Try to get something on paper.
> they could fire us on day #2 and we'd have only the token money we got up front to show for it.
That's something you should take care of contractually.
> the offer is low by about 20% from what would make us "happy" to sell for.
20% is not a whole lot to be off for an opening offer, but keep in mind that if you go for broke you might end with nothing.
> We're very excited (indescribably so) at the prospect, we love the company and really want to make a deal and start working on the million ideas we have for the future - but at the same time we are afraid of cutting a deal now that we'll be second guessing ourself on for 4 years.
How long before the next offer comes along?
Will it be a better one?
Will this offer stand?
Are you the next twitter or are you operating in a space with competition? This matters a lot in your risk assessment.
> The purchaser has made the deal seem very much like a standard-fair offer and has (without saying so) implied that they make an offer and that is it - they don't go back and forth on it.
I would say that :) That doesn't mean it's true. But it does mean that they want to pressure you a bit and apparently that is working.
Keep your head cool.
Don't sign anything on the spot ever, always think it over, always have it reviewed. Be as cool as you can be and don't allow yourself to be pressured.
> We are also being courted by attornies/firms and investment bankers who want the business, and it's hard to get a bead on some really solid advice without feeling like the person giving it has something to sell us. They basically have all told us it's ridiculous we've come this far without getting an LOI already, and the purchaser has basically said they don't issue LOIs until the terms are agreed on in principle.
That makes good sense but even a letter of intent is essentially meaningless. Even a term sheet is meaningless. The only document that really matter is the final contract, and only then when it has been signed.
> So anyhow, what next?
Get a really good lawyer! An experienced one and one that will not blink on doing a deal like this (as in, that has done multiple deals like this and comes with very solid references). Deals like this happen only a few times in a lifetime, don't be cheap, that might come back to bite you big time.
> They are waiting on our go-ahead to put together an LOI.
Get a lawyer.
> Counter immediately?
Get a lawyer.
> Is it stupid to be afraid of "ruining" a deal?
No, not at all, that actually happens. Don't ruin it!
> Should we involve our attorney?
YES!
If you end up with a deal on the table after negotiations are finished and you don't like it walk away.
Treat it as a learning experience up to that point and only sign if you are 100% sure that it's a good deal for you and your buddies.
Good luck!