I was in my last "real job" for 7 years, and spent the last 3 negotiating an equity position. They offered 10% for "effort to date" and our only point of debate was how to develop a schedule to grow that 10% to the upper limit they were comfortable with (20%) over the next 3-5 years. They would get the certainty they needed, and I would get the increasing reward (and commitment) that I needed.
We never reached an agreement, so I eventually resigned and never got the original 10% - it wasn't worth the legal effort to fight for. But throughout the last 2 years, because the negotiation had dragged out so badly, I had accepted a revenue-share of 5% (on gross, not profit). Obviously it was never intended for this 5% to actually leave the business as cash, it was meant to be "converted" as we travelled from 10 to 20% equity. But as we never resolved the issue, I took it monthly as cash. This certainly made it worthwhile (overall) for me to hang around, but it can only have hurt their own position.
Fast-forward 2 years and they were bought by a public company in a 50% cash, 50% shares deal. I thought the price (based on our revenue at the time) was crazy, and could only be motivated by confidence the parent company's shares were on their way up, and/or the opportunity to leverage themselves into well-paid upper management slots in the parent company.
Sure enough, the shares of the parent gradually headed to zero over the next year or so, making them next to worthless.
In the wash-up, the 10% I "lost" by walking away ended up being worth very little. Obviously I'm somewhat relieved they didn't end up selling for a squillion dollars in any real currency.
There's also the problem of whether or not Mr 10% would actually get what he's owed, in a private company, when Mr 90% sells up.
I've been gainfully self-employed for the 6 years since. I can't recommend 100% equity highly enough, but will certainly tackle this equity problem as I grow my own business and take other people onboard. Revenue-sharing deals will definitely be based on profit though, not gross.