In the recent Monotype foundry conference call (which I believe many of you attended), they once again highlighted their foundry acquisition efforts.
They stated the usual price for acquiring a foundry as “mid single digit multiple of your yearly earnings”. They gave an example of calculating it with number 4, but to be fair in this discussion, I’ll use 6 — because it still fits the description and gives them some leeway. I doubt any number over that still fits their description and if it did, they’d use a higher example.
The point is, your business is worth more than 6X your earnings and it makes me sad they’re hoarding our IP on the cheap and bolstering their monopoly.
Let’s look at it this way; so you accept Monotype’s offer and receive 6X what your fonts earn in a year. To keep it simple, let’s assume they keep earning the same on them, even though any fonts sold directly by the largest company in this space receive an automatic advantage due to prioritized marketing, direct enterprise sales etc.
So you receive the 6X in full while Monotype starts receiving their 1X per year. As an investment to keep earning on the lump sum you’ve received, you could buy shares in a large stable business that pays out dividends, and get 5% yearly on the amount — after 20 years of this passive income, everything you get later is pure profit… Monotype? They’ll start getting pure profit off of your IP after the 6th year already.
I’ve used the example of a dividend paying asset, as that is the closest thing your foundry becomes to them after purchase. To be realistic, I can see the earnings of a type library easily doubling when owned and sold by Monopolytype instead of an independent player. And at that point, they’re profiting in 3 years — probably less than it took you to even design all that IP.