Shark Thank - no Due Diligence?
Hi Monkeys,
I have just discovered shark thank and watched 10ish episodes and I am confused. How the hell do they throw 100k to every guy while doing any DD. They basically ask for top and bottom numbers for three years and then make an offer (most times at interesting multiples of revenue).
Is it fake? do they have money to waste? what is it?
You think diligence even matters? Its just to protect themselves from lp legal actions.
I get its a show but damn are they gambling, they make every deal too quickly not even funny
They make a ton of money from the show so throwing money is probably not important. secondly, they do their due diligence, just not during valuable airtime.
They make the offer then after the show they do DD and if the company isn’t legit they pull the money.
There are examples of this happening and deals getting pulled.
While it’s a hand shake deal, the investors complete diligence to confirm there is no mis representation.
The pitch actually last 45 minutes - 1.5 hours, they only show the 5 best minutes. Also, when they “close” deals on the show, the sharks have teams who actually review the financials and negotiate the rest of the deal. Most of the time, the deals don’t go through actually and there is DD that is executed by the shark’s teams.
It’s a TV show, so they only show the entertaining part and it does not mean that no DD is done
Had a family memeber that worked on the show, like on set. While the bits are edited down, it is no where near that long per company. 10 - 15 min tops.
Well people who have gone on before mentioned being there for over an hour as the other used commented
gotcha, I guess it would be much more interesting to make each episode at least 30/35 min and try to dive more into the company financials, competitive advantage, risks
This comment verifies you work in RX lol
Do you want to make the show an IC meeting? Maybe add a quick LBO/DCF live to see if deal makes sense?
It would make it more interesting for people in finance. Most people get bored when talking about due diligence. It’s a good idea though - they should have a “Shark Tank Uncut” version of the show for those interested.
Who tf is gonna watch a show about a bunch of people doing due diligence for an hour
I would watch it but maybe I’m a finance nerd.
There's a bunch of research that goes into companies before they even get on the show. They include a lot of the stupid ones for entertainment value (like the shitty auditions in American Idol) and for the ones they actually make an offer for there's a typical DD process after the offer is made. Think of making it through the TV pitch as just getting an IOI.
The deals are all real. There’s a lot of editing done to cut down to only the most interesting parts of the pitch and discussion—the entrepreneurs are actually in there for longer than you see. The diligence is done after an offer is made (off camera), which is contingent on everything being solid and true. I think I’ve read that most of the deals don’t end up going through.
good thinking, I am sure a 5 hour screening of a benefits / P&C call with buyers' counsel interviewing the head of HR is going to bring blockbuster ratings
I've had 3 companies on it, some of them have their own DD team etc. If Mark Cuban invests for ex, you don't actually deal with him.
Like any other term sheet, these are non-binding offers
The real answer is that any offers made on the show are not legally binding, that due diligence is done after the fact, and quite often verbal deals made during the show fall through
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