Shark Tank & Selling a Business
Many business owners watch Shark Tank and wonder how this might apply to their business when they are ready to sell. Shark Tank can be a great place to get exposure for your business while also getting an investment. It is a popular show and has helped a number of business owners to grow their businesses to the next level. It’s not for everyone though so you should understand the difference between using a business broker vs. going on a show like Shark Tank or “The Profit”.
Do you want to sell part of your business or all of your business?
Generally, people that use a business broker want to sell their entire business and they often retire. Although in some cases businesses brokers do sell partial investments in businesses.
On Shark Tank typically the goal of a business owner is to sell part of their business and then work with one of the shark investors to help them to grow their business. So it can be useful in this case. In fact, some of our clients have been on Shark Tank and The Profit. They grew their business as a result of exposure, mentoring, and hard work and are now ready to retire so they turned to us to sell their business.
Is your business Profitable?
Shark Tank and the Profit can also be useful at taking businesses that are not making any money and turning them into profitable companies. Whereas in most cases Business Brokers and M&A firms will focus primarily on selling companies that are already profitable.
How many potential investors do you want?
On the shark tank, there are typically a handful of potential investors whereas a typical business broker or M&A firm has thousands of potential investors. They will actively market the business on the internet, to their database of potential buyers, and approach potential buyers directly.
When you are selling part of your business it is usually OK to let people know that you are looking for investors and stating this on National TV is part of the process with Shark Tank.
When you are selling all of your business and looking to retire, generally owners don’t want their employees, customers, competitors, and suppliers to know that they are looking to retire. So while a Business Broker will do a major advertising campaign, they won’t advertise the actual name of the business. They will only reveal the name after potential buyers have signed a confidentiality agreement. It takes more work to do this but Business Brokers do this as a normal part of their business so it’s an efficient process.
There are many business owners that would love to appear on Shark Tank. You need to submit your video sales pitch and application and unfortunately, there are 40,000 applicants each year for 100 aired submissions.
Most successful business brokers are also selective in the businesses they will take. From our experience, we only take on about 5-10% of the businesses that approach us to represent them. So while we’re not as selective as the Shark Tank, we are selective. Part of it is that we focus primarily on selling businesses that have an owner’s net income (including their salary and benefits) of $200,000 to $5 Million and we get a lot of inquiries from business owner’s that don’t meet these criteria.
In addition to that, we will need to feel comfortable that we can meet a seller’s price expectations. This is similar to what the shark investors do when they assess whether or not they can meet the seller’s desires in terms of a potential price. Without this, there is no deal to be made for either the Sharks or for a Business Broker.
This is important to business brokers that don’t charge an upfront fee, because we only get a commission if we are able to get a buyer willing to pay what the seller is willing to sell their business for. We spend a lot of time on each assignment as well as a lot of marketing dollars. We have a six-figure advertising and marketing budget each year and commissions are our only source of revenue.
When we have a potential client that falls within our profit range and is willing to price a business within a range of what we feel we can get then generally, we take on the assignment as long as they fall within one of the industries that we focus on. These include technology, healthcare, manufacturing, distribution, construction, services, education, transportation and more. On Shark Tank, they seem to focus the most on consumer products or services industries.
If your business is one of the lucky few to appear on shark tank and you are interested in selling a part of your business than a Shark Tank appearance can definitely be worthwhile. However, if you want to sell your entire business confidentially and retire, please fill out our Seller Registration Form or call us at (914) 738-9350.
Synergy Business Brokers offers a no-cost consultation to provide an assessment of the value of your company and discuss how we can help achieve your goals. This is similar to the Shark’s initial phase of finding out more about a potential investment opportunity.
We have Brokers in NJ, NY, CT, and MA and sell businesses throughout the US.