Financial Implications Of Mergers

Introducing the Music Tech Ownership Ouroboros, 2025 edition ✨ The music-tech sector has come of age. What started as a relatively niche investment thesis five years ago has matured into a powerhouse market segment, drawing tens of billions in capital since 2020. For five years, we at Water & Music have been mapping these shifting power dynamics through our “Music Tech Ownership Ouroboros” — a living document that traces the complex web of investments, ownership stakes, and strategic acquisitions shaping music and tech. Our latest update adds over 30 new relationships to the map, primarily from growth investments and M&A deals in 2024. The takeaway: Private equity firms and major labels are locked in a battle for control over independent music infrastructure. As indie market share keeps climbing, owning the tech backbone is becoming as valuable as owning the actual rights. Highlights from 2024 include: - Hellman & Friedman's majority stake in Global Music Rights — making GMR the third PRO owned by a private equity firm - Virgin Music Group's acquisitions of Downtown Music ($775M), [PIAS], and Outdustry - Flexpoint Ford's growth investments in Create Music Group ($165M) and Duetti ($34M) - KKR's acquisition of Superstruct Entertainment ($1.4B) and debt financing in HarbourView Equity Partners ($500M) - EQT Group and TCV's co-ownership of Believe (alongside CEO Denis Ladegaillerie), as part of taking Believe private - Vinyl Group's acquisitions of Serenade, Mediaweek Australia, Funkified Events, and Concrete Playground Link to the full interactive chart with sources is in the comments. Would love to hear what you think, and if any of these deals feel particularly standout or surprising to you! #musicbusiness #musicindustry #musictech #privateequity #musicinvestment #musicrights

Let’s Dance: Private Equity plays a major part in the music ecosystem paying 15-25x annual cash flow for royalties. Since 2020, several billion dollars have been invested in music royalities led by the largest PE sponsors in the world, including Blackstone, Apollo Global Management, Inc., KKR, & The Carlyle Group. Francisco Partners the brilliant technology-software focused PE firm, led by Dipanjan Deb purchased a controlling stake in the best PE music specialty asset manager, Kobalt Music. Kobalt recently sold a catalogue comprised of Weeknd, Lorde and others for $1.1 billion to a KKR-led team, with another sponsor selling its music royalties (Shakira & Nelly) for $465 million. The music business has always been big business, but the original creative mind who revolutionized the monetization of music rights was Mr. Space Oddity himself, David Bowie. Bowie Bonds were the first music-backed bond sold in the capital markets, allowing the artist to receive a windfall in the 1990’s when Moody’s, S&P and Fitch rated his music-backed bonds. The bonds matured 10-years after issuance, and the rights to the income reverted to David Bowie. Thanks to the demise of Napster, and the business models of Spotify and Apple Music, top recording artists receive payment for every song played. Music royalties are classified as Master or Composition, whereby the Master is the IP or rights to reproduce or distribute the sound recording that belongs to the recording artist or record label; whereas the Composition represents the rights based on the lyrics, harmonies, or melodies of the song that belongs to the songwriter or publisher. As Prince famously said in a Rolling Stones article “if you don’t own your own masters, the master owns you”. Taylor Swift’s Eras Tour has topped $4 Billion, the most profitable in history, which comes after her legal battle with a promoter who purchased her music rights from her producer. Given the steady cashflows for royalties, financing is based on an LTV attachment point and DSCR. Financing costs have soared over the past two years, so returns are now upside down for some of the PE sponsors, with creditors earning more interest income than the royalty stream earned by equity, a condition that is not particularly favorable at this current juncture. This explains why there has been very few transactions in 2023 given costly financing. During the past two years, as interest rates have risen, the price paid for music royalty cash flow streams has fallen nearly 20%. For instance, if a buyer were to pay 20x cash flow expecting to earn a 5% return (unleveraged), and the newly adjusted multiple subsequently traded at 16x, then the value would decline by ~20% as the new buyer requires ~100bp higher yield. A publicly listed UK listed music royalty company trades at a discount to its NAV as its share price has declined 50% from 2021.

