Importance of ERP in the Merger and Acquisition World of Cannabis


Investors in cannabis businesses are becoming more interested because the cannabis market is exploding. This industry has been growing at an incredible rate for many years and is not slowing down. If you're a successful owner of cannabis business and have been stable then you must have built your venture into a well-known company. You have worked hard to build a company culture that is both profitable and great.

The future is bright and sales are rising. Your company is no longer a small startup. It may be a company that other companies want to invest in, merge with or buy. What are investors in cannabis businesses looking for? Are you able to attract their attention and make their money?

Your business will be more attractive to investors if you have the right ERP system to manage it all. Cannabis ERP systems give companies the ability to grow quickly and show upside potential to investors, as well as other companies that are looking to merge or acquire. Let's take a look at how a Cannabis ERP can make your business attractive to investors.

Arion ERP experts in agriculture suggest that greenhouse growers are breaking old habits that hold back their profit potential.

Demonstrate that you are on solid financial footing

For start-ups, QuickBooks is often the "go-to" tool. It is easy to use and can be connected with any seed-to-sale software you have. As your business grows, and your needs change, QuickBooks will become a one-way street. The seed-to-sale process 'dumps in' data and you need to trust it is correct. QuickBooks does not encourage or enforce business process controls in your operation. This includes ensuring compliance with the separation of duties. It's also not designed for multi-entity businesses, which most of the cannabis businesses are. They often create separate entities for licensing and regulatory purposes. The multidimensional nature of cannabis ERP systems allows them to handle large volumes, multiple locations, WIP costing, production management, and inventory planning and control.

Your financial system is linked to your operations, so you can access both operational and financial data and manage key performance indicators (KPIs) from one source. Which extract has the highest yield and best margin per gram? Which are your top 10 revenue-generating clients? Are your client buying habits driving your production and purchasing? A system that manages your entire enterprise will allow you to answer strategic questions, make faster, smarter decisions, and communicate with potential external stakeholders confidently.

Demonstrate that you are capable of scaling operations

You want to grow quickly and you will need to invest capital. Cannabis ERP system offers essential manufacturing functionality such as perpetual inventory management, material requirement planning (MRP), product costing, and materials plan. No more managing spreadsheets or on whiteboards. Cannabis ERP lets you scale your business and processes as you grow. ERP provides deep business insight. ERP allows you to assess the effectiveness of your business processes and make improvements to improve performance. Cannabis ERP helps you to grow your business. This is important for companies looking to merge or large investment firms.

Reduce internal and external risk

A Cannabis ERP system can be a great incentive for investors and buyers of cannabis businesses. It allows you to coordinate your internal operations with customers and suppliers. Investors are assured that all functional areas within your company are in sync so there are no risks of disorganized growth or destabilizing management when key leaders/vendors change. When merging companies, investors and others look at the financial strength of the company. They also consider the risks involved in guiding it into the next phase of its growth. They seek companies that are able to manage change and minimize risk for all stakeholders, both internal and external.

Disorganized information can lead to a huge investment of time and money. A company with an organized ERP infrastructure allows new leaders to have all the information they need in order to adapt to changes in reporting styles, capital sources, and vendor relationships. Investors will be more inclined to invest in a well-organized company that is able to manage change and minimize risk for both internal and external stakeholders.

Demonstrate to potential investors that you are the whole package for cannabis business investment

Buyers, investors, private equity firms, and larger cannabis companies all want to be sure that their targets are able to grow and earn a return on their investments. It is important to show that you are able to scale your business and gain real-time information about your company's profitability. Cannabis ERP solutions like the one provided by Arion ERP demonstrate your commitment to best business practices and meeting compliance mandates.

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