms (Pricing and Valuation)
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Key Deal Terms (Deal Size, Valuation, Pricing, Warrants, Cost of Capital)
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Deals by Location of Issuer/Buyer/Seller (To Track the Flow of Capital and M&A Deals by State and Country)
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Credit Ratings (Leverage and Liquidity Ratios)
Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $50 billion in aggregate value.
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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