Bollywood’s Crown Jewels Are Being Sold, And That Tells You Everything About The Industry’s Future When Sanjay Leela Bhansali sells up to 50% of Bhansali Productions for ₹325 cr & Karan Johar exits 50% of Dharma Productions for ₹1000 cr, this isn’t a liquidity event. It’s a signal. ₹1325 cr has changed hands. For the 1st time in 100 yrs, Bollywood’s most powerful auteur-led studios are admitting family-run film empires can no longer survive on creative reputation alone. ✅ The Big Picture: Bollywood’s Old Model Is Breaking Hindi cinema today is fighting a 3-front war 1. OTT platforms absorbing audiences & capital 2. South Indian cinema dominating spectacle and scale 3. Ballooning budgets with collapsing hit rates The result is an industry bleeding ₹2800–3400 cr/ yr. • 2019 peak:₹14200 cr • 2023 recovery:₹10400 cr • Still 27% below pre-pandemic highs At the same time: 1. OTT platforms spent ₹18400 cr on content in 2023 alone 2. South cinema captured 42% of the Hindi-belt box office 3. Average Hindi film budgets jumped 68% in 5 yrs 4. Success rate collapsed from 38%→18% ✅The Deals That Changed Bollywood’s Power Map 1. Bhansali Productions×Saregama Deal Size: ₹325 cr, Stake: Up to 50%, Implied Valuation: ₹650–₹812 cr. Bhansali, the last pure auteur, chose institutional backing. - ₹180–₹250 cr film budgets can’t be self-funded anymore - OTT demands scale, pipelines & governance - Music IP+film IP integration now matters more than auteurs Saregama didn’t buy Bhansali’s past. They bought future IP, music rights, OTT pipelines & remake optionality. 2. Dharma Productions×Adar Poonawalla Deal Size:₹1000 cr, Stake: 50%, Valuation:₹2000 cr. This was succession planning disguised as a strategic deal. What Poonawalla bought • Bollywood’s most bankable brand • OTT leverage with Netflix & Disney • Talent management annuity via Dharma Cornerstone What Karan Johar secured: • Capital insulation from ₹200–₹300 cr film risks • A future-proof corporate structure • Continuity beyond the founder ✅ Let me share #Rajspectives 1. More than 60% of major studios have no clear next-generation operators. No heirs, no appetite for risk, no tolerance for public scrutiny. 2. Running a film studio today means: 82% probability of loss, ₹150–₹300 crore downside per film, zero margin for ego-driven decisions. Institutions absorb this risk. Individuals can’t. 3. Buyers are lining up now due to music+film+OTT+IP monetisation. Think Disney, not YRF. Poonawalla’s Play is Pharma cash flows→ Cultural capital→ Media empire. 4. Think Reliance, not vanity investing. This is not nostalgia buying. This is platform building. 5. When Bhansali & Karan Johar, men who once rejected studio interference, invite balance sheets into their sanctuaries, it tells you Bollywood is no longer run by stars or directors. It’s run by capital discipline. The future belongs to studios that are paranoid, partnered & platform-aligned. Everyone else becomes a footnote. #india #entertainment #business #finance

One AI music platform will soon let artists control how AI uses their voice, imitates their style, and remixes their songs. Getting sued helped build it. Eighteen months ago, the Recording Industry of America sued Udio on behalf of major major record labels. Uido is an AI music generator that lets users create songs from text prompts. Their scale is staggering. The platform generates 10 songs per second, amounting to over 6 million files weekly. The complaint alleges that Udio trained its AI on copyrighted recordings without permission, producing outputs that replicated works from Mariah Carey to Green Day. Now one of the parties to that lawsuit has transformed their argument into a partnership. Universal Music Group (UMG) and Udio just announced a deal. Udio admitted no wrongdoing. But everything about their business model changed. The deal will allow users to create music using UMG artists' voices and styles, remix favorite songs into new genres, generate mashups combining different artists, modify tempo, and swap voices. But nothing created on the platform can be downloaded or distributed externally, likely to avoid cutting into existing revenue streams. This restriction has already sparked user backlash and may evolve. Artists get paid twice. Once for their music being used to train the AI model. Again when subscribers use their work to generate new creations. How does UMG know it gets paid fairly? Each AI-generated track is analyzed to identify which copyrighted songs influenced it. Revenue will be split based on measurable contribution, though the exact method has not been disclosed. UMG isn’t the only one demanding compensation for AI generated music. Koda, a Danish music rights organization, just sued AI music generator Suno, calling it "the biggest music theft in history." At this stage, only time will tell if it ends in partnership or court. New licensing models are emerging across AI and content. Getty recently licensed its images to Perplexity for cited outputs. (https://lnkd.in/eh8V56BJ) Now music follows with UMG and Udio. These deals reshape how AI companies access creative work, moving from fair use arguments to negotiated frameworks. Whether creators get paid fairly is another question. When the platform launches in 2026, which song deserves an AI-powered makeover? I'm leaning towards Baby Shark meets Mozart. #IPidity #Copyright #Licensing #AICanCarryATune #AIMusic #OptInOrOptOut #SuedToPartnership #RoyaltiesNotRobbery

