Beleave Inc
CSE:BE
As At 11/25/2107
Shares Outstanding: 532,416,754
Share Price: $1.73 Market Cap: $32,416,754
VIEW CASE STUDY LINKS HERE
247
Source: CIBC Investor’s Edge, Stock Centre
Spiro Sertsis, CPA, CMA
@SpiroSertsis
245
Consolidation through M&A activity occurs in almost every industry and this will be no different. In 2002, Graeme K. Deans, Fritz Kroeger, and Stefan Zeisel published in the Harvard Business Review their work on “The Consolidation Curve”. Most industries go through four stages: Opening
Scale, Focus, Balance and Alliance. This summary below is succinct and I invite you to read their work as it is readily available online.
Stage 1: Opening
Start-ups come and go. After a while, generally the top three companies combined have between 10% and 30% of the market share. Those with first-market advantage need to move fast to establish their footprint and acquisition skills as they prepare to move to the next stage. That the only three companies to attract institutional investment are not in America suggests that the industry, in the USA, is still in the early phases of Stage 1.
Stage 2: Scale
As the name implies, this is about building up scale! Where the bulk of the M&A activity occurs. Dominant front runners emerge. By the end of this stage, the top three companies control as much as 45% of the market share. Their scale and efficiencies provides a formidable barrier to entry to new entrants. That two of the only three companies to attract institutional investment are in Canada (CGC, OGI) and both are holding companies suggests that facets of the Canadian industry may be flirting with the transitional period between Stage 1 and Stage 2. Two years since I wrote this, do you think we can safely say we have entered Stage 2 in some sectors of this industry?