Don't proceed with any numbers until you know what they need. And they're going to want to know what you need to. Oh, and read through to the end to know what you should NEVER EVER (EVER) do.
All about the deal memo, along with a sample deal memo and a sample email to use when you send the deal memo.
The main concept behind this part of the process is to come to a deal that is really mutually beneficial. It's totally possible. Both sides are likely to start out asking for everything they could possibly dream of, but as you go back and forth you can slowly let go of things that are less important.