Yes, I write a lot about sports. 🎾🏀🏈   And yes, our firm is called SportsInvest Advisory.   But let’s be honest, "Sports,Media&EntertainmentInvest" Advisory sounded a bit too long.   However, our focus spans the entire 𝐒𝐩𝐨𝐫𝐭𝐬, 𝐌𝐞𝐝𝐢𝐚 & 𝐄𝐧𝐭𝐞𝐫𝐭𝐚𝐢𝐧𝐦𝐞𝐧𝐭 𝐞𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦.   Why?   Because each of these segments is worth looking into from an investment standpoint.   Just the other day I was talking about content (series, cinema) as an investment opportunity with Louis Ladreyt from Logical Content Ventures, a fund deploying capital in films and series.   And several years ago, we also started exploring 𝐦𝐮𝐬𝐢𝐜 𝐫𝐢𝐠𝐡𝐭𝐬 as a new asset class—one that has now captured the attention of leading PE investors. 🎵 👉 BlackRock backed Alignment Artist Capital to deploy $5M-$20M deals for artists and songwriters (2015). 👉 Blackstone committed $1BN to Hipgnosis Songs (now Recognition Music Group) to acquire music catalogues (2021).   👉 Apollo Global Management, Inc. committed $1BN to HarbourView Equity Partners, led by Sherrese Clarke (2021). 👉 Providence Equity Partners launched Tempo Music in 2019 with Warner Music Group, later exiting to WMG for $450M. 👉 KKR acquired Kobalt Music's catalogue for $1.1BN (2021). What sparked private equity's interest in music rights?   ✅ Market growth—check out Goldman Sachs' Music in the Air report (link in comments).   ✅ Low correlation to macroeconomic trends & financial assets.   ✅ Stable, recurring royalties revenues (5-10% yield).   ✅ But also (and that's even more interesting) value creation opportunities through IP expansion (licensing, events, entertainment). One of my favorite investment teams in this space?   🔥 Pophouse Entertainment.   Why?   First, because it boasts an outstanding founding team, including ABBA’s Björn Ulvaeus and EQT Group founder Conni Jonsson, led by CEO Per Sundin and chaired by Lennart Blecher, EQT’s Head of Real Assets.    Second, because I had the opportunity to first connect with Pophouse Entertainment back in 2022 (Shahriar Shokofan, Parham Benisi, Joakim Andersson) and I was impressed by their visionary approach in IP expansion.    🎯 Investment focus? Music catalogs and IP, covering three key rights: publishing, recording, and brand rights (NIL—artists’ name, image & likeness).   🚀 Value creation? An artist-centric approach that goes beyond passive catalog ownership, expanding and monetizing IP across the entire entertainment ecosystem. They launched ABBA Voyage—a concert featuring digital avatars of the Swedish pop icons, and The Avicii Experience—a tribute to the late Swedish DJ. On Monday, they announced a €𝟏.𝟐𝐁𝐍 𝐟𝐢𝐫𝐬𝐭-𝐭𝐢𝐦𝐞 𝐟𝐮𝐧𝐝—one of the largest debut private equity funds raised in Europe in the past decade.   They have already deployed about 30% of the fund, acquiring rights to KISS, Cyndi Lauper, Avicii, and Swedish House Mafia.   Huge congratulations to the entire Pophouse team for this fantastic achievement. 👏

