| A few years ago, I wrote a commercial plugin for a product and later sold the IP to the developer of the product I plugged in to. I'm intentionally being as vague as possible to remain anonymous. My plugin was on the market for about 9months. In that time, my revenue was in the $60k range. The sale price was around 6x the revenue. However, it was spread out over a few years of me being employed by the purchaser. Of course, I got a nice salary in addition to the purchase price. One thing that made my situation interesting is that a competitor of the product I plugged in to was interested in me doing the same thing for their product. Once they got wind of the negotiations, they immediately made me an offer. It turned into a bidding war for my IP/company. My observations from what you've described: you will almost certainly be expected to work for the purchaser since it sounds like you are the sole developer. They are essentially buying your services and the IP. So don't give them a reason to be wary of you working for them. On what to ask for: Unless you have revenue, there is no way to objectively quantify at least a minimum value of your IP. There is an art to negotiation that is beyond this post but you've already got them to admit that you will make them millions. I think that is an excellent start. The best negotiators are willing to walk away from the deal. Determine a minimum you want ahead of time and then be prepared to walk away if you don't get it. If you just want out then act accordingly. Give them a price that you know will keep them interested. In my case, it took several months between the initial exchange of interest and serious negotiations to begin. They first contacted me in January, An email with an offer price arrived out of nowhere in May. What I would do differently: I would have asked for an earn-out instead of a flat price. I didn't know about this until I talked to a few other entrepreneurs. Basically, you give up guaranteed money for a cut of the action from your IP. You're assuming part of the risk. Big company with big marketing budget drives your product to success and you get a cut. It's a very common thing in product acquisitions. When the competitor made an offer, I disclosed the other company's offer. I should have let them make me an independent offer. Even though there was a bidding war, the price stayed pretty close to the initial offer by the first company. |