Most entrepreneurs I know are understandably excited about building their business. They're busy making deals, signing clients, adding new products.
And even though many business owners ultimately dream of selling their business and seeing a big payday, what happens if a buyout offer comes early -- while your startup is still on the launch pad? Are you ready?
On this past week's episode of ABC's Shark Tank, one inventor found himself with a $600,000 buyout offer -- and froze.
The show's investors liked Eric Corti's Wine Balloon, which he spent $65,000 developing. The product seals half-empty bottles so the wine doesn't go bad.
Shark Kevin O'Leary jumps in right away, offering $40,000 and pitching help to get Corti's product acquired by a maker of popular wine-preservation solutions. In exchange, O'Leary wants 30 percent of the proceeds if they make a sale.
QVC maven Lori Greiner (pictured), who recently joined the Sharks, counters with a buyout offer of $500,000. Would he be interested?
"Potentially," Corti says. But you can just see his head spinning at the unexpected opportunity to simply sell off the invention.
Billionaire Mark Cuban jumps in to partner with Greiner and up it to a $600,000 buyout offer if he'll agree on the spot. Instead of biting, Corti asks if he could get a 3 percent royalty in the deal. Cuban backs out.
Greiner offers $500,000 again, but Corti still hedges. The next thing he knows, the offer is $400,000 from Greiner and Cuban. Finally, he takes the lowest offer.
Obviously, few buyers would probably be as demanding as the Sharks in expecting an instant answer. But Greiner makes a good point on the show: Many promising deals are undone by too much dithering.
Many entrepreneurs think of their business as their baby, especially when that business revolves around a product they created. There's a lot of emotion involved in selling. That emotion can lead to missing a big opportunity for financial security.
After the TV lights dimmed, it turns out, Corti hung onto his baby and turned down the deal, Corti writes on his blog. So he walked away with nothing, after being offered $600,000, in hopes of making millions off the invention on his own.
Was it the right decision? Only time will tell. In my view, $600,000 in the hand is awfully nice compared with having to work in the business over what could be years to possibly make more -- or not.
Would you sell your business right now? Leave a comment and tell us what it would take for you to sell.
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Comments:
For $600k, I'll create a startup from scratch, right now. I have a few ideas ...
Sell now for $600,000? No WAY! $6,000,000? That I might consider...
I watched a guy turn down 4 million dollars. I also saw another turn down money because they wanted stake in the guy's retail store. Then again, one of the guy's investors was Steve Wozniak. I would sell an idea for $600k. I can always start another idea.
CertifyMyRide is a marketing company that caters to the millions of private consumers that sell their vehicles to private consumers each year. We provide the seller with a professional vehicle inspection, oil change, car fax and a 90 day warranty for the benefit of the buyer. The seller has an opportunity to sell their vehicle faster and for top dollar and the buyer get's peace of mind.
Hi Bill, I am one of the Partners for DOF-Designs On Fitness,Inc (Boston,Ma Based). I would like to speak with you regarding our innovative and exciting product LeanSnack(www.leansnack.com). The health and beauty business fits very nicely with LeanSnacks applications. Please contact me at coachericgoodman@aol.com when you are able. We are currently working with CVS and also focusing on Exporting to Canada and Brazil. I can also be reached at 781-812 -4928. have a good one. Eric Goodman- Partner /DOF/Designs On Fitness,Inc
Totally depends on how much you believe in yourself (and in your product of-course)
What is certifymyride about?
the dragons are such ubermegacunts - good for him turning those thieving whoresluctcawksuckers down
I would sell my start up, CertifyMyRide, LLC for 1, 000, 000.00 and 5 % of all earnings. With the proper documents in place i will send a power point presentation.
Yes I would sell but only if I could still run the company and yes I would give a percentage if it was resonable.
Yes I would consider a 600,000 dollar buyout and if it were true I would not hesitate, however, I have owned my company for nearly four years and sell products in 38 states. I am in the health and beauty business and have major retail customers who buy my products on a regular monthly basis. It is worth more than 600,000, for my products are expandable worldwide, however there are millions to be made right here in America. I am just now scratching the surfface.
