Occasionally a trend enters the zeitgeist, and speculators like this week’s Built to Sell Radio guest make out like bandits.
It’s hard to know when a fad will pop, but for an enterprising few that can time it right, there is scads of money to be made.
The gold rush of 1849 led to a wave of “Forty Niners” that moved to California in search of riches. Most were left with nothing, but the earliest promoters—particularly those supplying the miners that had come to California to find their fortune—did very well. Levi Strauss, who later founded the first company to manufacture jeans, initially went to San Francisco to open a West Coast branch of his brother’s New York dry goods business. The durable pants he sold to miners were especially popular, laying the foundation for his future success in the clothing industry.
In 1999 you could slap the suffix “dot com” on just about any company name, and investors would add a zero to its valuation seemingly overnight.
Today artificial intelligence (AI) is all the rage, but it wasn’t that long ago that cannabis was the modern-day gold rush. Do you remember when weed was supposed to displace booze as the recreational drug of choice? Well, that hasn’t exactly happened. As TD Bank recently reported, cannabis sales in the U.S. reached $29 billion last year. By comparison, alcohol sales were $264 billion. Not surprisingly, most publicly traded cannabis stocks have been slashed since the weed mania peaked in 2021. For example, Green Thumb Industries (GTBIF), one of the largest cannabis companies in the U.S., has seen its stock tumble from $34 in January 2021 to around $11 today.
But the relative disappointment of the cannabis industry didn’t stop a legion of pioneering founders from making a truckload of money as the industry rode a wave of speculation. This week we released an interview with Basem Hanna, who timed his foray into the marijuana business perfectly. He got one of the first licenses issued in North America to produce marijuana legally then parlayed that license and a fledgling manufacturing facility into a $25 million exit.
Clip of the Week
In this clip, Basem shares how to avoid being duped by the most devious investors.
Quote of the Week
“Somebody tried to sneak into the paperwork that their shares would be worth 10 to 1.”
– Basem on the slimiest trick an acquirer tried to play on him
Deals
- Sportech, LLC, a designer and manufacturer of OEM components in the powersports industry, has entered into a definitive agreement to be acquired by Patrick Industries, Inc. for approximately $315 million. Patrick Industries is a provider of solutions for recreational vehicles, marine, manufactured housing, and various industrial markets. Sportech’s revenue in 2023 was around $255 million, meaning Patrick Industries valued the business at just over 1.2 times revenue.
- Pulse Technologies, a U.S.-based contract manufacturer known for its micro machining of medical device components, has been acquired by Integer, a company that specializes in making and assembling parts for medical devices, for $140 million. Pulse Technologies projected 2023 sales to be around $42 million and an EBITDA of nearly $11 million, meaning Integer paid over three times revenue or over 12.5 times EBITDA for Pulse Technologies.
