According to a leaked memo, Bloomberg has reached $10b in annual revenue. Despite incredible scale, Bloomberg remains private and may never go public. How could that be?
The answer lies in the company’s history of growing profitably with little outside investment. Bloomberg never raised venture capital – instead selling a (highly priced) product for much more than it cost to produce. Profits enabled consistent re-investment, obviating the need for investors who might otherwise want liquidity via IPO.
In fact, the only outside capital on record (~$30m) came from Bank of America in 1985, 4 years into the company. However, BAML’s minority stake was eventually repurchased by management, leaving control and governance largely to Mr. Bloomberg.
With few outside investors, financial information has rarely leaked – making this $10 billion data point somewhat significant. Plus, we can take a fresh swag at what the company might be worth.
Factset ($9.3b enterprise value) has traded at 6-7x revenue over the last couple years, while Thomson Reuters ($38.8b enterprise value) has traded at 4 – 5x revenue. Conservatively, this would imply that Bloomberg is likely worth $40 - $70b. An even higher valuation could be warranted if Bloomberg is more profitable or growing faster than these peers.
So Mike has set the standard. But who will be the next dude or dudette of fintech?
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