I would definitely sell. Then I would start another business. I like to start things, not necessarily keep them going forever.
I feel it is a personal decision based on age, desired standard of living, etc. If you started your company just a year ago and brought it to $600k and are 21. Yeah if you don't full-heatedly believe in doing everything to keep it growing...SELL IT. But if it is your passion and you know how to obtain resources and want to really do it for a living then grow it. I agree that the fact they put an offer up screams multi-million dollar business. But then again you need to have the smarts and resources to get it up there. Obviously something the investors of Shark Tank have.
First of all, the FACT that they offered to buy him out screams that he has a multimillion dollar invention. I WOULD NEVER Sell. He has a website he can sell directly to the consumer and he can possibly make 600Kin 3 months and still own the company. BRAVO to Corti for walking away from that deal.......
I wouldn't sell either obliviously someone saw a lot of value in your company to offer you 600,000 on the spot. Keep it, if it goes under oh well at least you got to see what the potential was and what your potential was. its not always about getting rich overnight when its your baby.
I have a post going live tomorrow about this, but I'd likely sell. I'd think this guy's passion is not necessarily this product but something relating to the topic (wine, maybe?). Plus, it's a great idea. No way this is the guy's only great idea. It's a bird in the hand and he can move on to other ideas. It's certainly not retirement money, but it's an opportunity and a great one. I certainly respect the other side of the argument but I'd likely end up selling.
Like Jimenez, if it was truly my passion then I wouldn't sell it. Youtube was sold and look at it now..
If it was truly my passion, I wouldn't sell it. It's a good amount of money to buy-out a startup, but VC's and investors sometimes need to understand that there are also entrepreneurs who don't do it all for the money ... I mean would you go into a relationship and break up if someone offered you 600k to leave that person? And If you did, then you didn't really love that person in my opinion... So I wouldn't do it if it was my passion.
Based on your last comment, then don't be in business. $600K doesn't go very far & equally to get this takes focus & work. If one is looking to avoid the work then work for someone else but the rewards will naturally dwindle considerably. The secret is to find & do what you love... you will then understand that this amount is very small.
I would definitely sell. The reality is that, yes this can be a multi-million dollar business, and yes this is the "baby." Reality shows me that; 1) this business can only become a multi-million dollar business if you have the right people. Trial and error is not the way you make millions. By the time you get it right another similar or better product is out. 2) Even in life we let our kids grow up on their own after a certain point. They get married and move on to the next thing. Again, I would sell. There are too many opportunities out there to patiently grow an invention. I love to say "When life gives you lemons, make orange juice and keep them wondering."
If I am not on financial disruption, I won't sell. 600K sounds definitely amazing in the short term but if I believe on my idea and have capacity and willingness to invest in I won't sell it. If the sharks were amazed by my product I'm sure that many other investors will be.
I remember watching this episode the night of when the Wine Balloon aired on the Sharks. I was eagerly frustrated at the conclusion. Though many people are not experts in the industry they primarily discovered an idea for, in my opinion, one's original [idea] is PRICELESS. No matter how big. No matter how small. Facebook wouldn't be what it is today if it's founder would have sold out and given up a priceless idea to some already established entity. Entrepreneurs that think of their businesses as their baby should not be ashamed. Perhaps that is the underling factor that determines the quality of a product or service.
I am facing the same issue, I own my own patent, along with my own company that I started less than a year ago, I was offered 1,000,000 for 51% and I would retain %49. I know in the years to come my company will be worth several Mil but One in the hand is better than 2 in the bush.....
its all about satisfaction/happiness that you get. when you build a business that eventually becomes successful, it gives you an unbelievable sense happiness/achievement and confidence that you will never get from $600,000 that you get without having actually built the business. unless if you have another venture that you believe you can go for, then you can sell the business but for some people great ideas dont come easy!!
Yes, I'm ready to sell or find a venture capitalist. My new drawing tool, SketchGenie, needs a factory and lots of advertising. It's patent-pending but will soon have a new and better design. People are using SketchGenie in 23 states and Canada. It's based on the grid method of drawing but you don't have to draw or erase the lines and can save time for professionals or be used as a teaching aid. It can be used over and over. I can't give it the time or the investment that it deserves.
