I would encourage changing your mindset here to think about a negotiation in terms of power rather than reasonableness.
And I don't mean fists or violence type of power. It's much more what power do your future actions have to impact the sale value of the company? Those are the things that matter in a negotiation.
When people talk about what's fair or reasonable, as the OP is doing, I think they get lost in arguments that don't hold any water. "I put in so much work" is much weaker than "This is how much money you'll make if you change the deal and how much money you'll lose if you don't change it."
So, looking at it from the perspective of where do you have power, mainly you have power to keep working up to the sale of the company, to keep working after the sale of the company, or to leave right now.
Do any of those things change the value of the sale? If so, you have a pretty clear path to negotiating for a piece of that value.
I've been the business owner giving out a deal like this recently. The deal was that I'd guarantee a minimum amount of money and split the revenue, but I'd maintain 100% ownership. I think I was a bit more up front than this owner about what the implications were.
IMO, even without ownership, it can be a pretty good alternative structure to a flat contracting rate or salary. For the employee/contractor it gives a lot of upside, while still giving the owner some leverage to renegotiate down the road if that upside gets out of control. Given that the future is hard to predict, this allows for some punting on deal terms. I literally told the counterparty, "If this really works, yes, you may live with some anxiety that I will come back and try to squeeze you."
In practice, this deal has made a lot of money for both of us and the counterparty has been protected by my fear of losing continuity or momentum in a business that's doing well.
But this also points to these sorts of contracts only being appropriate for experienced people. If you aren't comfortable that contracts are not permanent and that they can and will be renegotiated as leverage changes then you shouldn't be in these types of deals.
Comments
I would encourage changing your mindset here to think about a negotiation in terms of power rather than reasonableness.
And I don't mean fists or violence type of power. It's much more what power do your future actions have to impact the sale value of the company? Those are the things that matter in a negotiation.
When people talk about what's fair or reasonable, as the OP is doing, I think they get lost in arguments that don't hold any water. "I put in so much work" is much weaker than "This is how much money you'll make if you change the deal and how much money you'll lose if you don't change it."
So, looking at it from the perspective of where do you have power, mainly you have power to keep working up to the sale of the company, to keep working after the sale of the company, or to leave right now.
Do any of those things change the value of the sale? If so, you have a pretty clear path to negotiating for a piece of that value.
I've been the business owner giving out a deal like this recently. The deal was that I'd guarantee a minimum amount of money and split the revenue, but I'd maintain 100% ownership. I think I was a bit more up front than this owner about what the implications were.
IMO, even without ownership, it can be a pretty good alternative structure to a flat contracting rate or salary. For the employee/contractor it gives a lot of upside, while still giving the owner some leverage to renegotiate down the road if that upside gets out of control. Given that the future is hard to predict, this allows for some punting on deal terms. I literally told the counterparty, "If this really works, yes, you may live with some anxiety that I will come back and try to squeeze you."
In practice, this deal has made a lot of money for both of us and the counterparty has been protected by my fear of losing continuity or momentum in a business that's doing well.
But this also points to these sorts of contracts only being appropriate for experienced people. If you aren't comfortable that contracts are not permanent and that they can and will be renegotiated as leverage changes then you shouldn't be in these types of deals.
Thanks for the detailed and helpful reply, much food for thought!