Truthfully, John?

This sounds like a situation where you need paid-for advice from someone who knows the business environment and norms in your area, not the wisdom of crowds.

That said, here's what I think. It is in no particular order.
1. In essence, this employer is asking you to work on commission. So you could read advice related to that to get a sense of what to do and how to do it.
2. If you want to earn at least as much as you were earning on your own, then take the difference between that number and what you're paid, and that's the amount you need to generate from profit-sharing. If the business grosses $10,000 per month and their profit margin is 10% of gross, then their profit would be $1,000. If you need to add $100/month to your salary to bring it up to what it was before you'd want at least 10% of the profit. (I used these numbers to make the math simple.)
3. On the other hand, I assume that when they say "profit share" they're talking about sharing the profits only of the division you're about to start. Therefore, you are assuming considerable risk in this venture: they want to leverage your knowledge, your client base and your ability to manage a team of employees, all to their benefit. And under the circumstances, I don't think it would be unreasonable to ask for 90-95% or even 98% of the division profit, at least until it's well established.
4. While I don't think this is totally unworkable, the first thing you need to settle is what each of you gains from the arrangement, and what each of you risks. Determine the balance of the four (your risks and rewards, the employer's risks and awards) and you'll begin to have an answer.