Ask HN: My startup got an an acquisition offer. Please share your advice!

I'm located in the EU and have built a server software project which is currently in private beta. This week, out of the blue, I've been contacted by an US company expressing interest in an acquisition. They talked about some cash up-front (6 digits) and hiring me. This is all new to me.

The company and I communicate via email and telephone conferences. I guess such a deal won't be closed only remotely and they will probably invite me over before reaching an agreement.

* Which steps would be involved in selling my project and getting hired by them?

* What guarantees can/should either party ask for?

* Should they be able to see the full source code in advance?

I would greatly appreciate your advice and experiences!

Retain some non-dilutional ownership, if you are pre-revenue beta and they are throwing 6 figures and a job, then they think you have some gold there. Retain 5% to 10% non voting interest, that way they are not worried about your politics in executive leadership. Basically you become an employee with a hell of a bonus plan.

No to the full source code, I would bind then with a non-compete if they are insistent on seeing all of the source code. If they are concerned about code quality, a module's code base should serve as evidence of the overall code quality.

Lawyer up.

Acquisitions can be hairy. My first startup was acquired in a semi-hostile takeover; I'm not able to discuss the details, but I can say that a lawyer (and a trusted advisor-- not necessarily the same person) would be a good thing for you right about now.

Beyond that, I'd think about the bullet points of what it is you are after. 6 digits cash up front is nice, but what else are you looking for?

In the absence of better legal advice, I'd suggest that you definitely want a job contract with a guaranteed sum-- say, 1 year's salary. (If things don't work out, they'll fire you, and you'll be without pay, otherwise.)

If it were me, I'd let them see the full source code as part of a "due diligence", after an initial contract is signed; make sure the "due diligence" has a fixed timeframe, and that there is a penalty for them breaking the deal between the signing and the completion.

If you're somewhat interested, first, negotiate. Make them understand that this won't be cheap. They have likely decided that this way (acquiring + salary) is cheaper than building it themselves, and they're likely offering you a lot less than they are willing to pay.

1. double the price (from, say, 150,000 US to 300,000 US, or from 500 to 1,000). Just double it. Really. You can always go down.

2. Ask for a guaranteed yearly salary of 150,000 to 200,000 US$, with benefits. This is not too much.

Then see how they respond.

As for the hiring: make sure they are responsible for getting the visas. I don't think they should be able to see the full source code in advance, it is quite possible that they are just trying to steal your ideas.

Did you know of the company before they contacted you? Do you know of their reputation or have common-contacts with which to check it? Do you know them well enough to know you'd want to work with them?

Those would be the foremost questions for me.