3 ms·

I am in a similar situation right now, and one of the things that we came up with is an upfront payment with additional dollars down the road pegged to revenue

by blurry 18y ago

I am in a similar situation right now, and one of the things that we came up with is an upfront payment with additional dollars down the road pegged to revenue growth. To clarify, I am not suggesting lowering your sell price but rather getting the buyer to commit to more dollars on top of your discounted cash flow figure. One more minor advice is to negotiate a consulting fee for yourself. Clearly, you've been doing something right and the buyer will want that. I've heard of people getting significant ongoing $$ that way. Best of luck and congrats.

chmike 18y ago
Be careful with this method. I've heard a story of a German entrepreneur who built a valuable business around a web service and was bought. He wanted more money than the buyer could give so they agree that he would get a significant amount of the value as shares. There was much more share value than money because the seller was confident in the business model. Then the bubble 2000 exploded and the shares lost all their value. But wait, the worst is yet to come. The next year the IRS claimed the taxes on the transaction and refused to take in account the loss of share value. SOo the seller had to borrow to pay the IRS and pays it back by working for the buyer ! The lesson I learned is to think twice in getting payed with shares or revenue promise. Today the economy is really uncertain, so watch out for this kind of accident. It also depends on the business and the expected long term stability of your business. Today I would prefer a sound business instead of a big pack of money. I wouldn't know how to secure it.
- blurry 18y ago
  Dude, have you read my comment at all before posting your random story of the day? I made sure to stress I mean dollars. I made sure to stress I mean dollars on top of a firm sale price. Seriously, which part of my post said shares to you?
  - chmike 18y ago
    It is not a random comment and I did read your comment. You wrote "additional dollars down the road pegged to revenue growth" and I referred to revenue promises. If it doesn't correspond to the plan you exposed, it is along the line, just a bit further away with the same logic. Ok, I shouldn't have post it as a reply to your comment. Sorry.

by blurry 18y ago

chmike 18y ago

Be careful with this method. I've heard a story of a German entrepreneur who built a valuable business around a web service and was bought. He wanted more money than the buyer could give so they agree that he would get a significant amount of the value as shares. There was much more share value than money because the seller was confident in the business model. Then the bubble 2000 exploded and the shares lost all their value. But wait, the worst is yet to come. The next year the IRS claimed the taxes on the transaction and refused to take in account the loss of share value. SOo the seller had to borrow to pay the IRS and pays it back by working for the buyer ! The lesson I learned is to think twice in getting payed with shares or revenue promise. Today the economy is really uncertain, so watch out for this kind of accident. It also depends on the business and the expected long term stability of your business. Today I would prefer a sound business instead of a big pack of money. I wouldn't know how to secure it.

blurry 18y ago
Dude, have you read my comment at all before posting your random story of the day? I made sure to stress I mean dollars. I made sure to stress I mean dollars on top of a firm sale price. Seriously, which part of my post said shares to you?
- chmike 18y ago
  It is not a random comment and I did read your comment. You wrote "additional dollars down the road pegged to revenue growth" and I referred to revenue promises. If it doesn't correspond to the plan you exposed, it is along the line, just a bit further away with the same logic. Ok, I shouldn't have post it as a reply to your comment. Sorry.