Ask HN: Received an offer to buy out my web app, what do?

[zlappo]

I literally just launched my MVP last week and signed up my first few users, one of whom turned out to be an angel investor.

After exchanging a few emails about my app, he offered to buy out my app "as-is," since he'd have access to the talent, capital, and resources to really develop it.

What should I do?

[gus_massa]

Does he have a verifiable trajectory as an angel investor? Is he going to pay you in cash now?

1) Get your lawyer review the paperwork. Not his lawyer, your lawyer.

2) Is he going to pay you in cash now? Not equity, not a % of future earnings, not some money in 6 months. Green cash now. (Euros are fine too.)

Assume that this is all the money you will get. Are you happy with this amount? You may negotiate something else, but assume that you will not see the money.

3) Are there any strings? Do you have to keep working on this project? If you "quit", does he get all the money back?

4) Is there a non compete clause?

Let's be as negative as possible and suppose this is an scam and he's idea is to "invest" money paying himself as the CEO, some money to one of his friends as the CFO and more money to other of his friends as CTO, some peanuts for a freelance developer and some worthless equity for you that must do all the real work. Get a lawyer to be sure you are not getting screwed and get the money upfront for the same reason.

[FpUser]

Way too many unknowns to give meaningful advice. However unless you believe that you've developed a money printing machine you can do the following: Say you spent 1 year developing it. Say you believe your fair salary for that year is XXX pesos and you've also incurred YYY pesos in expenses. So calculate the final price as (3.14 * XXX + YYY * 2 ) and offer to sell at this price.

[grizzles → FpUser]

Ignore this advice. At least a 10X return is standard. If it's sale or nothing, another option is to leverage his offer to get finance from other investors if that's what you want.

I've sold a startup for below what it's worth and it's not a good feeling to see people do really well when were the one who solved most of the big problems that allowed it to exist.

Feel free to email me if you want help with the negotiation or figuring out what to do. eric@gregarious.com.au

[zlappo → FpUser]

Where do 3.14 and 2 come from?

[FpUser → zlappo]

Well, make it 2.98 instead.

Comes from "take your estimate and multiply by Pi ;)" I think 1:3 ratio is about right. If you do not agree you are more then welcome to make your own number

[samstave]

Sell him some stake - build a clause that you retain ownership and input and control until he can prove he really wants to take it over, once you can assess the value he sees, then you can negotiate what to fully sell to him which works for both.

But don’t be scammed and also don’t look a gift horse in the mouth,

Think deeply about what you want, but do not sell 100% - retain 10% at least no matter what

[zlappo → samstave]

Hm. I'm open to something like that, but it sounds like he wants me to hand it over and walk away from it. So it's like a "his way or the highway" kind of thing. That's the vibe I get anyway.

[samstave → zlappo]

This is all about your ability to negotiate.

“Bob, I’ve been thinking a lot about you offer, and I’ve sought advice from people I really trust. I’d like to take you up on that offer, however, I’d like to propose we discuss how to structure this.”

Then you ASK him, what were your thoughts.

This requires him to show his hand.

Which gives you information on how to respond.

Then he will say what he wants, and this is where you counter.

But I recommend you start high and whittle down to your actual goal of retaining 10%