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One of many largest tales within the music business this yr is the continuing potential sale of US assortment society, BMI.
MBW was first to report in August that personal fairness agency New Mountain Capital (NMC) – majority-owner of music biz valuer Citrin Cooperman – was in talks to amass BMI.
New Mountain’s reported USD $1.7 billion bid, we’re instructed, represents an implied a number of of 11.7X BMI’s newest annual EBITDA ($145m).
However New Mountain isn’t the one potential suitor who desires BMI, the world’s largest music PRO by reported annual income.
Credible MBW sources have instructed us that one other monetary participant has made a weighty acquisition proposal for BMI, delivered to the music org’s administration.
This strategy commenced in August, subsequent to BMI coming into unique discussions with NMC.
Probably the most fascinating factor in regards to the newer proposal? It cites a 15X a number of on BMI’s $145 million annual EBITDA – suggesting an enterprise valuation for the PRO of $2.175 billion.
Following our conversations with sources, right here’s what we learn about BMI’s thriller proposer:
- It’s a ‘clean verify’ firm – aka a SPAC – that’s publicly traded in New York;
- So far, it has specialised in tech that serves a non-entertainment sector;
- Its management has present music business hyperlinks, significantly on this planet of music rights acquisition. Stated management additionally has a historical past of working at firms like JP Morgan Chase, The Royal Financial institution Of Scotland, and Financial institution of America;
- The SPAC’s bid for BMI is fairness slightly than cash-based, with substantial extra development capital for BMI’s future promised on high. The bid, primarily based on a ‘de-SPAC transition’ mannequin, consists of sponsors resembling BlackRock and different massive asset managers. The SPAC in query argues that its proposed construction would lead to long-term funding in BMI’s methods and international enlargement. It additionally argues that this is able to be a greater final result for songwriters, and the expansion prospects of BMI, than a non-public fairness acquisition.
MBW’s sources haven’t but whispered the title of BMI’s SPAC proposer – however we do know that its firm model begins with ‘C’. And that, in keeping with one supply, “it ought to be handled like royalty ;)”. No matter meaning!
We additionally know this proposal is actual. Nonetheless, BMI’s response to the $2.175 billion proposition has to this point been… lukewarm.
The PRO continues to solely focus, we perceive, on its New Mountain Capital discussions, that are ongoing.
“From the place I’m sitting the SPAC proposal doesn’t appear to have been taken very severely at BMI… Are BMI’s songwriters or board members even conscious of it?”
MBW supply
One supply near the $2.175 billion SPAC bid mentioned: “[The SPAC] thinks their proposal gives considerably better worth for BMI’s stakeholders in comparison with the rival personal fairness provide, each now and over the long run.
“From the place I’m sitting the SPAC proposal doesn’t appear to have been taken very severely at BMI. This appears odd for a proposal price almost half a billion {dollars} extra by worth than [the NMC bid]. Are BMI’s songwriters or board members even conscious of it?”
Stated one other supply: “BMI’s management could be frightened off by being concerned in a SPAC, however the [group behind the $2.175 billion proposal] believes it might in the end convey extra worth, generate extra money, and develop higher methods than a non-public fairness takeover.
“It might be the case that the New Mountain [bid] is seen as extra strategic at BMI, as [NMC] purchased Citrin Cooperman and is already invested in tech that may probably assist BMI optimize.
“However many people consider BMI and its songwriter members would profit extra within the long-term from the funding plan that comes with the $2bn+ provide.”
A BMI spokesperson declined to remark when contacted by MBW.
It’s understood that Goldman Sachs ran the method that resulted in BMI coming into unique discussions with New Mountain Capital.
BMI initially explored a sale course of again in spring/summer season 2022, however pulled the plug in August that yr stating {that a} transaction was “not an avenue we’re contemplating”.
Two months later, in October 2022, BMI introduced that it was switching away from its long-term, non-profit setup and in the direction of a for-profit enterprise mannequin.
That for-profit mannequin is now in full swing.
Final month (October 2023), in its latest annual report, BMI’s CEO, Mike O’Neill, revealed that BMI is planning to extend the margin of annual collected income it retains (i.e. spends on working prices or banks as revenue).
Stated O’Neill: “As we have a look at the following three years of our enterprise, our objective is to distribute 85% of licensing income to our songwriters, composers and publishers and retain roughly 15% to cowl our bills/overhead (which have traditionally run round 10%) and a modest revenue margin.”Music Enterprise Worldwide
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