The Moment You Get a Deal in Shark Tank
Just imagine yourself as being in Shark Tank standing in the middle of bright lights, hearing someone out of the sharks say those two magical words ‘I will give you X dollars for Y percent of your company’. You might leap around as if on a trampoline or clap. So, this is your big moment, a moment you might have practised for year preparing yourself for such a moment. Contemplating a handshake deal within a tank with some experienced investor may be beneficial for your company. The question is: But what do you do next when you exit the tank with a new partner? Now it is going to shift to generation – behind the curtain.
Making Things Official in Shark Tank
Investing on the set of Shark Tank is not a final agreement – at least until the cameras stop rolling. You make a gentlemen or ladies agreement when you thrust your hand over the person you are about to do business with in the tank. It is an agreement that you are *hoping* to follow up and formalize and indeed make the deal concrete and legal, but it is not official until all the details are worked out. This often takes the form of more detailed Ultimate negotiations and due diligence – where both parties do background check on each other. In some cases, the whole process of completing paperwork may take weeks or even months before signing any paper. Such agreements may fail during this period if there are problems between, however.
This is your truly binding bargain that should not be changed in discussions with the counterparty or your client.
When outside the tank, particular for drafting documents with counsel for both committees, or what is termed long-form agreement to settle the contractual details. Loosely speaking you may like have overall agreement but in full blown agreement, there are a lot more detailed areas to discuss. The proportion of equity the shark will receive, how investment checks will be structured, revenue milestones, management positions, and all the exit strategies, and protection of shareholders’ interest will be discussed. For instance, a shark may just invest in phases whereby the funding provided is bound to financial or growth benchmarks. Negotiating a deal may take somewhere from four to six weeks. At this stage each side may readjust terms it considers necessary provided both parties agree to the changes. After all these processes, but before the deals are sealed, both partners must sign on the dotted line.
Celebrating (Hopefully)
Well done, now the champagne, if it does not turn out like that since negotiating the details and if you do sign the binding agreement, congratulations! For some like ring’s Jamie jamie Siminoff who got a deal with Kevin O’Leary in season we could not agree on the details. But most pairs are able to negotiate a deal that will satisfy both of them. Having waited for several months of negotiation and waiting, the sealing of the partnership reminds you of official partnership and everything that comes with it. You can now truly move forward and make your business dreams become a reality.
Executing the Growth Plan
Once the papers are signed and the investment in place, then it’s time to get to work — on taking your company to the next level. Normally sharks expect desirable growth and expansion strategies that allow firms achieve growth and profitability. In as much as one to two months you can begin launching the clearly outlined execution strategies and objectives that you presented before the tank. All these timelines are outlined in this agreement –. The investor will be very much involved with the company as an adviser this comes with opportunities to penetrate the networks, branding skills, and other assets your business needs to scale up.
It refers to the regular communication of information of staff performances, the measurement of program implementation progress and compilation of program success stories.
In any case, it is likely monthly or on a quarterly basis to submit reports to your shark partner on the growth KPIs of your business. This encompasses revenues, incarcerations, sales, profits, costs, Web hits, units manufactured – bits of information that demonstrate that you are having a positive impact, as planned – or not! If you are getting below the set parameters of your long-form agreement and the goals set for the growth strategy, the investor may come in by placing new managers, or by implementing the growth strategy faster. No shark wants to see their money to be lost in a din. Expectation is high to deliver success on behalf of both parties.
Cashing Out Your Investment
Right from the onset, your aim is to grow your small business into a giant multimillion-dollar corporation. For sharks, the best scenario is to exit through IPO, which means that within three to seven years after doing the deal, the company is acquired by a large firm. That said, there may be some faster exits from time to time, like an IPO. Whether by merger, buy out or even going public or selling off assets your investor will be waiting to make their money five to over ten fold depending on your deal. Even when sharks invest in startups they do it taking certain chances that largely have them emerge massively rich in the long run. Well you can ride down that sunset trail with your new fortune as well!
The Bottom Line
This I have realized that getting a deal on Shark Tank is the first step, and not the final destination. That handshake on screen guarantees funding, the nuts and bolts of it are mostly off screen where the fine print is fine tuned, the growth plan is implemented and finally, an excellent exit opportunity for your investor-partner. It requires years of additional endeavor to transform that initial capital into huge revenues for all parties involved. But hopefully it leads to the transition of your small business into a popular brand modern society recognizes – a brand that started from Shark Tank.
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