It depends because you could be short changing yourself if you sell for 600,000 without any royalty. the product could over the years make millions over millions.
I would say sell, with 500k plus you could come up with new ventures and have capitol to start, or build your nest egg on the slow yet proven route franchising in subways or something similar.
No, I will not sell it. I know and believe that businesses are established in years and generations but sold in days and even in some hours. I never sell my business but only if when I think that opportunities are not available anymore for me. If I can make the business worth to $600000 then I can also boost it from $1000000 or more.
That episode was really hard to watch. The inventor interrupted Mark Cuban to accept the $400k deal, when Mark was about to offer $500k. *hand to face*
yes i gree to sill by$ 600000
yes i agree to sill it by$ 600000
i'd sell for $6000 dump that problem invent a new one!
I would never sell my business for a mere flat out $600,000 You have to figure the taxes you will have to pay, the start up costs involved, that you have already invested in, many thousands...There would have to be royalties for long term security and a heftier sum to boot!
Yes. I'd sell in a heartbeat. For $600,000 you could buy a lot of other good ideas. Maybe a similar product for the bottled babyfood market.
I would Probably would sell it neither. If I were to keep some royalties then I would of sold. 600k is a nice paycheck, but at the same time imagine in the long run what it could do.
First off, i'd never go on a show like shark tank. These people are out of their mind.. both the contestants and the sharks... Why would I give of 30% , 40% and even more for $30,000 or $40,000.... You want to invest in my business, then invest, don't steal. as to $600K for a conceptual startup... maybe... then on to the next idea.... but $600K for an operational business? That depends on valuation... No matter how much someone offers, make sure you have a solid valuation and know the number before you talk to anyone about investment or buyout. Would I sell my business right now for $600K.... nope. cheers geo
If the sharks are willing to jump in this after a 5 minute pitch then there is more money to be had in the market from an investor who is not looking to beat up the inventor. As a start up, you have little say in what the market value of your company is so the royalty is absolutely required to ensure that you are not taken to the cleaners down the road. Shark Tank and Dragon's Den are entertaining but should not be confused with the real world.
I totally agree. $600,000 is not small change. He could've started a new business AND had enough money to live comfortably no matter what happened with his business. The problem is too many of us suffer from the lack and limitation mentality and think we can't come up with more ideas. But the human mind can come up with infinite ideas, especially an entrepreneurial one. No flames from me on this one!
I would have countered this way...... No matter what offer you throw out at me i want royalties, or no deal ..abviosly you want this and you know its going to make money. or you wouldn't put an offer like this on it. So whats alittle royalty..If you don't except this offer i take it mself and turn it in to a million dollar business..
I'd be one of those who take in a heartbeat and invest in one of my many other ideas!!
I would as you do not know how long it would take to be able to make that sort of money and if you make that amount in general
Corti was thinking long-term business. Cuban and QVC were thinking 'flash-in-the-pan' profit. Which one is designed to go the distance ? That's what long-term business is all about.
I believe countering for royalty on the deal was a smart play. It didn't play out, but nothing ventured, nothing gained. That said, many entrepreneurs are serial in nature. The question many entrepreneurs need to answer is simply, "Passion or Profits?"
it depends...i seen the episode and he mentions that he has alot of business ideas that he writes down while he's working as something in construction. in that situation i would take it and invest it in another venture. it takes alot of money, time and etc to be successful and even after all that theres no gurantee that it'll be successful. so personally i would $600,000, is alot of money. i can pay off my house, buy another to rent and start another business
I agree - take the capital and invest it into a larger business plan. I disagree with the "real entrepreneur" mindset. If you are a "real entrepreneur", you have several ideas for businesses you are tossing around, and you can easily sell one, and use the funds to build another.
Research done by Scott Shane, professor of entrepreneurial studies and angel investor, found that motive matters. It cited that business owners who started BECAUSE they hated their jobs, were outperformed by those who started to make lots of money. Its logic, if I start simply because I hate my job, in quitting my job, I have accomplished my goal, and no longer am propelled. If on the other hand, I start because I want to generate millions, I have a constant ambition before me, causing me to work in and on my new idea-enterprise. So I disagree with the notion that you have to either start because you believe in it, or, you want money. Sophisticated entrepreneurs do both!
