3 ms·

Shop 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 w

Shop 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, when you have another offer (either better or worse), tell them very briefly: "We've had another offer. We don't want to turn this into a bidding war. We need some more time to think about our next steps." (Of course you want to turn this into a bidding war.) I once got an offer for a startup out of the blue, just after I decided I was tired of it (karma!). I was going to take it. My girlfriend told me to ask for 50% more, and they gave it to me with only a little pushback. I could have likely gotten double. 3x revenue in STOCK sounds like a BAD deal. 3x revenue basically means: if they pretty much abandon the whole thing and let it run out a few years, they'll still make money. If they offer you just 3x revenue, it should be cash. Ask for 6 time revenue in cash, as your counteroffer. If you're really doing well and in a growing market, I'll offer you 3x revenue in cash myself, that'd be a steal.

founder001 16y ago
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 :)
- random42 16y ago
  Are you 37signals?
- jacquesm 16y ago
  > Just to address this, we will not receive another offer. Period. >> If you're really doing well and in a growing market, I'll offer you 3x revenue in cash myself, that'd be a steal. You just did.
  - petervandijck 16y ago
    :)
- petervandijck 16y ago
  OK, fair enough. That diminishes your bargaining position. So the options are: 1. Take the deal as is. 2. Negotiate the deal. 3. Keep working for 3 more years (3x revenue), and make the same money - salaries you would have made at BigCo, but PLUS you still have the company and money coming in for years after. My calculation would be around 3: how exciting is that. Also, you have plenty to negotiate around. 3x revenue can be upped. Your employment conditions can be negotiated (ie. I get to spend 2 days a week on open source software, paid). Vesting can be negotiated (4 years is a really long time). Or calculate it like this: current annual revenue = X. If you stay alone, assuming revenue will grow a little, work for 4 years and you get (5X + the total value of the company at that point, which is likely 4X-ish) = 9X. Work for 4 years in BigCo and you get 3X + salaries. (Adjust formula to take into account multiple founders etc). If your combined salaries would be about the same as your net revenue is now, it's a rather equal deal (except for the freedom). So it depends on how your salaries compare with your income now. A lot also depends on how you estimate the longevity and growth potential of your company. If it's gonna grow and keep going for 5 years, they're cutting you a bad deal. Also consider how much you could be making at some other company, in todays job market. It's weird that you're sure you won't get another offer. It also kind of sounds like a talent acquisition. Do they want you, or the company? Has that been discussed?
  - jacquesm 16y ago
    > 3. Keep working for 3 more years (3x revenue), and make the same money - That's three times revenue in three years, but not the same as a stock deal which vests in four years in stock that may be worth 0, also, revenues are not profits. It would require far more insight in to the actual figures involved to say whether this is a good deal at all (or a bad one).
- gte910h 16y ago
  That's fine. This offer is still crap. Throw it in the garbage.
  - jacquesm 16y ago
    The offer is crap but the process may not be and some elements of the offer indicate the other party is serious, welcome to hardball. Throwing the offer 'in the garbage' will end the negotiations, the trick is to gain control of the dialogue and to push back as hard as you can without breaking off the deal to see what room there is.
    - gte910h 16y ago
      While you're very likely right, if the most important thing out of this entire discussion that the OP needs to get is you cannot accept the offer as is. They seem to actually believe the offerer that they aren't going to make another. Well then, at this point then, they just really need to go 'well that's crap' and toss it in if they're unwilling to counter. They have to get to the point of accepting that accepting it is the absolutely worse thing they could do. Ending negotiations is far far far superior to actually accepting that offer. Once they accept that, then they can counter, confident they're not losing anything. Even if this truly is the last offer, that's a better result than acceptance.

founder001 16y ago

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 :)

random42 16y ago
Are you 37signals?
jacquesm 16y ago
> Just to address this, we will not receive another offer. Period. >> If you're really doing well and in a growing market, I'll offer you 3x revenue in cash myself, that'd be a steal. You just did.
- petervandijck 16y ago
  :)
petervandijck 16y ago
OK, fair enough. That diminishes your bargaining position. So the options are: 1. Take the deal as is. 2. Negotiate the deal. 3. Keep working for 3 more years (3x revenue), and make the same money - salaries you would have made at BigCo, but PLUS you still have the company and money coming in for years after. My calculation would be around 3: how exciting is that. Also, you have plenty to negotiate around. 3x revenue can be upped. Your employment conditions can be negotiated (ie. I get to spend 2 days a week on open source software, paid). Vesting can be negotiated (4 years is a really long time). Or calculate it like this: current annual revenue = X. If you stay alone, assuming revenue will grow a little, work for 4 years and you get (5X + the total value of the company at that point, which is likely 4X-ish) = 9X. Work for 4 years in BigCo and you get 3X + salaries. (Adjust formula to take into account multiple founders etc). If your combined salaries would be about the same as your net revenue is now, it's a rather equal deal (except for the freedom). So it depends on how your salaries compare with your income now. A lot also depends on how you estimate the longevity and growth potential of your company. If it's gonna grow and keep going for 5 years, they're cutting you a bad deal. Also consider how much you could be making at some other company, in todays job market. It's weird that you're sure you won't get another offer. It also kind of sounds like a talent acquisition. Do they want you, or the company? Has that been discussed?
- jacquesm 16y ago
  > 3. Keep working for 3 more years (3x revenue), and make the same money - That's three times revenue in three years, but not the same as a stock deal which vests in four years in stock that may be worth 0, also, revenues are not profits. It would require far more insight in to the actual figures involved to say whether this is a good deal at all (or a bad one).
gte910h 16y ago
That's fine. This offer is still crap. Throw it in the garbage.
- jacquesm 16y ago
  The offer is crap but the process may not be and some elements of the offer indicate the other party is serious, welcome to hardball. Throwing the offer 'in the garbage' will end the negotiations, the trick is to gain control of the dialogue and to push back as hard as you can without breaking off the deal to see what room there is.
  - gte910h 16y ago
    While you're very likely right, if the most important thing out of this entire discussion that the OP needs to get is you cannot accept the offer as is. They seem to actually believe the offerer that they aren't going to make another. Well then, at this point then, they just really need to go 'well that's crap' and toss it in if they're unwilling to counter. They have to get to the point of accepting that accepting it is the absolutely worse thing they could do. Ending negotiations is far far far superior to actually accepting that offer. Once they accept that, then they can counter, confident they're not losing anything. Even if this truly is the last offer, that's a better result than acceptance.