Working with Monotype

What is an acquisition?

An acquisition is an option to sell some of your fonts, your entire library, or your entire business to Monotype. Instead of royalties, you’ll typically be compensated with a lump sum payment, in exchange for your library or foundry. You can then use these funds to build out a new catalogue of IP, start a new foundry, or take another path that is best for your personal financial situation.

What criteria must be met to be eligible for an acquisition?

Monotype is always interested in acquiring high-quality, value-additive IP. Generally, your foundry/library must be earning at least $20k per year to be considered for an acquisition. We strongly prefer to acquire IP from designers/foundries with 100% ownership of the families under consideration. The purchase multiple and structure of the acquisition (see below) is evaluated on a foundry-by-foundry basis. We cannot guarantee that your foundry will be eligible for acquisition until we start to learn more about your library and business.

What are the first steps if we want to learn more about M&A?

Reach out to acquisitions@monotype.com. Please share your current business address so that we can share a mutual NDA and our standard diligence request. This will include simple questions about the IP you want to sell, the revenue historically generated by your library, and the expenses/royalties associated with the IP. Once we have the completed diligence request and an NDA in place, our team will review your information, determine our interest in an acquisition, and work to give you an estimate, or at least the multiple we would apply to your earnings.

How much money do I get for selling my library?

The amount you are offered for an acquisition will depend on a number of factors, including the size of your annual revenues, whether we are acquiring your brand trademark/website/whole foundry as well as your IP, and more. If you receive an offer from Monotype, the purchase price would be based on a multiple of your earnings. This is a standard metric for any type of business valuation. Our typical multiple range is in the mid single digits. The greater your annual revenues and the more established your brand, the higher the multiple we apply. As an example, a 4x multiple would mean that for every $1 you earn in a year, we will pay you $4. 

What is the timeline for an acquisition?

This also depends on the complexity of the deal and the assets we are acquiring (IP, website, foundry, etc.). Less complex acquisitions (e.g. just acquiring IP from a smaller foundry) can take as little as 4 weeks from offer to close. More complex acquisitions can take anywhere from 2-6 months from the time you receive an offer to the time you receive funds and transfer the acquired assets to Monotype.

What is a Letter of Intent (LOI)?

The Letter of Intent is effectively a non-binding offer. When you sign a Letter of Intent, you are acknowledging that you agree in principle with our valuation of your IP/foundry on the general terms that we have set out, and would be willing to move forward with an acquisition at the stated offer price. After signing the LOI, we will conduct additional diligence to learn more technical details about your IP and/or business operations. This will ultimately help us make the most of the assets we are acquiring from you and ensure a seamless transition of ownership. If any new information comes about during diligence, which negates or changes any underlying assumptions about your foundry/IP, Monotype has the option to reduce the offered purchase price, or take our offer off the table altogether. This typically does not happen, but the non-binding agreement provides some additional protection to both parties.

After I receive an offer from Monotype, can I “shop” around for better offers?

No. By signing the LOI, you are committing to moving forward with the offer that we have proposed (unless there is a change as described in the two above questions). You are not allowed to look for other offers once you have signed a LOI. If you do so, you will be in violation of the LOI and your offer will be considered void.

If I receive a LOI and initially accept it, can I decide to not go through with the acquisition later?

Yes, this is allowed because the LOI is mutually non-binding. We strongly recommend and prefer that you only accept a Letter of Intent (LOI) if you are planning to go through with the acquisition. If, however, your situation dramatically changes and you decide not to move forward with the acquisition, you can choose to do so.

What if I want to sell my existing library and continue releasing new IP under the same foundry name?

We welcome this and are happy to facilitate the acquisition of font assets, while you retain ownership of your brand name and brand trademark, to continue using for future releases.

Will I keep earning royalties after I sell my library?

We strongly prefer to acquire 100% ownership of font IP. This means that typically you would not continue to receive royalties on future sales. Instead, you would receive a lump sum payment in exchange for ownership and all future usage of the IP. If you want to continue earning royalties from your library, we are open to discussions on a case-by-case basis. If you continue to receive royalties, you will receive a lower amount upfront when we acquire the IP.

Why should I sell my library to Monotype?

Monotype has an extensive distribution network and great visibility in the type industry. Selling your library to Monotype can help protect the legacy of your type designs by ensuring their distribution for decades to come. If you plan to continue releasing new font families, selling your existing library to Monotype can also provide additional avenues for promoting future releases and your brand. Lastly, acquisition is often the best option if you are looking to retire or secure cash for a new creative endeavor.

