Sounds like a horrible deal. If you want some cash out, talk to VCs and negotiate taking some investment for growth and some for the founders to take home.
If you don't need the cash... then why bother?
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#22In the worst case, they could fire us on day #2 and we'd have only the token money we got up front to show for it. To me, this would be enough to immediately reject the offer. I don't believe in doing deals which make my worst case worse unless I will be in a position where I can prevent the worst case from happening -- and it doesn't sound like you'd have any way to avoid getting screwed here. they've expressed to u…
> To me, this would be enough to immediately reject the offer.
To me that would be reason enough to make sure I negotiated the deal in such a way that if the company fires us that our stock will vest instantly.
> Any time someone tries to convince you to not consult your advisors, run away immediately.
No, get advisors anyway.
If the deal is good they might be lowballing them anyway and they're scared the other party finds out by how much.
What's good for one party may be great for the other!
There is this joke about the rights to an invention being sold for a relatively low amount, where the buyer confides after the deal to the seller 'we'd have bought it for ten times as much', whereupon the seller answers 'I'd have sold it for ten time less'.
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#23IANAL, and you should get one (see #1) ASAP. But a few observations:
1. Get a startup attorney (you probably already have one, who incorporated you, if you don't - use one of the bigger names (wilson sonsoni, gunderson, cooley))
2. Figure out what your perfect offer would be, and counter
3. Rule #1 of any negotiation is to be willing to walk the fuck away if you're not happy. As soon as you become a little desperate, you've lost leverage.
4. I'm not quite sure how double trigger acceleration works but if you're getting options that vest, you could potentially figure out a way to get all (or some) of your options accelerate if you do get terminated. Usually this applies only on change of control, but I'm sure your attorneys could cook up something.
5. Why do you need to get acquired to work on the million ideas for the future? Have you thought about raising capital to do that (you know, the choice that Foursquare took when it turned down acquisition offers) - raising capital when there's already acquisition interest should be easier if that's the route you want to take and you can take money off the table if you need the cash and still build a potentially massive company. Talk to VCs anyway. This goes back to what you think the size of your opportunity is and how tired you are of going after it.
6. If you do "verbally" accept the offer, make sure you and your attorneys go over the LoI and terms with a fine tooth and comb, you could still get screwed. There's a million ways that could happen and that's where good attorneys will help.
7. Don't panic.
8. Best of luck!
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#24Never rush into any decision because the buyer told you that they are not going to negotiate ... they all put on a poker face playing the game. Your business is highly profitable while on paper their offer isn't really that exciting. I think there is plenty room for negotiation.
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#25All other advice aside, any vesting stock should accelerate upon termination. ie. You only lose stock if you walk away. They fire you, you vest 100%. Anything less is an invitation to be robbed.
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#26Get a lawyer. Go check out the list of suggested good start-up lawyers on http://venturehacks.com
You do NOT want to sell without a negotiated contract for your (all of you) ongoing employment. You need a lawyer for that, DON'T do it yourself.
Some of what the other side is telling you is clearly manipulative (no surprise). If they want to buy you, insist that they do it properly. You owe it to yourselves, and the other side will respect you for it - guaranteed.
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#27Shop around now. You have 1 offer. You're quite likely to get a much better offer (by either the current oferee (?) or another one), with just a few weeks of work. Shop around, for real. "Has (without saying so) implied that they make an offer and that is it" -> standard negotiation practice. Shop around, even if "selling" isn't your strong point. Practically, tell them you need some time to think this through. Then,…
Just to address this, we will not receive another offer. Period. It's annoying that I can't fully explain that without blowing our cover, but you'll just have to take my word on it :)
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#28I can't recommend him personally but I'm always stunned by grellas' comments on HN regarding legal stuff (he's a Sillicon Valley business lawyer)[1]. Maybe you could get in touch...
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#29[deleted]
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#30Lawyers/bankers/third-parties people can and do very frequently kill deals. Do not hand the discussions off to them. Yes, in some cases a third party negotiator can help a lot. In this case though it's probably too likely they'd piss off the buyer and make them walk.
Just tell the buyer you want a deal that you won't regret, and what that means. It's really that simple. Once you get to the point where you're happy stop pushing for more unless you're truly okay with the buyer walking away.