Robert Herjavec has closed his share of deals on Shark Tank, both on-air and off. Asked by Inc. magazine about the potential of Shark Tank deals to fail to close after the period of due diligence, Herjavec revealed there’s been a shift in how deals play out. When once entrepreneurs seemed anxious to finalize the Shark Tank money, now they are the ones who are more hesitant to ink the deal.
“It’s really our own money, and so we go through that due diligence period and find out what’s real. At the beginning, if a deal didn’t close, it was because we didn’t close it. Now it’s the complete opposite. A lot of people come on and then change their mind. They get the publicity from the show and then don’t want to close. I would say 90 percent of the time now, it’s the entrepreneur [who backs out].”
A report by the Associated Press in March 2015 told the story of one couple, Daniel and Stephanie Rensing, who accepted an on-air offer from Barbara Corcoran for their company The Smart Baker. The Rensings ultimately pulled out of the deal because of a disagreement with Corcoran over the company’s target market. The episode’s exposure nonetheless helped increase their revenues, from $130,000 before its March 2012 airing, to $600,000 the following year and nearly $1,000,000 today. Daniel called it the “best scenario.”
Corcoran said she was disappointed but every Shark Tank deal has its own set of negotiations.
“When we shake hands on a potential deal on Shark Tank, the romance runs high, and everyone’s excited about what could be. In the end, the entrepreneur is in charge.”
Herjavec admitted that some small business owners come on to the show just for the publicity.
“[P]eople have figured out Shark Tank. We get a lot of gold diggers who just come on for the publicity, but I think we’re getting better at spotting the people that are so obvious about it.”
Last summer a report emerged that claimed two-thirds of Shark Tank deals fail to close off-air. The Associated Press report from last month states that show producers have not tracked the number of deals that do not close.
Finding out what happens after entrepreneurs pitch the Shark Tank is the premise of an upcoming spin-off, Beyond the Tank. Herjavec said it’s not always pretty. The show will give a more complete picture than the short, upbeat updates that currently appear on Shark Tank.
[Robert Herjavec image courtesy of Getty]