From the Journal: The companies are battling over how much TikTok pays Universal Music Group —the world’s largest #music company—to make the label’s vast catalog of songs available to one billion-plus social-media users worldwide, who are eager to splice snippets of that music into their dance videos, tutorials and memes. They are negotiating in a new world in which a seconds-long clip of a song on TikTok can be just as valuable as the tune in its entirety. The fight escalated this week, with Universal bringing on what many in the industry call “the nuclear option”—requiring TikTok to take down songs on which any songwriter signed to Universal’s publishing division has a credit. The move could affect 80% of the current hits across Universal, Warner Music Group, Sony Music Entertainment and independent labels, by some estimates. Since a top hit can have more than 10 songwriters involved from multiple publishers, even if one songwriter of many on a track is signed to Universal, it will have to come down. TikTok estimated a lower percentage would be affected, saying 20% to 30% of popular songs used on TikTok would be silenced, depending on the market. The showdown is putting to the test which company has more leverage in the streaming era: a Chinese-owned #socialmedia giant with an app on nearly every Gen Z and millennial phone, or the label behind Taylor Swift, Drake and Billie Eilish. After years of offering TikTok discounted terms, Universal wants TikTok to start paying royalties in a longer-term deal, the way other established video-centric apps including Meta ’s Instagram and Google ’s YouTube do. The ongoing feud between one of the world’s biggest music promotion platforms and Universal is reverberating across social media and the recording industry, forcing artists to rethink how they release songs and some TikTok users to change how they engage with the platform. “Whatever happens here is going to dramatically affect the next several years of global music revenue,” said Bill Werde, director of the Bandier music business program at Syracuse University. Music has become the lifeblood of TikTok. Last year, 85% of videos on the platform contained music, according to content identification technology and data firm Pex , and it’s trending upward. Record executives and artists’ teams have struggled to measure the true dollars-and-cents value of TikTok because of the serendipitous nature of a song taking off or not, and the fact that virality in itself doesn’t build an artist’s career and fan base. Few listeners that love a portion of a song on TikTok go on to listen to the artist’s prior work, music executives said. By Universal’s math, comparable short-form video platforms pay out at about five times the rate of TikTok. 

💥 Biotech M&A Is Booming?: Here’s What YOU need to know. After a quiet 2024, biotech M&A has roared back to life in 2025 and it’s not just about filling pipeline gaps anymore. Big Pharma is making bold moves, and the data tells a compelling story. Looking over 30 recent acquisitions and found that the average premium paid was around 77%. That’s not just a signal of confidence, it’s a bet on innovation. The most active buyers? Sanofi, Novartis, and Roche. Each is playing a different game, but all are chasing the same prize: differentiated science. Sanofi is going big. With deals like Blueprint Medicines and Vigil Neuroscience, they’re leaning into rare diseases, neurology, and immunology. Their average deal size? Over $3.5 billion. And they’re not shy about paying up premiums north of 1.3x show they’re serious about owning the future of specialty medicine. Novartis is taking a more platform-driven approach. Their acquisitions point to a strategy focused on RNA-based therapies and enabling technologies. Regulus Therapeutics and Anthos Therapeutics are examples of this, with premiums that reflect the value of scalable innovation. Roche, meanwhile, is making focused bets. Their acquisition of 89bio signals a strong interest in metabolic diseases, and their deal structure shows discipline targeted investment with strategic upside. Now Pfizer is making a bold move into obesity buying Metsera for $ 4.9 B. Across the board, oncology remains the most active therapeutic area, but we’re seeing a resurgence in CNS, metabolic, and rare disease deals. Asia is also stepping into the spotlight, with companies like Sun Pharma and Taiho making cross-border moves that hint at a more globalized innovation race. This is a signal: early-stage biotechs in these hot areas are acquisition targets. Platform technologies, rare disease assets, and differentiated pipelines are where the action is. The landscape is shifting. Innovation is the currency. And the next wave of biotech winners is already being written one acquisition at a time. 💬 What trends are you seeing in biotech M&A? Drop your thoughts below or DM me if you’d like to dive deeper into the data #Biotech #Pharma #MergersAndAcquisitions #BusinessDevelopment #Investing #RareDiseases #Oncology #GeneticMedicine #Innovation

3 major MASH acquisitions in under a year. Roche, GSK, now Novo. Combined value over $9B. The market's sending a clear signal: MASH has moved from speculative to strategic necessity. Here's the competitive dynamic playing out: Novo owns GLP-1s. Wegovy and Ozempic generate tens of billions annually. MASH frequently stems from obesity. Acquiring Akero Therapeutics efruxifermin gives them both ends of the treatment spectrum. They can address the obesity AND the downstream liver damage. No one else has that combination. Roche paid $3.5B for 89Bio's pegozafermin last month. Similar mechanism to efruxifermin (FGF21 analog). They're betting on a parallel path to the same market. The clinical data showed comparable efficacy, so Roche bought its way into the race rather than starting 5 years behind. GSK grabbed Boston Pharmaceuticals experimental MASH drug for $1.2B upfront earlier this year. Different mechanism (THR-β agonist), potentially complementary to FGF21 approaches. They're hedging on mechanism diversity. What this tells us: The big pharma companies with deep metabolic disease franchises have decided MASH can't be ignored anymore. The patient population is massive (6-8% globally), growing with obesity rates, and there's almost no effective treatment currently available. The companies that waited are now paying premiums to catch up. Novo Nordisk's 16% premium looks reasonable until you factor in the 42% run-up from acquisition speculation. Roche paid a 127% premium for 89bio. GSK went straight to a $1.2B upfront payment before the asset even hit meaningful clinical milestones. Early movers got better deals. Late movers are paying for speed. The next 3-5 years will determine which mechanisms actually work in MASH. Multiple programs have failed spectacularly. The ones that succeed will define a $10B+ market. The ones that fail will write off billions in acquisition costs. But here's what's interesting: None of these companies could afford NOT to play. If MASH programs succeed and you're not in the game, you've ceded an entire treatment category to competitors. The cost of missing this market is higher than the cost of buying in. We're watching portfolio strategy play out in real time. Companies aren't just buying drugs. They're buying optionality on a market that might explode or might collapse, and they've decided the risk of missing it is worse than the cost of entry. What do you think drives the better ROI here - mechanism diversity or doubling down on proven approaches like FGF21? #Biotech #Pharma #Strategy #MASH #M&A

