All Shark Tank

Sharks bite at raw deal: What were they thinking?

Charli Chair

Hani and Meray Yassa
$200,000 for 5% equity

Wow, another huge valuation for a business that is still learning how to walk. It is, however, a great idea. I also had huge babies but I must admit that I loved sitting in the bottom of a shower or bath and cuddling my baby whilst we both got clean, so I would not have purchased the product myself. There is a real need for the product, as John explained through the eyes of a man who sees property and the needs every day. They seem to have gone down a good path with a business called Love and Care, which seem to be the owner of the rights of the chair and Hani and Meray purchase the product off them like a wholesaler; so it was an interesting model but one that worked for them. With their raw enthusiasm and John as a partner, I am sure they will succeed.

Nexus Notes

Hugh and Richard
$300,000 for 7.5%

These guys started off really strong with an amazing start and pitch. If you are thinking, “Have we seen these guys before…?” the answer is YES. Richard was on Big Brother. Everything was going really well; the interest was high and we could all see the benefit of investing in the business. And then…

Steve asked the question on shareholders and we discovered that they were offering the same percentage of 7.5% for only $50,0000 to another business. So how this would work is that if we invested the $300,000 for 7.5% not only is our contribution 6 x that of the kick start business but due to the other deal, our value would be immediately reduced by 6 x – which is basically ripping off your investors. As you can tell Steve was not happy and his annoyance was reasonable.

The only way it would have worked at an offer of $300,000 was if it was at the kick starter val, which would mean Steve would be the major shareholder with 45% (7.5% x 6). I don’t think what Hugh and Richard did was a deliberate act to rip anyone off, I just don’t think they thought through the consequences of the offer. With any deal you do, make sure you always put yourself in the other person’s chair and see if it is a win-win.

Dinner ladies

Katherine and Sophie
$271,000 for 33%

You would not find two nicer women than Katherine and Sophie. They are smart, passionate and are bloody good at what they do. So they were a huge tick for me before I even got to understand what their business is all about. To my disappointment, they were only offering a mobile business that did not exist and that they had no track record of success in, but with a hope that it is a good idea and a way for them to increase their other business’s capacity. It then became exciting again, when they were happy to consider their whole business, which is where the only value was for me. Their costs of raw product were high but I thought I could help in that area due to our buying power. The business had debt, which I would have taken on being an investor, so you have to take this into account in your valuation. I visited their factory in Sydney and it was amazing what they had achieved and loved seeing their passion for their business outside of the camera and lights. Loved the girls and I have enjoyed all the interaction that we have had. They will be a huge success.

Simple tip this week: enjoy what you do and be grateful for everything you have.

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  • Reply
    April 14, 2015 at 11:01 pm

    Re dinner ladies

    I agree with john mcgraths comments.. If you’re going to factor the debt into business valuation surely you would have to also consider the corresponding asset securing the debt ie commercial kitchen.

    For a you know the kitchen could be worth $10mil and only have a debt of $950 k.

    This would make $216k for 33% very cheap…. No?

  • Reply
    April 15, 2015 at 7:19 am

    Hi Janine,
    Firstly, congratulations for your achievements!
    I have a question regarding the Dinner Ladies deal: you deducted the whole debt amount (950K) from your valuation when you will only be liable for 33% of that debt; therefore don’t you think you should have evaluated Dinner Ladies 316K more than you did?
    I’ d love to hear your thoughts on this.

    • Reply
      April 15, 2015 at 7:23 am

      Actually, 632K more..

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