I have been in this position twice before with a services-based consultancy. The first time it was a similar low-ball offer with 50% paid up front and remainder

I have been in this position twice before with a services-based consultancy. The first time it was a similar low-ball offer with 50% paid up front and remainder over 4 years as an earn-out. The total deal was for roughly 4x revenues, and was all cash. We actually didn't think it was such a great deal at the time, but we ended up going all the way to closing. Lo and behold, they actually tried to change one of the material terms of the deal AT CLOSING. These folks were not to be trusted at all. We immediately said "GOOD BYE!" and hung up the phone (we were in Switzerland at the time working for a client and actually tried to do the closing virtually). I don't think they expected that we would just walk away if the deal went sour, but they had nickled-and-dimed us so much along the way that the trust was already frayed. By the time we were done, there was no trust left. Without trust, you can't do any deal. Fortunately, like you, we were already profitable. Almost five years later, we've actually made more money (and pocketed) than we would have gotten in the deal. Meanwhile, the other company has gone belly-up. If we had taken the deal, we would have been screwed. The other deal was such a stupid lowball, we couldn't even take it seriously. We simply replied, "this is not a good deal. Make us another offer." We felt it would be ridiculous for us to counter offer such a stupid deal that rejecting it out of hand and making them negotiate against themselves was a better option. Needless to say, they didn't make a better deal. Good riddance. This is a great conversation here (tagged for future reference). For those of us who are trying to learn as much from other startups' experiences, would it be possible to keep us updated (in the same sort of anonymous style you have done here)? It may not be possible, but I'm very interested to hear what you end up doing with this offer.