Selling a Business to a Publicly Traded Company

Aug 25, 2020

GrowGeneration (NASDAQ:GRWG) was in the financial news ( last week as a result of its strong 2nd quarter financial performance with revenue up year over year 123%.  For those not familiar with the company, they are one of the leading vendors of hydroponic gardening supplies for the cannabis industry in the United States.

I noticed the company’s stock listed in the Wall Street Journal as one of the biggest percentage gainers in the market on the previous day and did some online research to learn more about the reason for the gain.  My inquiry was not based on discovering a new stock to potentially invest in, but on follow up curiosity about a known entity.

I first learned about GrowGeneration in 2017 when IBA successfully facilitated the sale of Seattle’s Hydro Spot to GrowGeneration Corporation as a vehicle to enter the Washington marketplace.   In addition, to allowing GrowGeneration to expand its footprint into another state, the sale allowed IBA’s sell side client to achieve their transaction objectives on favorable market terms.

The sale of a business to a publicly traded company can provide the seller with transaction terms not available from a private equity firm, privately held company, or high net worth entrepreneur.  The terms can include stock or stock options; an executive management retention compensation package; and/or an above market value based on the acquisition being driven by a need to demonstrate growth to shareholders, increase market share, or enter a new marketplace prior to or to compete with other companies in the industry.

The negotiation and facilitation of this type of transaction require an investment banking skill set not commonly found in the main street and lower middle market firms.  IBA, a business brokerage firm with a large, regional team of experienced, knowledgeable, professional intermediaries, is uniquely qualified in the marketplace by having the ability to facilitate transaction sizes from $500,000 to $25,000,000 with the same superior level of representation creating an opportunity for even smaller strategic acquisition candidates to be presented professionally to larger entities in the most flattering light.   It is doubtful another firm in the Pacific Northwest possessed the skill set and knowledge of the cannabis industry to make this deal come together.

The Seattle’s Hydro Spot acquisition by GrowGeneration was far from IBA’s first transaction where a local business was sold to a publicly traded company.   As the preferred business brokerage firm of successful entrepreneurs in Washington, Oregon, Idaho, & Alaska since 1975, IBA’s track record of success in transactions of this nature goes back past the era of DVD’s and CD’s when a bidding war between Blockbuster Video and Hollywood Video was facilitated for the Encore Entertainment chain of stores and Veterinary Centers of America (VCA) was rapidly buying up large veterinary hospitals in deals facilitated by IBA’s professional practice division.  VCA, Inc. was acquired by Mars, Incorporated in 2017 for over nine billion dollars, evidence that there usually exists a bigger fish available to purchase all, but the largest companies in a strategic acquisition.

If, as the owner of a privately held company, you are interested in learning more about a potential exit strategy involving a publicly traded company and the services offered by IBA to its clients, we would welcome the opportunity to meet with you and hold a confidential discussion.  IBA is unique in the marketplace in that 100% of our fees are paid on performance upon completion of a sale regardless of if the transaction is for $5, $10, or $20 million.   It should also be noted that potential buyers are not limited to domestic companies.  IBA presently has an eight-figure deal in escrow pending sale where a Pacific Northwest technology company is in the process of being acquired by a publicly traded company on a foreign exchange.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.