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SpaceX’s initial public offering was solid proof that in 2026, investors are happy to pay high prices for companies whose value lies far into the future. But what about those whose best days seem to be in the past? Bending Spoons, an Italian tech conglomerate about to go public in New York with a potential valuation of roughly $19bn, thinks that’s where real value lies.
Bending Spoons is a bit like a private equity firm. It buys tattered internet businesses, guts and rebuilds them with the hope of making at least 25 per cent annualised returns on capital. But it invests its own money, and unlike buyout firms, has no intention of selling. Returns come from earnings alone. By contrast, around a quarter of private equity returns between 2010 and 2022 derived from expanded valuation multiples, McKinsey estimates.
The result is essentially an emergency room for critically injured tech businesses. Bending Spoons’ engineers often reconstruct acquirees’ code almost from scratch. Products are enhanced, not hollowed out. Workforces aren’t so lucky. Of the 1,830 employees who came with has-been brands AOL, Eventbrite and Vimeo, it expects to keep “only a few hundred”.
As with private equity, debt is the magic ingredient. New borrowing funded around 80 per cent of the company’s acquisitions in the first quarter of the year; net debt amounts to over four times its annual ebitda at its last quarterly run rate. That adds risk and earnings volatility. Constellation Software, a $40bn Canadian company that is somewhat comparable, carries debt of less than one turn of ebitda.
And while Bending Spoons’ CEO Luca Ferrari tells a good tale about his “deep transformation” approach, it’s hard for new investors to gauge the results. Rapid growth and big swings in cash flows and tax rates obscure the portfolio’s underlying performance. More than 70 per cent of its assets were bought in the past three years, and information on individual companies is scant.
Bespoke accounting doesn’t always help. Bending Spoons’ “adjusted” profit ignores fees it pays to make acquisitions and the cost of reorganising newly bought companies. That seems bold, given M&A is its lifeblood. Take these adjustments at face value and the company is currently making a return on invested capital of 18 per cent; factor in fees and costs and it falls to 11 per cent. Adjust again for profit not yet flowing from recent acquisitions and the number would no doubt be much higher.
Further out, it’s not clear what kind of longevity the emergency-room treatment provides. Take online note-organising app Evernote. Its revenue has increased by 30 per cent since Bending Spoons pitched up as new owner in 2023, but monthly active user numbers look to have halved as it cut freebies and cranked up prices. That may be good for returns, but doesn’t obviously position the brand to exist a decade from now.
Bending Spoons would deny that it picks lemons, squeezes them hard, and then sets out to pick some more. That’s a shame, because such a strategy could be quite refreshing, especially if generated returns of 25 per cent. Prioritising returns over growth is certainly different from current Silicon Valley groupthink. Besides, real world spoon benders make no pretence that cutlery will still be recognisable as such once they’re done.
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