Determining the fair market value of a business operating in the cannabis space is an in-depth task for a cannabis business owner. But with the right insights into a company’s operations and finances, it’s possible to determine a cannabis company’s valuation in this emerging industry.
Some traditional valuation methods may not be applicable in the cannabis industry. Thus, it’s important to work with a professional who understands the complexities of this market.
A cannabis valuation specialist can help you determine your business’s value and make sound decisions for its future. With financial reporting and bookkeeping throughout the year, the stress of a nearing valuation date is never a concern.
For this reason, cannabis companies turn to Northstar for insight into their market approach. With over a decade of experience in cannabis business valuation, we have the expertise you need to make smart decisions for your company.
If you’re looking for an accurate valuation of your cannabis business, or if you have any other questions about this industry, book your free consultation now.
How Do Cannabis Business Valuations Work?
Several different approaches can be taken to value cannabis businesses. Most of the time, two approaches are utilized to value a business; the Guideline Company Method and the Guideline Transaction Method.
The Guideline Company Method assesses the value of your cannabis business by looking at publicly traded cannabis companies and comparing them to your company. This approach uses market data to establish a range of values for your operation.
The Guideline Transaction Method is a little more specific and looks at recent transactions within the cannabis industry that are comparable to your company. This data is used to establish a range of values as well.
In addition to these market approaches, the Income Approach and the Asset Approach can be used to cannabis business value. The Income Approach looks at future cash flows and discounts them back to the present day. This method is often used for young businesses that do not have a long operating history.
Other factors like regulatory and tax burdens, ineffective internal controls, market size, and overall market trends can also impact the value of a cannabis business. Our team of industry experts will take all of these into account when providing you with a valuation.
What Else Goes Into a Business Valuation?
In addition to market data and financial statement analysis, our team will analyze your market share, intangible assets, capitalized cash flow, and more. This information is important in order to establish a range of values for your cannabis business.
We’ll also take a look at your licensing and compliance status to ensure that your cannabis company is in good standing with the state and federal governments. This review will help to reduce any risk associated with your company.
A net asset analysis is also important in valuing a cannabis business. This looks at the value of your assets less any liabilities. It’s important to have an accurate net asset value as it can be used in the event of a sale or merger.
Why is an Accurate Business Valuation Important?
Accurate business valuations are important for a number of reasons. Perhaps most importantly, they provide a snapshot of your company’s financial health and can be used to make informed business decisions.
A valuation can help you understand the value of your business and identify areas where you can improve operations. They can also be used in negotiations with investors, lenders, and partners.
Most importantly, a valuation can help you avoid surprises down the road. By understanding the value of your business, you can be better prepared for any potential financial transactions.
Furthermore, it’s important to remember that if your company goes public, it will be required to have an up-to-date valuation on file. Public companies operating in the cannabis industry are under a magnifying glass, meaning you’ll need to ensure your valuation is an accurate depiction that reflects your balance sheet.
Many investors are looking for cannabis companies that have impressive valuations. While total revenue is important, ultimately, companies need valuations that reflect every aspect of their operations.
Need a valuation that highlights your business’s efficacy in operating in the cannabis industry? Book a free consultation to speak with one of our industry-specific professionals about your needs today.
Northstar’s Cannabis Industry-Specific Valuation Services
At Northstar, our team of cannabis industry experts has the knowledge and experience to provide you with an accurate valuation of your cannabis business. We’ll take a look at all aspects of your company to ensure your valuation is comprehensive and accurate.
Our unique market approach takes traditional valuation methods and pairs them with cannabis-specific data to provide you with the most accurate valuation possible.
We understand that cannabis companies are under more scrutiny, which is why we understand that determining your taxable burden plays a significant role in valuations. With our help, your company will get the valuation it needs to accomplish its goals.
Need a valuation that highlights your business’s efficacy in operating in the cannabis industry? Book a free consultation today to learn more about how we’ll determine your operation’s value.
Why Northstar?
Northstar knows the cannabis industry inside-out. Our extensive experience and market knowledge make us the perfect partner for cannabis businesses looking for accurate financial reporting and valuations.
We understand that cannabis companies are under more scrutiny than most, which is why we take a holistic approach to our valuations. We take into account all aspects of your business to ensure that the valuation is accurate and reflective of your company’s current standing.
If you’re looking for a valuation that will impress potential investors, Northstar is the right partner for you. Contact us today to book your free consultation and learn more about what we’ll do for your company.
Getting Started with Northstar
Whether you need a valuation to improve market capitalization, have investors interested in learning more about your cash flow and the finer details surrounding it, or something else, Northstar is ready to support you.
Our cannabis industry-specific knowledge and unparalleled professionalism set the precedence for exceptional service. Book your free consultation now to learn what companies choose Northstar to guide their success.
