In one study, a reporter looked at seven seasons of the show. They found that, no, not every single deal went through. In the period that they looked at, seven seasons of the show, they found that there were a total of 319 accepted deals that happened on the show.
To answer the question of how many Shark Tank deals fall through after the show, they talked to 237 of those 319 business owners. What they found out may not be of much of a surprise to anyone who works in the business world.
Period of Research and Due Diligence
Of course, when the sharks make a deal on the TV show, they aren’t going to sign anything or move forward with the deal until they’ve done their research.
Following this period of research and due diligence, there are situations where the deal does not move forward. This can happen for a number of different reasons, although some may surprise you. Can you believe that there are occasions where the participants themselves walk away and the sharks want to move forward with the deal?
During this due diligence period, the sharks will be looking into a few things to make sure that it makes good business sense for them to move forward. They will look at things like the participant’s background and financial history.
If there is evidence of something like bankruptcy or questionable business dealings, the sharks will likely back out. Based on the environment and vibe of the Shark Tank shows, it’s pretty unsurprising when the sharks decline to move forward.
The same is true when it comes to looking at the deal itself. In the article referenced above, the reporter found that of the 237 participants that they spoke with, 43% did not move forward with their deals and became Shark Tank failures, after their on-screen pitch.
For 27% of the participants, their deals went forward exactly as they were discussed and agreed to on the program. And, for 30%, their deals went forward but under different terms than their handshake deals.
There are a number of different reasons why deals don’t move forward. Some viewers may be surprised to learn that it’s not always the sharks who back out! That’s right, there are more instances than you would think where the participants choose to walk away without a deal. We’ll dive into that a bit more deeply in this article, so be sure to keep reading!
Shark Tank Participant Backs Out of the Deal
This is what most people are surprised to learn when they ask about Shark Tank deals that fall through after the show. It happens more frequently than you would think! There are some participants that audition to get on the show simply for the publicity. They have absolutely no intention of moving forward with the deals.
These people are very frustrating for the sharks. The sharks may seem like a group of people who only care about getting the deal done and making money. While this is of course, true, there’s a lot more to their motivation than just making more money.
These sharks have so many business successes behind them that they are on the show to truly help others be successful too. This means that when a participant comes on the show just to get some free publicity, a more worthy candidate doesn’t make it on.
When you think about all of the time and effort that goes into getting onto Shark Tank, it really is difficult to believe that people would waste their own time as well as that of the people running the program. Alas, it is a sad reality.
There are also times when the deal changes due to facts discovered during the due diligence process. These changes make it so the participants no longer feel like the deal is in their favor or worth doing.
And for others, the show boosts their business so much that they no longer need investors! When revenues increase exponentially due to being on the show, it may not make sense to bring in equity partners or investors.
The Shark Finds that After Looking into the Details, the Deal is No Longer a Good Investment
This is what most people think happens when they hear that a deal does not go through once the cameras stop rolling. While it is often the case, having a shark back out isn’t the only reason why some deals that are agreed to on camera don’t actually happen.
There is a lot that can come to light once the sharks start looking into a potential investment. This can mean that they are no longer comfortable with going into business with certain individuals.
It could be that the financials presented during the pitch don’t hold up to scrutiny. And, there is a whole host of other reasons why the sharks may not want to proceed with their handshake agreement.
In other situations, it may be that the shark wants to change the terms of the deal. When a participant signs up to be on the show, ABC is very transparent that the deal terms can change following the due diligence period.
This means that the sharks may want to invest less money. Or they could want to make changes like holding a higher equity percentage of the business. When there is a proposed change in terms, the participant is free to say no thank you and walk away.
All in all, participants who want to actually land a deal on the show can expect to enter a transparent situation. There have not been reports of sharks trying to mislead anyone. They are very clear about what has changed as far as the deal terms go and why.
If you are thinking about going on the show, you may not get the deal you want but you are sure to get a lot of helpful publicity! And, crafting a strong pitch will help your business well into the future.