Comment by jsavimbi | Hacker News Reader

Comment by jsavimbi | Hacker News Reader

a) No, NDA's may hurt you in the sales process, as it binds you both. The only thing you need to protect is your IP which can be done through patenting if you want to go that way, but basically it's the execution they should be interested in, not the underlying tech. However, when it comes to facts and figures, you should talk that over with your business lawyer as whatever you represent may become binding.

b) No. Never tell a car salesman what you're willing to pay for a car. That becomes the starting point from which he'll only go up. In your case, the reverse. I'd hire an independent auditor to valuate your business, giving you a high, low and median selling point from where you can intelligently negotiate.

Your diligence needs to be done as to whether or not they're actually a good fit to buy (qualified?) and research them to see if it looks like they may be interested in your company from more than just a buying perspective, because they could just be shopping you and there's no need to disclose everything.

Making the first offer can have a strong anchoring effect on the product's perceived value (to both parties).

Here's a good article on general negotiation from HBS: http://hbswk.hbs.edu/archive/4302.html

I completely agree that you should not worry about the NDA, but you should consult a lawyer nonetheless. jsavimbi is correct that the NDA is only going to bind you. As for the second point, I believe that you should not start with an indication of your value if you can help it, but you can provide revenue results. Your revenue now is not going to be your revenue in the future. As long as you are making anything, you are doing well. There is a big difference between $0 and $1. You should not disclose everything, though, until they provide you with more details, and let them make the first bids. As was said, this is the starting point of negotiations.

So you are recommending not to reveal revenues right now and instead tell them what auditor says the company is worth?

I'm recommending that you be open and honest with your revenues as they fall into the context of a potential sale. Once you've been able to pull all of the information together (year over year revenues, adoption rates as compared to the total market, etc.) together and undergo an audit for the true value of the business, you'll be in a better position to negotiate a sale to one or more parties.

If your suitor doesn't come right out with a great offer and their own NDA accompanying it, which should go hand in hand, I wouldn't recommend entering any type of secrecy agreement with them and open up a potential sale to other suitors, if they do exist. If this big company you speak of will not prove to you that they're serious at the outset, it's probably just a cursory fishing expedition to begin to assess the market and you'd just be a starting point, so yes, I'd keep my pants on until you know they're serious. After all, they're approaching you. Let them do the talking for awhile.

But the best piece of advice which is echoing in the thread is to lawyer-up asap, and don't go buying that new piece of shiny consumerism just yet.

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