I'm a new company providing sass. A company wants to buy exclusive rights to it.

AndrewJRenko

Can you offer them regional exclusivity? You won't sell the product to any of their local competitors for an agreed period, but you can still sell it internationally?

Raging_Ninja

tookotook wrote: »

I don't see you coming up with any ideas.

Bottom line, OP needs to get paid upfront to build the features the client wants.
They also want exclusivity, and not across the board but a handful of companies they have identified. Get them to pay for the features by offering them the exclusivity for a year, OP can integrate the features into his product and go after companies that are not on the list.
By all means, he should get as much money as he can.

I did give some ideas regarding pushing the corporate to close the deal earlier in the thread, but I didn't go around giving nonsense figures off the top of my head because we don't have the information necessary to value the product.

But we do know this: the potential customer wants exclusivity for 1 year; the OP wants to start hiring staff; and the company is offering 5k per month. One of those needs to go for that valuation to be realistic.

OP here.

They can't afford what I would consider a minimum for exclusivity so it's not being discussed anymore. I feel like a weight has been lifted as I was so worried about signing something crippling.

The good news is that the "final phase" stuff I was worried about has since been dropped for now and the go-ahead has been given for implementation of what I can currently offer with little additional effort. I've just got to code a few minor requests that are generic features.

They said that the big final phase can be talked about next year and I've a strong feeling that a more formal partnership will be talked about. He drunkenly mentioned something like that and asked again if I'd be willing to move to that city for it.


Anyways, I feel like I'm wasting people's time and effort here. The complexities regarding exclusivity are gone and now it's just me stumbling my way through a first deal. Thanks again everyone. I've no one else I can talk to about this stuff.

Oh my God kill me.

Exclusivity is gone and a ten-page contract drawn up for standard use. We're close to signing and I remember that it should only apply to the country I'm in and they can't use it outside this country as I could have deals there, as the contract currently stood. Basically, we need to negotiate this.

It turns out this is a no-go as they want to franchise their content on my system around this region. I say that it doesn't matter how they want to describe it, that's reselling my system in other countries and me receiving a tiny percentage, running it, and assuming all risk for it, while they collect 98%+. Apart from anything else, I'd be competing with myself in those regions to sign those businesses.

I think I'm going to give them one chance to offer me the percentage of that franchising business they think I deserve, and if they get it right, talks can continue. It's obviously 33%-50% as far as I'm concerned as there simply isn't another system available anywhere that can facilitate this franchising.

I so nearly signed my death warrant and at heart, don't even want to continue the talks, but know I should to see what happens. Too much time wasted.

Trojan

Deleted User wrote: »

Oh my God kill me.

Exclusivity is gone and a ten-page contract drawn up for standard use. We're close to signing and I remember that it should only apply to the country I'm in and they can't use it outside this country as I could have deals there, as the contract currently stood. Basically, we need to negotiate this.

It turns out this is a no-go as they want to franchise their content on my system around this region. I say that it doesn't matter how they want to describe it, that's reselling my system in other countries and me receiving a tiny percentage, running it, and assuming all risk for it, while they collect 98%+. Apart from anything else, I'd be competing with myself in those regions to sign those businesses.

I think I'm going to give them one chance to offer me the percentage of that franchising business they think I deserve, and if they get it right, talks can continue. It's obviously 33%-50% as far as I'm concerned as there simply isn't another system available anywhere that can facilitate this franchising.

I so nearly signed my death warrant and at heart, don't even want to continue the talks, but know I should to see what happens. Too much time wasted.

Not total waste, surely? Have you learned from the process and what they've signalled as important? If it doesn't work out, that data should point you in the right direction to create an offer that might work for their competitors, etc

Corb_lund

Sunk cost fallacy. Don't fall for it whatever decision you go for.

modmuffin

Deleted User wrote: »

Oh my God kill me.

Exclusivity is gone and a ten-page contract drawn up for standard use. We're close to signing and I remember that it should only apply to the country I'm in and they can't use it outside this country as I could have deals there, as the contract currently stood. Basically, we need to negotiate this.

It turns out this is a no-go as they want to franchise their content on my system around this region. I say that it doesn't matter how they want to describe it, that's reselling my system in other countries and me receiving a tiny percentage, running it, and assuming all risk for it, while they collect 98%+. Apart from anything else, I'd be competing with myself in those regions to sign those businesses.

I think I'm going to give them one chance to offer me the percentage of that franchising business they think I deserve, and if they get it right, talks can continue. It's obviously 33%-50% as far as I'm concerned as there simply isn't another system available anywhere that can facilitate this franchising.

