Bieber sells music rights; what are the value drivers?

Singer Justin Bieber has sold his music rights for around $200 million, according to various reports. One of the main drivers of value in a music catalog has been the emergence of streaming, which has triggered higher cash-flow growth expectations—and has proven to be resilient during COVID-19, according to this report. Also, music royalties are recurring and predictable (similar to what you would see in asset classes such as real estate). What’s more, spending on music has a low correlation to economic activity. A 2021 report by Shot Tower Capital explains that “music assets have generally experienced non-correlated growth throughout various market cycles.” Moreover, consumers continue to spend on music during recessions. In times of economic instability, music provides stable cash flow. Low interest rates also fueled high values, but rising rates have caused a “general cooling-off” of the catalog market, according to Variety.

For some insights into the valuation of a music catalog, David Dunn, managing partner at Shot Tower Capital, discussed the valuation of Michael Jackson’s music catalog during a 2021 BVR webinar.

Ipse dixit nixes some of expert’s opinion

In an economic damages case in Delaware, both sides filed a number of motions to exclude expert testimony, evidence, and arguments. In one instance, the court found that a portion of one expert’s report was unreliable because it was ipse dixit. Under Daubert and Rule 702, testimony based on nothing more than the expert’s “because I say so” (ipse dixit) is destined to be excluded. If an expert makes an assertion, it must be substantiated. In this case, the expert was “not permitted to testify to damages based on Plaintiff’s expectation interests in the agreement it purports to have reached with Defendants.” However, the expert was allowed to testify to the general proposition that the nature and extent of services justified higher compensation.

The case is LCT Capital, LLC v. NGL Energy Partners LP, 2022 Del. Super. LEXIS 1448, and a case analysis and full court opinion are available on the BVLaw platform.

Vertical IQ enhances its industry research platform

Eleven U.S. industry sector profiles have been added to the Vertical IQ industry research platform, including: accommodation and food services; agriculture, forestry, and fishing; educational services; information sector; real estate; and transportation and warehousing. The platform’s sector profiles offer a macro level look at the major segments of the U.S. economy, so they give a wider view. For a narrower view, the platform’s industry profiles cover more than 570 distinct industries, representing more than 97% of the U.S. economy.

More news:Also, the platform now incorporates data from Nexis Newsdesk™, a top provider of news and media content, to increase Vertical IQ subscribers’ access to industry news articles.

For some sample reports, click here.

What BV developments did you miss in 2022?

Now’s your chance to catch up on all things BV with the latest editions of two BVR yearbooks. New ideas on valuation approaches and techniques, takeaways from the leading conferences, key court decisions, and changes in regulations and standards are covered in over 70 articles and hundreds of news items in the Business Valuation Update Yearbook, 2023 edition. A companion guide, the Business Valuation Case Law Yearbook, 2023 edition, represents BVLaw’s analysis of the most noteworthy court decisions of the past year in the areas of business valuation and damages. It also contains the court opinions and a case listing by state/jurisdiction, court, and case name, followed by a short description of the key valuation issue of each case. These yearbooks are compilations of what appeared in the Business Valuation Update newsletter and the BVLaw platform during 2022.

Good news:You already have these two volumes if you are a subscriber to BVResearch Pro or BVR’s Digital Library.

BVResearch Pro adds another issue of the ASA’s BV Review

Among many other resources, the BVResearch Pro platform contains the full archive of the  Business Valuation Review going back to 1982. This is the business valuation journal of the American Society of Appraisers. The Summer 2022 issue has been added to the platform, and it includes these articles:

•  “Double Backsolve Remains Unsupported” (Eric Sundheim, ASA; Ben Towne, CPA/ABV; and Jeff Faust, CVA);
•  “The NICE Method Theory and Application” (William H. Frazier, ASA); and
•   “Most States Reject Discounts in Appraisals and Oppression Cases—But There Are Important Exceptions” (Gilbert E. Matthews, MBA, CFA).

If you are not a subscriber to the BVResearch Pro platform, you can do a stand-alone subscription to the ASA’s BVReview if you click here.

Global BV News

2022 was a record year for Swiss M&A, per KPMG

Despite the gloomy economy, the number of mergers and acquisitions with Swiss involvement hit a new record high in 2022, surpassing the numbers of the past 10 years, according to KPMG in its report “Clarity on Mergers & Acquisitions.” The report contains deal statistics from last year, highlights the most noteworthy transactions, and presents latest trends and drivers that are impacting deal activity. It also includes KPMG’s outlook by sector for 2023.