I'd try to focus the initial conversations on understanding why they view your company as a strategic fit for their plans, their view of how the market may develop, etc. From there, you can get into what the integration of the two companies might look like (do they want you and your team to stick around, are they more interested in technology than customers, etc., etc.) There are a ton of things you can engage them with to get a better sense of whether or not you can do a deal at the price you've got in mind. And if it turns out you can't, just say so. Something like "Listen, I think you are really just interested in our patents, and I think we've got a lot more value in our organization - I don't think its likely that we'll be able to bridge the gap between how you'd value our patents and how I value the entire business. If you really want to talk about an acquisition, it would have to be on the basis of your interest in the entire business otherwise I can't sell it to my investors, board and team. It really is your call, what do you think?" etc…
Put another way, price should be one of the last things you talk to them about and there are plenty of real things to talk about before you have to indulge them with a fishing trip. Usually all the real stuff doesn't come out until a letter of intent has been inked and due diligence starts. Its perfectly okay to keep a few cards tight to your chest until you get to that phase… assuming you manage the conversation well up until that point…
I think the deposit requirement might be a little too passive-aggressive for my liking. I'd personally want to take the stance that they are approaching you in good faith and do everything I could to make a transaction - unless I firmly was opposed to any sale. It really comes down to what you are trying to achieve. If you think you'll end up selling in the end, it might not be helpful trying to pick the buyer - stay focused on making a sale happen instead.