Counter Offers & Business Valuation Calculations on Shark Tank Finale

First into the Shark Tank was Ryan Custer of Cougar Limited.  Ryan Custer was asking for $150,000 in exchange for 30% equity in of Cougar Limited, which translates to an asking Business Valuation of $500,000.  Ryan Custer was on the set to promote his beverage line catered to middle aged women.  Custer calls his targeted beverage a ‘Lifestyle’ Drink.  The Cougar Limited beverage is similar to 5 hour energy, in that it is a Zero calorie beverage.

Given that Cougar Limited’s sales were $60,000 over the three years prior to the taping of the segment, the revenues and profit of the business did not justify the asking Valuation.  Another issue the sharks took with the business was that Barbara Corcoran was not fond of the taste.  Given these two issues, there were no offers from the Sharks.  While there was a complaint from Kevin O’Leary that the product needlessly narrows it’s market by targeting a specific demographic market.  However, we’ll point out that targeting a specific demographic can lead to dominating a niche.  Ultimately, the lesson learned here though is that all edible products MUST taste good to get broad market adoption.

Second in the Shark Tank was Gary Gagnon of Remyxx Shoes.  Remyxx Shoes are fully recyclable shoes that can be recycled when the customer is done with them.  Remyxx Shoes is currently in the Start Up phase and is seeking investment through Kickstarter.com.  Gary Gagnon was asking for $50,000 in exchange for 10% equity in the company, which is an asking Business Valuation of $500,000.

Since the company was in start up phase and still far away at the time of taping from delivering products, every Shark except for Daymond John was out.  Daymond John Came in with a an offer for $50,000 for 80% equity in the company.  Gary Gagnon got quite emotional about the offer and the legacy he wanted to create for his children to build upon.  After some hesitation Gagnon accepted the offer from Daymond John.  It is important to note that Remyxx Shoes can be found on Kickstarter looking for funding, and as such we can assume that a deal with Daymond John was NOT finalized.  While it is a worry that a large competitor will gobble up the market by copying the concept, it rarely happens that way, since by the time the concept is proven as worthy of copying, it is too late to catch up.  Hence, we hope that Remyxx reaches funding goals on Kickstarter and develops a following and a brand.  Lesson Learned Here is to believe in your concept and make it happen, just be prepared for the Manufacturing Challenges in costs and timeframes, which the Sharks all pointed out.

Third into the Shark Tank were Frank Campitelli and Debrae Barensfeld of Nitroforce Industries.  Frank Campitelli and Debrae Barensfeld  were on the show to pitch their home gym product called Titan 1000.  They were there asking for $250,000 for 10% equity into Nitroforce Industries.  Frank Campitelli and Debrae Barensfeld had sold 26 units at the time of taping, and as such had miniscule sales relative to the $2.5 Million Dollar Asking Business Valuation.  As such, the Sharks put one strike against the business, as the asking Business Valuation for the business was TOO high.  Another issue the Sharks took with the product was that it was TOO big for most people’s residences.  A few Lesson Learned from this segment, but we’ll focus on having a Reasonable Business Valuation for your Business.  If the Business Valuation is NOT realistic, investors will quickly lose their interest in the pitch.

Last into the Shark Tank was Phil Dumas asking for $500,000 in exchange for 33% equity into his business which is UniKey Technology.  In short, the product allows people to lock and unlock a door with a cell phone.  It also can be used to monitor and grant access to locks to people like maids, friends and other non occupants of a residence.

All of the Sharks were interested as the product offered great convenience relative to using a physical key.

Phil Dumas‘ asking Business Valuation was $1.5 Million Dollars ($500,000 / 33%)

First offer was from Kevin O’Leary, who offered $100,000 for 10% Equity, a $1,000,000 Business Valuation.

Second Offer was from Robert Herjavec who offered $1,000,000 for 75% equity, a $1.33 Million Dollar Business Valuation.

Third offer was from Barbara Corcoran for $250,000 for 25% Equity, a $1,000,000 Business Valuation

Fourth Offer was from Daymond John for $500,000 for 40% equity, a $1.25 Million Dollar Business Valuation.

Fifth Offer came from Mark Cuban & Kevin O’Leary for $500,000 for 45% equity, a $1.11 Million Dollar Business Valuation.

After all of these offers, then Dumas Counter offered Robert Herjavec at

Then Phil Dumas Counter Offered Cuban and O’Leary for $500,000 for 40% equity, a $1.25 Million Dollar Business Valuation which is equal to Daymond John’s offer.

After some back and forth haggling, Cuban & O’Leary accepted $500,000 for 40% equity and control of the Board of Directors.

As you can see above, Dumas did not take the offer with the Highest Business Valuation, which was from Robert Herjavec.  He chose the lower Business Valuation offer from Kevin O’Leary and Mark Cuban as he felt that they were better Strategic Partners.  Lesson Learned Here, make sure to choose the right equity partners that are the best strategic partners to help keep the business on the right track.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com