This is a negotiation so think about your leverage. Reasoning about fairness is very little leverage. Two Questions: 1. How important are you to the ongoing r

This is a negotiation so think about your leverage. Reasoning about fairness is very little leverage. Two Questions: 1. How important are you to the ongoing revenue of the business after it changes hands? If you're an ongoing key person, you do have some leverage with the current owner. You may have even more leverage negotiating a consulting contract with the buyer. This is a business negotiation and then a lawyer can help you draft a good agreement. 2. Do you believe your 20% royalty continues in the event of a sale? If your 20% royalty is supposed to survive the sale, maybe you should negotiate a buyout of that royalty. There are lots of factors in valuing this, but your anchoring point would be 20% of the expected sale price, and its a financial discussion not a fairness discussion.