Selling a business is a complex endeavor. As advisors to business owners and shareholders of private companies, we have helped companies to navigate the process from beginning to end. We are excited to share those experiences and insights in this new series, “M&A Essentials.” The series will offer a fundamental understanding of the concepts, issues and processes every business owner should be familiar with when considering and conducting the sale of a business.

Today’s post discusses the relationships between a company’s valuation, purchase price and the cash proceeds received from a sale.

Read more: M&A Essentials: Understanding Purchase Price

Authors: Bruce Roher and Meghan Haley

On October 17, 2018, Canada became the first G7 country to legalize marijuana for recreational use. According to U.S. research firms, Arcview Market Research and BDS Analytics, global consumer spending on cannabis will triple from its current level to US $32 billion by 2022.

As beer, alcohol and tobacco sales volumes slow, companies within these industries have been actively acquiring stakes in, or partnering with, cannabis companies. Cannabis-infused food and drink products will be lawful in Canada no later than October 17, 2019, which is bound to further increase M&A activity.

In October 2017, Constellation Brands, a leading beverage alcohol company (best known for Corona beer and Robert Mondavi wine) acquired a 10% stake in Canopy Growth Corporation for $245 million. In August 2018, Constellation Brands increased its ownership interest in Canopy to 38% for $5 billion. There are clearly benefits to both companies.

Read more: Why All the M&A Activity in the Cannabis Market?

The ever-changing environment demands frequent adjustments to be made in the laws of land for efficient and effective management of both business as well as non-business activities. Government has just introduced the Companies (Amendment) Ordinance, 2019 thereby, bringing relevant alterations in Companies Act, 2013 (”Act”). This action has provided an affirmative action that any violation in complying with the set standards will lead to stringent repercussions for both the company and its management.

Read more: Highlights of Companies (Amendment) Ordinance, 2019

Financial statements of a company are necessarily required to be filed with Ministry of Corporate Affairs (MCA) annually. The form for filing such financial statements with MCA is AOC – 4. All the companies fall under this category and are compulsorily required to file form AOC – 4.However, few Companies are covered under Extensible Business Reporting Language (XBRL) and are required to upload the financial statements on MCA portal in XBRL format as per the Companies (Filing of documents & Forms in Extensible Business Reporting Language) Rules, 2015. In this case the requirement of signing under hand is not a requisite.

Read more: Filing of financial statements in India

Trading names will cease to be displayed on the Australian Business Register from 1 November 2018. ASIC registration will be required to keep these displayed thereafter.

Trading names

Trading names or business names in Australia can be one of two types: those registered under State or Territory laws (typically trading names or, in the case of many trusts, the name of the trustee company), or those registered as an Australian Business Name with the Australian Securities and Investment Commission (ASIC) and linked to an Australian Business Number (ABN).

Read more: Trading Names in Australia - New Requirements