You assume those deals scale down. Just because a company will pay $50 million for 50 engineers doesn't mean it's going to pay $1 million for 1 engineer. 50 engineers is magnitudes more valuable than 1 engineer.

Generally most startups have one or two "star" employees, who actually created the startup. I would say that the single engineer in a one-man startup is worth a lot more than the average engineer in a 50-engineer startup.

Instagram had 13 employees and was acquired for $1BN. Ptch had 3 employees and was purchased for $6.5M. In those cases the technology and product took up most of that value. If the acquirer is actually going to use your technology, that will obviously be a large factor in determining the sale price.

These numbers are totally irrelevant to this situation. We're talking two small companies here.

If there's no leverage, the chances of negotiating a better deal than described above are relatively slim.

He says it's "bootstrapped."

That won't make the difference between $60k and $1M. The main difference is that investors will be reluctant to lose money, so they'll push to at least get their principal back.