I don’t distribute my IP through Monotype’s platforms. Can my library still be considered for an acquisition?

Yes.

Will you include my earnings from non-Monotype channels when calculating an offer price?

Yes.

My library is primarily made up of Cyrillic/Chinese/Japanese/Korean/Arabic or other non-Latin font families. Can my library still be considered for an acquisition?

Yes.

Font families that I released years ago haven’t been updated or expanded in years. Can my library still be considered for an acquisition?

Yes.

Monotype works with our clients to ensure both their past and future font licensing is correct. To help facilitate accurate past use licensing, Monotype does extensive research to determine what fonts a brand uses, and compare that to their licensing history. If they are under licensed, we’ll help the client correct their licensing. 

You may receive an email from a member of our enterprise sales team requesting information about license history for one or more of your fonts for a particular client. 

If a salesperson identifies that one of your fonts is being used by their client, if they haven’t licensed it from Monotype, one of the first things they’ll do before reaching out to that client is work with you to figure out if the client has previously purchased a license for the font. The client may have purchased the font through a distributor you work with or through you directly. We want to make sure to collaborate with you in order to get the information needed so we can take the next steps and work with the client to become appropriately licensed. Of course, you’ll get royalties for any licensing of your fonts with this client. It’s a win-win! 

Our research, sales, and legal teams are experts at collaboratively working with brands to transform what could be uncomfortable, even contentious licensing situations into long-lasting relationships, leading to font renewals and additional licensing in the future.

If you’re contacted by a Monotype salesperson about this, be sure to check all sources where you sell your fonts for a license for that particular company or brand.

In the reverse, if you have a client that is using your fonts in ways that are unexpected to you, feel free to reach out to us at foundrysupport@monotype.com with a license history request for that particular client and we are happy to look into this for you to see if we may have licensed any of your fonts to them through our offline channels.

In Monotype’s font distribution agreement, there is a section about 'Modification Rights.' For some foundries, the idea of allowing someone else to modify font files that they’ve lovingly crafted is a scary thought. But don’t fear! We’re here to demystify this part of the agreement.

What are modifications?

A modification is any alteration made to a font, usually at the request of a customer. You can generally think about modifications in two categories: Non-Design and Design. Non-design modifications can include anything from renaming font files to converting font formats, while design changes could involve changing the design of specific glyphs or adding additional weights or languages.  The table below outlines the differences.

Classes of Modifications

Why does Monotype need modification rights?

Monotype needs modification rights to complete orders for customers.

One of the most common modifications we must do when licensing fonts is to generate webfonts for customers. For example, we dynamically generate WOFF webfonts from your OTF or TTF font files after the customer has placed an order for a webfont license. This ensures that the webfonts are thoroughly tested, high quality, configurable, and create the best possible customer experience. This is done at no charge to the foundry. It does require that we have modification rights. 

Monotype is unique because we have both e-commerce and offline font distribution channels. Our offline distribution channel is made up of Monotype’s enterprise sales team which primarily focuses on our larger customers. Enterprise customers have additional needs when they are licensing fonts for their brand, such as being able to support all languages where their brand is used. This is another common situation where modification rights are important. 

Monotype’s Process for Customer Modifications

Monotype only modifies fonts if a customer requests a specific change. When Monotype receives a request from a customer who wants to modify a font not owned by Monotype, here’s what happens: 

We do Non-Design changes ourselves, in order to save time and get the customer their fonts as quickly as possible. Most Non-Design changes are automated. (See the column “Who does it?” in the table above for more details.)

If Monotype receives a request for a Design change, we first reach out to the foundry that owns the font, to see if they want to do the modification or if they want us to do it. 

If the foundry wants to do the work, they provide Monotype with a price and time quote. This is then passed on to the customer for approval. If approved, the foundry does the work, delivers the files, and Monotype pays them for that work. 

If the foundry doesn’t have the resources or time to complete the work, the Monotype Studio will take care of the modifications. The Monotype Studio is a highly skilled team of over 50 font technicians and type designers with the capability and expertise to handle large, complicated modifications in a wide range of languages. 

Who owns the modifications?

You do! Modifications made by Monotype are owned by the foundry. However, Monotype has the exclusive right to the modifications, and can distribute the modified fonts for the term of the agreement. 

How do royalties for modifications work?

You (the foundry) own the modifications, so you receive royalties. Royalties for modifications are paid at the rates established in your agreement, for the term of the license.