I think many have hit on it, but are you really prepared to burn the bridge with someone who can write a $1mm check to you(and presumably alot more in future ventures) for a $450K payout(it seems like you would still get about a $150K payout based on the numbers if you gave the investor his 1mm back first).
If it were me, I’d try to talk to acquiring company and request the following(in order):
same upfront, stock in the acquiring company equal to the proposed payout(this gives you all upside of the acquisition, limits the cash outflow of the acquiring company) this will be the least likely scenario however
larger upfront(2-3x larger than current offer at least, no earnings payout)
Same upfront, OFFER TO STAY ON OVERSEEING COMPANY FOR 5 YEARS TIME(tie your payout to a 5 year performance metric). This limits the likelihood they will scrap the project and potentially screw you out if your payout
I think many have hit on it, but are you really prepared to burn the bridge with someone who can write a $1mm check to you(and presumably alot more in future ventures) for a $450K payout(it seems like you would still get about a $150K payout based on the numbers if you gave the investor his 1mm back first).
If it were me, I’d try to talk to acquiring company and request the following(in order):
same upfront, stock in the acquiring company equal to the proposed payout(this gives you all upside of the acquisition, limits the cash outflow of the acquiring company) this will be the least likely scenario however
larger upfront(2-3x larger than current offer at least, no earnings payout)
Same upfront, OFFER TO STAY ON OVERSEEING COMPANY FOR 5 YEARS TIME(tie your payout to a 5 year performance metric). This limits the likelihood they will scrap the project and potentially screw you out if your payout