The following are actually REAL negotiations between entrepreneurs and investors (Guppies & Sharks). The sharks invest their own money at their discretion. The guppies get devoured into a belly of finance, or spit back into the ocean of hard knocks to fend for themselves. The entrepreneurs must convince the sharks to invest the FULL AMOUNT, or walk away with NOTHING.
THE GUPPY: Mike Abbaticcio and Shon Lees
THE COMPANY: Hillbilly Brand
SYNOPSIS: Hillibilly is a brand that represents the country lifestyle of outdoors, hunting, fishing, skiing & more
SEEKING: $50K for a 25% stake
PRODUCT/SERVICE: Hats, T-Shirts, Tanktops with the HillBilly Brand
WHAT'S THE SKINNY?: The sales are at about $50K in the last twelve months, they do event sales, they just signed a vendor agreement with Sports Authority in 30 stores in the southeast, and just got distribution with Bar Jam, which distributes to all the travel plazas and trucks stops across the nation. They own the Hillbilly Brand and the name Hillbilly for apparel. They align their selves with country music concerts and sell T-shirts at tents. They want the investment money to take their whole party and Hillbilly movement to trade shows, and expand their trademark to other countries. They've signed a licensing deal with a Canadian record company that will package it with their music in 100 HMV stores across the country.
BUSINESS MODEL/HOW DOES IT MAKE MONEY?: They plan on expanding the brand to jeans, bathing suits, fishing gear, hunting gear, and backpacks.
STATS: Well yippy-kyay, hee-haw and howdy-doody-doo! talk about branding, these guppies bought the whole party to the tank. Which shark will be the first to sink their teeth into this southern fried financial fillet? Kevin hates the retail business and backs out first. Jeff thinks Mike and Shon should license the brand. Barbara doesn't have the licensing contacts and decides to drop out. Robert wants to know if Jeff will come in on the deal with him, but he wants 100% of the name! He just wants to license it to other people, have the check show up and pay Mike and Shon a royalty fee out of it. Robert wants to pay them a 7% royalty , but Mike and Shon wants to partner with the sharks and not give up their dream company. Jeff jumps in with Robert and asks Daymond to jump in on the deal. Jeff, Robert and Daymond offer $50K + 7% Royalty for a 100% stake. Mike and Shon wants $100K with a 10% royalty plus a guarantee that if the sharks just sit the product on the shelf, Mike and Shon will have the opportunity to take it back at some point (these Hillbilly guppies just might be sharks in disguise). The sharks counter with 75K + 7% royalty for a 100% stake. although Mike and Shon really want the 10%, they agree to the 7% and walk out with the investment. Look out Naascar, ... here they come!
CAME IN SEEKING: $50K FOR A 25% stake
WALKED WITH: 75K + 7% Royalty for a 100% stake
GRADE: (Guppy): C+
GRADE: (Sharks): A
COMMENTARY: I think they did alright but this was a pretty tough negotiation due to the fact that Robert wanted 100% of the company. On the one hand, you wander if they should have fought harder and got at least some percentage of the company for themselves. On the other hand I can't help but wonder if holding out would have blown the deal altogether. Personally I would have tried hold on to at least 10% of the company, or tried to get a 7% royalty that escalates to 10% after a certain amount of sales, or, a 10% royalty that decreases to 7% after a certain amount of sales. Still all in all, with Jeff Foxworthy lending his name, Daymond John's expertise, and Robert Herjavec's keen business insight they should make a mint with Naascar alone! Huge potential .............. I would even go so far as to utilize the money, clout, and connections of the sharks, learn ALL that I can learn about the business from them, and start another brand altogether, keeping 100% of that one to myself! It could be bigger than John Deer yall, I reckon, ya hear that bubba!? Yeeeeeeeeeeeee-Hawwwwwwww!!!
WHAT DO YOU THINK? COULD THEY HAVE GOTTEN THE SAME CAPITAL (OR HIGHER) WITH A LOWER STAKE? WHERE THE SHARKS FAIR IN THEIR NEGOTIATIONS? DID BOTH PARTIES COME OUT ON TOP? POST YOUR COMMENTS AND TEST YOUR NOODLE AT THINKING LIKE A BILLIONAIRE...........