The graph shows the number of M&A Transactions per quarter by target location.
The first 11 weeks of 2021 has seen a record amount of capital raised by cannabis companies, particularly in the U.S., and this cash is funding an acceleration of M&A activity.
U.S. companies have been the targets of 41 of the 56 closed transactions we have tracked in the first quarter of 2021. At current run rates we expect approximately 70 closed deals for the full quarter.
We expect the U.S. to continue to be the dominant target for M&A activity given its far greater growth potential and profitability, however, we would expect Europe to see increased focus given its potential market size.
M&A activity in the Cultivation & Retail sector has expanded significantly from 2020 but the sector accounted for only 32% of transactions in Q1:21, the smallest percentage of any quarter since we began tracking the industry. We expect this to normalize over the course of the year as MSOs increasingly use M&A to build out cultivation and retail capacity in newly opened markets.
Other sectors like software and Infused products are experiencing their highest percentage of M&A activity in recent years.