[malahoo]

Since you and buyer already agree on bottom line impact (i.e. profit, not revenue), I would recommend estimating the intrinsic value of the business using discounted cash flow analysis as a baseline. Make a reasonable assumption about the product's lifetime - let's say 5 years - project out those 5 years of profit, discount each year using a reasonable rate of return for a similarly risky investment (maybe 5-10%), and add up all discounted cash flows. The negotiation then becomes "how much of the business value should each of us retain?" instead of "how much are you going to give me?"

http://www.investopedia.com/terms/d/dcf.asp