23 Daily — According to saastr.com, Stripe acquired the wallet infrastructure company Privy a little over a year ago. At the time of acquisition, Privy's revenue was relatively insignificant. However, since integration into Stripe's ecosystem, Privy's asset scale has grown approximately 25-fold, monthly active developers have tripled, revenue increased about 9 times, and monthly transaction volume nears 5 billion, making it a core part of Stripe's financial infrastructure.
Acquisition pricing often anchored in revenue but overlooks strategic value
Founder Patrick Collison explained that Stripe's acquisition of Privy was driven primarily by three trends: growth in stablecoins, self-custody wallets enabling broader market reach, and rising demand for programmable financial infrastructure — with revenue playing little role in the decision. Privy's revenue at signing was a rounding error for Stripe. Even with a 9x increase later, it remains small relative to Stripe's scale.
Instead, the massive increase in assets and transaction volumes reflect the true value, showing Privy as a scalable, high-value core infrastructure component. Privy's team launched deposit addresses, earning on balances, digital asset accounts, and Stripe's own stablecoin cards. Thousands of companies including Ramp, Deel, Klarna, and Hyperliquid build embedded banking on Privy.
Post-acquisition growth and deal negotiation dynamics
Integration into Stripe allowed Privy to leverage Stripe's customer base, licenses, and distribution, which is the unique advantage of strategic acquisitions. Privy's standalone revenue only indicates its independent potential, whereas the acquirer focuses on post-acquisition scalability.
Although revenue isn’t the strategic focal point, acquisition prices often use revenue as a negotiating anchor because decision-makers like CFOs, board members, and analysts seek tangible metrics to assess fairness. Revenue is commonly the 'language of the deal' due to its quantifiable nature.
Editor's take: Decoding the real relationship between revenue and value in strategic acquisitions
Strategic acquisitions emphasize post-deal growth potential and ecosystem expansion rather than immediate revenue. Privy's rapid scaling in assets and volume post-acquisition through Stripe’s platform reflects this, with revenue growth being just one outcome.
Entrepreneurs facing strategic M&A should focus on communicating how their product scales and expands within the acquirer's platform, mapping out the post-closing growth trajectory. Validating acquisition success involves clarifying integration plans, product governance, and how the acquired team fits into the buyer’s roadmap.