Universal just acquired Downtown. Of course there is now a nice bump in market share but the real earthquake behind this deal is acquiring FUGA and Curve and it is going to rock the independent world. Whatever business you're in, imagine your biggest competitor taking over not only your means of getting your product to market, but also the processing system for your revenue. That is what just happened to many of the biggest independent labels. UMG now has access to the streaming performance and revenue streams of a good chunk of its competition in the indie world. FUGA and Curve are highly sophisticated tech companies that are market leaders in their space and foundations of the independent world's infrastructure. Leaders in the independent label world are going to be facing the fact that their only two options are: - Accept that UMG has taken control of their distribution and royalty processing - Rip up their infrastructure and go to a likely inferior supplier or build it yourself, which is highly disruptive even for labels who have been planning for it. Clearly neither of these options is that favourable. This is going to reverberate for a while given how essential infrastructure has become in managing the growth and complexities of data in the music industry. UMG is on a clear path to either acquiring or disrupting the infrastructure of its competition. It is exceptional strategically for UMG to the benefit of its artists and shareholders. And I'm certainly not saying that there aren't going to be benefits and synergies with FUGA and Curve in the UMG ecosystem. The reality is so many in the indie world are so explicitly anti-major that this is going to be a very hard pill to swallow. https://lnkd.in/eyCD5eed #UMG #musicindustry #Universal

Yesterday Bill Ackman's Pershing Square bid $64bn for Universal Music Group. Most people will read this as a music industry story. I think it is more like a capital markets story, and the music industry happens to be where it is playing out first. Four things matter. One. Music catalogues are now treated by big institutional investors as a long-duration income asset. Pension funds, insurers and private equity have put billions into music rights over the last five years because the royalties are predictable, they last for decades, and they tend to rise with inflation. That's a real shift. Ten years ago no serious institutional portfolio held music. Today plenty do. Two. The major labels trade at a lower multiple than pure catalogue funds. The reason is that a major label like UMG isn't just a catalogue. It also runs an active business of signing and developing new artists, which is expensive and risky. Investors mark the whole company down to account for that risk. Ackman is betting the markdown is too big, and that moving UMG from Amsterdam to a New York listing would close part of the gap because US investors pay closer attention and value the asset differently. Three. AI licensing is a wildcard nobody is pricing properly. The major labels are suing AI companies for using their music without permission, and at the same time quietly licensing catalogue to other AI companies for money. Either way, a new revenue stream is opening up. The labels are better placed to capture it than the pure catalogue funds, because the labels have the lawyers, the relationships and the operating infrastructure. The catalogue funds mostly don't. Four, on valuation. At €55.8bn the bid values UMG at c. 20x its 2025 adjusted EBITDA of €2.81bn. For context, private catalogue deals in 2024 were c. 16x for publishing and 13-14x for recorded music, according to Shot Tower Capital's annual review. Premium iconic catalogues have gone higher, into the 20s. So Ackman is paying a multiple above the average for passive catalogue and below the very best. He is essentially saying UMG as a whole deserves to be valued like premium catalogue, on the basis that the operating business and the AI optionality add real value on top. Whether that is right or not, the bigger point is what the bid signals. Music has finished its journey from creative industry to financial asset class. I thik most allocators with media exposure have not updated their frameworks for that yet. I covered this sector for over twenty years. The next eighteen months will be the most interesting period to cover it in a long time. The things to watch are how UMG's other major shareholders (Bolloré Group, Vivendi and Tencent) react, the Spotify margin trajectory, and the first credible AI licensing settlement. One final point for any board reading this: if your strategy deck still treats music as "creative industries", your strategy deck is several years out of date. As usual, this is not investment advice.