HGGC Explores $4 Billion Sale of Typeface Firm Monotype
by Ryan Gould and Gillian Tan, Bloomberg News
(Bloomberg) -- Buyout firm HGGC is exploring a sale of Monotype Imaging Holdings Inc. that could value the typeface firm at more than $4 billion, including debt, according to people familiar with the matter.
HGGC is working with a financial adviser to gauge takeover interest in the Woburn, Massachusetts-based company and is expected to launch a formal auction process in the coming weeks, said the people, who asked not to be identified because the matter isn’t public.
No final decision has been made and HGGC could opt to keep Monotype, the people added.
A representative for HGGC declined to comment, while Monotype didn’t immediately respond to a request for comment.
Monotype, which was taken private by HGGC in a $825 million deal four years ago, will be pitched to industry players and other private equity firms, according to the people. The company generates annual earnings before interest, tax, depreciation and amortization of more than $200 million, they said.
Monotype has been acquisitive under HGGC’s ownership. In 2021, it acquired Hoefler&Co, whose typefaces include the Gotham font. In March, Monotype formed a partnership with design platform Canva, and in July it struck a deal to buy Tokyo-based Fontworks, a provider of Japanese type design, from SB Technology.
With more than 40,000 fonts, Monotype Fonts is the industry’s leading font management platform, according to its website. The subscription-based service includes typefaces such as Helvetica, Univers and Frutiger.
Comments
Before 2018, MF accepted everyone regardless of their quality. If you wanted to compete with others, you could, no matter your location. You could live in a place with a weak creative industry and no social capital, with a laptop and internet, you could actually make a living. There was freedom. Additionally, MF used to create value around quality, with initiatives like the Creative Characters book and the monthly newsletter. However, everything changed for the worse after 2018. There was no more focus on quality, no more filtered products—just competing for a few crumbs.
Such a big number these days can only be justified within extreme contexts of big data, and probably all kinds of loopy AI potential. I would be very surprised if they get what they're asking for, but stranger things have happened. Deals that high up in the clouds can be rooted in a lot of voodoo.
As George said this looks pretty shady to me. But it's their business and we should take care of ours. This might be the point to raise the question is it really that one can't easily remove the font from MyFonts, but has to hide it? Is it a legal behavior from them?
Part of the problem imho is that there are very wealthy people in the industry who cynically could not care less about the long-term health of the independent type industry. These folks aren’t really interested in type; they have other goals.
So the valuation is not about the fonts, but how much money can be extracted via these fonts.
The important thing to understand here, is that Monotype's scorched earth strategy of the past few years has been in pursuit of a higher valuation, and that many in the font industry will suffer because of these policies.
I've been around the block a few times and have seen this kind of thing many times over in type and other industries. This time, though, it's particularly egregious because the contractual terms these PEs have been normalizing on their way up the valuation ladder end up making everyone's fonts look scary to most potential users — which feeds right into the protective inclination to avoid that whole rabbit hole and opt for the overhead-free font instead. We're about to enter a world in which the moment you mention that you make fonts you will perceived as a greedy troll.
What’s very interesting to me is how Monotype’s customers have responded to their sales tactics. Monotype does a very good job of pissing them off. To be clear, I don’t think all MT’s customers hate them, but in my work I have been on the receiving end of customers desperate for an alternative to Monotype. (One enterprise customer told me they despised MT and vowed to never do business with them again. It was the result of their brutal sales tactics.)
IMO, those who see selling out their IP to PE as their best or only choice need alternatives — anything that doesn’t result in their type being thrown into a pool of PE-controlled IP that is increasingly regarded as generic “content” to be aggressively monetized. In my experience, some type customers really do appreciate having a connection to type creators and, if nothing else, appreciate having a friendly, helpful partner in untangling their licensing needs.
But in any case, I totally agree there are people involved who don’t really care about type. It’s avaricious, and that is both common and depressing.
One thing nobody brings up in all these it's-a-tough-going conversations is the blacklists. The first time I saw a foundry/distributor blacklist hanging on cubicle walls in film studios and publisher offices was about 16 years ago. I was shocked and reeled a bit about that entire practice. I see different versions of those blacklists all the time now, and they certainly do make sense to me. The reasons I am given for placing certain foundries/distributors on these lists range from high-handed or gotcha licensing terms, too much litigiousness, upsells, unsolicited or threatening approaches, etc. I still have that first list I saw in New York City 16 years ago. All the foundries/distributors on it, about 30 of them, are now in various states of disrepair/disfunction — from having ceased to exist, to having been acquired, to running on auto-pilot. The most recent blacklist I saw was at an ad agency in downtown Toronto a few months ago. It said something like DO NOT BUY FONTS FROM THESE WEB SITES. You can probably guess what the first five entries were on there, and if you believe they're worth $4B, I've got a bridge to sell you.