Daniel Lubetzky, the founder of KIND Snacks, is joining the panel of regular sharks on “Shark Tank” replacing Mark Cuban. But before becoming a business mogul, Lubetzky made a risky $220 million move that almost cost him his company. It turned out to be the best decision he ever made.
Back in 2008, KIND was still a small player in the snack industry. Lubetzky had just taken a $16 million investment from a private equity firm, VMG Partners. The deal was that he had to sell the company within five years. It seemed like a solid plan then but things turned unexpectedly.
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“Four years into the deal, I was realizing that Kind could become so much bigger,” he recalled to CNBC. Sales were up and Lubetzky felt the company had much more potential. But his investors were eager to cash out, pressuring him to sell. Instead of giving in, Lubetzky decided to buy back their shares. The problem was, he needed $220 million to do it.
The Gamble of a Lifetime
This was no small feat. Lubetzky had to scrape together company cash and take on millions in bank loans to make it happen. “Because I hadn't pre-negotiated the terms for buying them out, it turned out to be very, very expensive – and very risky. It was a very painful negotiation,” he said.
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He could have lost everything if KIND's sales had dropped even slightly. He had sleepless nights knowing that any misstep could result in losing the company he'd built from scratch.
But Lubetzky believed in KIND and decided to leap. “I felt like we were just getting started,” he said. He was right. The company's annual sales nearly doubled that year, setting the stage for what would come next.
Lubetzky transformed his $220 million gamble into a tremendous win. By the time he decided to sell KIND to Mars in 2020, the firm had amassed an astounding $5 billion valuation. He attributes KIND’s success to his decision to purchase back his company.
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“If we had sold back in 2013, KIND might have gotten lost inside a big corporation,” he explained. Instead, he kept the company independent and, as a result, it grew into one of the world’s most recognized healthy snack brands.
He wishes he knew back then that when you negotiate with a private equity firm, it's not “their way or the highway.” When you bring investors into your company, it's no longer completely yours. “You need to remember that it's now a company that you and others own,” Lubetzky shares.
As the new regular on “Shark Tank,” Lubetzky will bring this same boldness and entrepreneurial spirit to the show.
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Why Mark Cuban Left
After more than 10 years as a regular on the program, Mark Cuban decided to leave “Shark Tank” in order to spend more time with his family. Having balanced business endeavors and TV appearances for years, he now desired to devote himself to spending more time with his wife and three kids before they left to pursue their own lives.
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