Nope
I agree Carol, I would sell in a heartbeat. I'm an inventor, but I never have felt selling, marketing, assembly, storage, was my forte. I'm looking for a licensing deal now, I'm over it! That kind of money, by the way, would change my life, and the lives of most people I know!
It depends on the reason you started the business in the first place. Many people start a business because they have a true passion for what it is that their business does. Others do it because they see it as a pathway to financial success. If you are in it because you truly love it and can't imagine yourself doing anything else, then no you should not sell. If on the other hand you could just as easily invent something new or do something else, then it would be worth your while to consider the cash.
Whoa.... I'd JUMP at $600,000 !!! I have several other ideas I'd use that newly acquired windfall to fund. I totally disagree with Rudy L when he states " real entrepreneurs" wouldn't sell their baby. Hogwash, Rudy. Get creative and have a few ideas/ start-ups on your plate at the same time. And PLEASE put me on Shark Tank!!!
First of all we must establish the difference between an inventor and an entrepreneur. An inventor designs prototypes for the market. An entrepreneur takes prototypes and products to the market and builds a business/brand out of the product or service they can offer. What is Eric Corti? He is an investor. With that cleared up we can now look at the opportunity in fornt of him. He is being offered almost 10times his investment. To be precise the ROI is 923%. An inventor creates and then sells. Corti should understand his sale he i\has in front of him. He has the opportunity to take a $600,000 cheque home and begin on his next idea. No inventor has just one idea. He now has the opportunity take his knowledge and apply it somewhere else. Eric Corti, in my opinion, is trying to do too much. It is hard to understand when to take the money and run but I think this was his opportunity. He is trying to raise this business like it's his own child. Why not let it go and tell yourself "All that hardwork has finally paid itself off"? Finally, if he should have taken the advice from anyone it should have been one of the sharks offering the deal: Lori Greiner. She is MRS. Inventor! Lori has prooved to us that inventors can keep inventing. Inventors won't always get rich by holding on to their inventions. After all, it is better to sell the patent than for it to sit in your basement collecting dust.
Wow...my computer is melting from the flames here. This is a topic there's a lot of passion around. I don't believe it's un-entrepreneurial to sell your business (if that's a word!). What if he put that $600K into the next great idea -- he's an inventor, he's got dozens of 'em. Think how he could ramp the next thing with that financial freedom, and keep all the profits. I just finished up writing book chapters on the starts of companies such as Twitter and Groupon -- and neither of those great brands would have been born if one of their founders had not previously taken a big payday on an earlier startup. That money allowed them to jump on the $1 billion idea when it came along. I think he was nuts not to take the money...but maybe it'll be a huge product success and I'll have mud on my face later. I think to most American families (or families anywhere), $600,000 means so much. The kids go to college, as Mark Cuban said on the show. You know you will be able to retire, with at least a modest income, especially if you've got time to grow it. You have money to invest. I think a lot of entrepreneurs would kill to be in that position.
yes I agree on that
Real entrepreneur would take this capital and invest it in even bigger business. Decision has to be based on numbers, there's little room for emotion in competitive market.
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So true Rudy, very well said I completely agree
Easy answer, No. It's not even a question if you're a real entrepreneur. I run into lots of different people in the startup community, and many of them fall into the category of... well.... maybe Mark Suster said it best when he said "F*** you you're not an entrepreneur". These are the people who are doing Business A one week, and Business B the next. You ask them why they're doing it and they say that they want to be independently wealthy. They feel they deserve investment, but you ask them what they'd do with it and they say "I'm tired of working for free". These people would take the money in a heartbeat, because at the end of the day that's all that motivates them. Contrast that with a real entrepreneur who does what they do because they're pursuing a solution they believe in to a problem that they think needs fixing. They are independent, they do want to make money, but they do what they do because they believe in it. Because they can't imagine doing otherwise. And when people talk to them about cashing out and sitting on a beach somewhere, the real entrepreneur looks back and asks "why would I ever want to do that??"