Ask HN: Company wants to aquire my website. Can you give me some advice?

This is a shit deal.

What they are essentially doing by tying your pay to the growth of the site is pushing all of the risk onto you, and you're getting NOTHING in return for assuming the liabilities that come with. If they don't have the cash on hand to pay your full asking price upfront and instead want to pay it in installments (with interest, of course) then that's fine: they assume the risk of their purchase and operations, as well they should. But that's NOT what they're asking. They're asking you to do it.

edit: For example, say a month after they acquire your site, the company decides your site and only your site is going to start running huge, 45-second flash video ads for all incoming traffic. Why just you? Because they've invested far less time and money in your brand than their others. You get to be the guinea pig for their stupid business plan ideas because you're the most expendable. Wham. You're fucked, they're not.

Agreed. Also why did you make an initial offer?

People have debated the merit of "he who says a number first loses" on HN before, but in general there is a lot of truth to it. If they are interested in purchasing, show them whatever info they need and let them make YOU an offer. The final price can only go up from there.

Agreed, if you make the first offer you should only be going big. You think $10k is fair, offer $20k.

I remember my father-in-law was at a garage sale and saw a tub full of barely used golf balls (better than the ones they sell in walmart at a stupid price like $12 for 15). He asked 'how much?'; she offered $10, he countered with $5 and she took it. We counted them, it ended up being 300+ golf balls. He would have been more than happy to pay $1 a dozen and consider it a steal ($25 for all the balls - like $240 for worse condition balls in walmart) without the rubbermaid container; he got that for free.

You don't want to be the person selling your company for $50,000 when on the straight market it would be going for $500,000.

This example demonstrates value of asymmetry of information when making a deal, but not "don't make first offer" principle. Obviously the lady was ignorant to the true value of the balls, as any non-golfer would.

It wasn't that she had a lack of access to the information (IE a non-golfer randomly acquiring the balls), he husband was an avid golfer and she said her son was semi-pro. She simply didn't care to get the information before selling a product, which is another lesson entirely.

Yep. By making the first offer, they set the ceiling, and it will only go down. They should have gone with the "make me your best offer" and started negotiating up from there.

There is a pretty good article that states that it is often to your advantage to actually make the first offer. I submitted it here: http://news.ycombinator.com/item?id=1643734

This is true. As a rule of thumb, just assume that you aren't getting the performance bonuses and then see how sweet the deal sounds.

By the way, this sounds like a very familiar offer. Is the company LiveUniverse?

Funny, I got a terrible offer from eUniverse, the predecessor to LiveUniverse. Maybe that's their schtick?

They wanted to resell my $20 shareware program (a pop-up blocker before pop-up blocking became just a feature). Their first offer was something like 25 cents a copy for each sale over a certain number and $1,500 dollars up front. I stopped returning their emails shortly thereafter.

Agreed, it's one thing if they don't want to pay say $10,000 (just a round figure for example) up front, but they should be paying a minimum of $15,000 in agreed upon installments on a contract drawn up by a lawyer or paralegal (whichever's necessary where you are).

You're totally correct, when someone expects to pay you less for you assuming more risks and liability it's a shitty deal. The response should be along the lines of 'fuck you'. If they're genuinely interested, that means someone else likely is too, someone who probably isn't trying to screw you over.

OP: If you're asking us whether this is a good deal or not, it's probably because you already know it's a crappy deal. Add 20% to your initial offer and say you're willing to take say 50% of advertising revenues as payment for maintaining the site (assuming you're making a profit off of it now). If they really believe they'll boost your readership + revenue streams then this way will negotiate out good, however that's not what it looks like they're interested in.

This is like owning an apartment building and being made a buy out offer saying "We don't want to pay the 15% down payment, would you be willing to forgo the total amount in lieu of increased pay as the super if you increase occupancy rates." It'd be a retarded offer to accept.

Assume that any money that is contingent is not ever going to be paid. Get enough upfront that you wouldn't feel ripped off if you never got another dime. Shit happens and they'll be in more control than you.

To ensure the highest possible chance of getting the rest of the money have it put in escrow. Structure it so that the escrow service pays out the money according to a very simple metric. Using Google Analytics is probably a reasonable method, as it's a third-party and not open to direct manipulation.

If they're not willing to put the money in escrow that's a huge red flag that they're expecting not to have to pay it out. Accept no excuses on this point, increase the upfront payment accordingly, or don't accept the deal.

Using Google Analytics is probably a reasonable method, as it's a third-party and not open to direct manipulation.

It's easy to manipulate Google Analytics numbers downwards (as the company would want to do): Remove or break the javascript.

This is why you have a lawyer write the agreement. They're really good at covering this kind of stuff.

It is very hard to give you any advice due to the vagueness in your post. Personally, if its < 100K deal as it sounds from your post, I'd just want the cash without any future commitment. You say they want you to work as a contractor - what if you quit the next day?

Bottomline: if it is a tiny deal, figure out a fair value for your site, get the cash, work for them without any longterm commitment so you can quit tomorrow if you'd like.

When I sold a site in high school for 5 figures, I was so over it the next day. That would have been a problem if I'd made a commitment to stay and maintain.

You say they turned down your initial offer. I was expecting the other way around. I know when I got the initial lowball offer, I multiplied it by 5. I sold it for 4x the initial offer.

Read "Bargaining for Advantage" as soon as you can - it'll give you incredible ideas for how to frame your arguments, and how to creatively negotiate a better deal for both you and the acquiring company.

Do you have a lawyer who understands internet companies / startups? I'd highly recommend finding one to counsel you, because you run a high risk of having the acquiring company's lawyers taking advantage of you without you realizing it.

Did they approach you or did you approach them?

If they approached you, you're in the drivers seat, set a good cash price up front and do not rely on any money after the transfer has taken place. If they don't take that walk away. They'll be back, or someone else will be or you'll be left running your own business. Either of those are good.

If you approached them then maybe this is not the right party for you. Walk and try elsewhere. If you keep getting shitty deals focus on improving your product, grow the installed base and if you can start making inroads on the companies that you looked at to buy you out.

They want your product!!!. You set the rules unless they see that you are craving for a "little" money.

They want you website because they are going to earn profit from it (trust me the company looking to acquire already analyzed the possibilities) Don't forget that!!!

This is about a company, but it sounds like something right up your alley: http://news.ycombinator.com/item?id=1639523.

I think you're possibly getting taken for a ride here.

You can take either A> Convertible Debt or B> Non-convertible debt.

Convertible Debt would be you agree to some smaller payment, with an option to convert the debt payments into a certain amount of revenue share if it does in fact work out very well. Non-convertible debt would just be payments over time. But in neither case should you take this currently offered deal.

You really need to provide much more detail about the type of site you're running, how/if it makes money, whether you're comfortable working as a contractor for the larger company, etc.

Also, know that traffic milestones are way too easily taken advantage of (inflation and deflation of numbers is very simple in practice) -- I would suggest coming up with another way of tracking your growth than by pageviews.

I'd be a buyer in deals like this, where I get the seller to make the money for me to buy them. Who wouldn't?