What they are essentially doing by tying your pay to the growth of the site is pushing all of the risk onto you, and you're getting NOTHING in return for assuming the liabilities that come with. If they don't have the cash on hand to pay your full asking price upfront and instead want to pay it in installments (with interest, of course) then that's fine: they assume the risk of their purchase and operations, as well they should. But that's NOT what they're asking. They're asking you to do it.
edit:
For example, say a month after they acquire your site, the company decides your site and only your site is going to start running huge, 45-second flash video ads for all incoming traffic. Why just you? Because they've invested far less time and money in your brand than their others. You get to be the guinea pig for their stupid business plan ideas because you're the most expendable. Wham. You're fucked, they're not.
People have debated the merit of "he who says a number first loses" on HN before, but in general there is a lot of truth to it. If they are interested in purchasing, show them whatever info they need and let them make YOU an offer. The final price can only go up from there.
Agreed, if you make the first offer you should only be going big. You think $10k is fair, offer $20k.
I remember my father-in-law was at a garage sale and saw a tub full of barely used golf balls (better than the ones they sell in walmart at a stupid price like $12 for 15). He asked 'how much?'; she offered $10, he countered with $5 and she took it. We counted them, it ended up being 300+ golf balls. He would have been more than happy to pay $1 a dozen and consider it a steal ($25 for all the balls - like $240 for worse condition balls in walmart) without the rubbermaid container; he got that for free.
You don't want to be the person selling your company for $50,000 when on the straight market it would be going for $500,000.
This example demonstrates value of asymmetry of information when making a deal, but not "don't make first offer" principle. Obviously the lady was ignorant to the true value of the balls, as any non-golfer would.
It wasn't that she had a lack of access to the information (IE a non-golfer randomly acquiring the balls), he husband was an avid golfer and she said her son was semi-pro. She simply didn't care to get the information before selling a product, which is another lesson entirely.
Yep. By making the first offer, they set the ceiling, and it will only go down. They should have gone with the "make me your best offer" and started negotiating up from there.
There is a pretty good article that states that it is often to your advantage to actually make the first offer. I submitted it here: http://news.ycombinator.com/item?id=1643734
Funny, I got a terrible offer from eUniverse, the predecessor to LiveUniverse. Maybe that's their schtick?
They wanted to resell my $20 shareware program (a pop-up blocker before pop-up blocking became just a feature). Their first offer was something like 25 cents a copy for each sale over a certain number and $1,500 dollars up front. I stopped returning their emails shortly thereafter.
Agreed, it's one thing if they don't want to pay say $10,000 (just a round figure for example) up front, but they should be paying a minimum of $15,000 in agreed upon installments on a contract drawn up by a lawyer or paralegal (whichever's necessary where you are).
You're totally correct, when someone expects to pay you less for you assuming more risks and liability it's a shitty deal. The response should be along the lines of 'fuck you'. If they're genuinely interested, that means someone else likely is too, someone who probably isn't trying to screw you over.
OP: If you're asking us whether this is a good deal or not, it's probably because you already know it's a crappy deal. Add 20% to your initial offer and say you're willing to take say 50% of advertising revenues as payment for maintaining the site (assuming you're making a profit off of it now). If they really believe they'll boost your readership + revenue streams then this way will negotiate out good, however that's not what it looks like they're interested in.
This is like owning an apartment building and being made a buy out offer saying "We don't want to pay the 15% down payment, would you be willing to forgo the total amount in lieu of increased pay as the super if you increase occupancy rates." It'd be a retarded offer to accept.
What they are essentially doing by tying your pay to the growth of the site is pushing all of the risk onto you, and you're getting NOTHING in return for assuming the liabilities that come with. If they don't have the cash on hand to pay your full asking price upfront and instead want to pay it in installments (with interest, of course) then that's fine: they assume the risk of their purchase and operations, as well they should. But that's NOT what they're asking. They're asking you to do it.
edit: For example, say a month after they acquire your site, the company decides your site and only your site is going to start running huge, 45-second flash video ads for all incoming traffic. Why just you? Because they've invested far less time and money in your brand than their others. You get to be the guinea pig for their stupid business plan ideas because you're the most expendable. Wham. You're fucked, they're not.