I so nearly signed my death warrant and at heart, don't even want to continue the talks, but know I should to see what happens. Too much time wasted.

Don't worry about the time wasted. you can't take it back so learn from the experience. 
From what you have shared, I think these guys are time wasters. Can't afford to pay you $1k / month but want to shop your product around the region ? 

Also, you're in discussions since April. Time to move on. 
I would send them a note saying you are withdrawing from negotiations and go speak to each of their competitors.
[No harm in letting them find out you are in discussions with competitors]
They'll either come back with an improved offer or it will fade away (which means it was never a serious deal anyway)

Well the conversation continued (some a bit heated) and it turns out no one else in the company was aware of this idea this long-term plan the guy had. He told it to me on the phone so it was never in writing in emails. The other main person I've been dealing with in the company was openly frustrated at him for the possible dealbreaking that was taking place.

The contract got reverted and strengthened on my end, and some of their requests were entertained. The franchising stuff has been added to the contract as a clear breach, but I've said I'm open to the idea in the future.

So after a bunch of chaos and stress (I'm also working full time in another job now), I've signed my first proper client. I've just gotten back from two days training their staff in using the software, which went really well. They pay for flights and hotel for that sort of thing, which felt pretty cool. I have enough revenue now to hire two local staff so that's the next step. Woo.

jesus_thats_gre

Soulsun wrote: »

700 per day for 6 month contract
15k upfront lump

More like 2,000 a day and 1,000,000 up front.

Well the fun never stops I suppose.

I never signed exclusivity and the lads have moved to a new franchise of a company. A new set of functionality I've developed is going through the rigmarole of testing there and later this week globally, and now they want to buy 70% and sell it to the global company which is absolutely massive.

Selling most of my company.. I'll know by the weekend if the offer is true. The sell would be contingent on that deal and then afterwards, they'd be selling to others. That's what I'm getting from them so far. They openly say what I've banged together is better than all the global competition that have tendered solutions.

I'd be getting a somewhat small buyout followed by a salary and a massive monthly if it went to plan. Thought I'd have a few beers tonight and then get that phonecall...


I'm sick of the company to be honest. If someone else wants to take it on with a global reach, let them, is my line of thinking. I just want money.

Is the percentage too high to give away? I just don't want to even think about it.

Gloomtastic!

Ok, well done for keeping this afloat. I still haven’t got a clue what you’ve done or what it is you’re selling but it looks like you’ve developed something of value to someone.

Maybe it’s time to talk to a competent accountant or accountancy firm who can put an actual value on what it is you’ve done and to work out what’s best for you in the short, medium and long term tax-wise.

I’d go for one of the big four - KPMG etc and speak to one of the partners that deal with Mergers & Acquisitions. They don’t just deal with big corporates, they deal with individuals as well. You’ll pay heavily for the advice but you can negotiate the terms being contingent on a deal etc

So, write down a 30-second proposal of what it is you’ve done and what you’re hoping to do with it. Try and put some numbers together of what you believe the eventual buyer could achieve revenue-wise. Keep it simple. Then call round a couple of firms, explain what it is and arrange an initial meeting. See where you go from there.

Good luck!

rgmmg

Deleted User wrote: »

Well the fun never stops I suppose.

I never signed exclusivity and the lads have moved to a new franchise of a company. A new set of functionality I've developed is going through the rigmarole of testing there and later this week globally, and now they want to buy 70% and sell it to the global company which is absolutely massive.

Selling most of my company.. I'll know by the weekend if the offer is true. The sell would be contingent on that deal and then afterwards, they'd be selling to others. That's what I'm getting from them so far. They openly say what I've banged together is better than all the global competition that have tendered solutions.

I'd be getting a somewhat small buyout followed by a salary and a massive monthly if it went to plan. Thought I'd have a few beers tonight and then get that phonecall...


I'm sick of the company to be honest. If someone else wants to take it on with a global reach, let them, is my line of thinking. I just want money.

Is the percentage too high to give away? I just don't want to even think about it.

Based on the info you've provided, no one here can answer that. 70% of what?

Do what the next poster said - contact someone in M&A or similar who can give you a qualified and fact based opinion. It may cost you now but will likely be worth it.

Good luck. And congrats (I think!).

sderiis

With these two numbers you are going to know what amount you are happy with charging them upfront and then over the six month period to make it worth your while (also considering your only dealing with one company instead of loads of clients which makes your life easier).
With their number you have to put yourself in their shoes and figure out what is an attractive price for them that makes this a profitable deal.