. As a result, Salm says, there are now multiple billions of fresh Wall Street dollars “waiting on the sidelines” to be invested in music rights. With such escalating demand, sale multiples for music publishing rights are soaring to unprecedented levels — some say as high as 20-times-plus a catalog’s gross profit — with the likes of Hipgnosis, Downtown, Reservoir, Primary Wave, Kobalt Capital, Round Hill and Tempo Investments duking it out, depending on the deal in question.
It’s different, says Salm, in the rarified air of those deals approaching — or above — a $100 million price-tag; here, the dreaded “full-scale industry auction” scenario drops away, leaving room for a less fraught, more direct negotiation.
“It makes sense that they love music as an asset class,” says Bob Valentine, Concord’s chief financial officer, noting that music “offers returns to a pension fund that are not particularly volatile, and not particularly correlated to other things they’ve invested in.” He adds that it is a “phenomenal position for us to have an institutional investor who is thinking about this business as a 20-year investment.
What will those acquisitions entail? According to Steve Salm, one only need look at the company’s Imagine Dragons deal to detect the crucial ingredients.
You buy the competition when it is weak.