Issue No. 16

Top of mind as Q3 comes to a close is our upcoming Goals meeting this week, where we’ll review Q3 progress and set our Q4 objectives. At Pier, we use the SMART Goal System to ensure we stay on track and maintain focus.

SMART stands for:

• Specific: Our goals are clearly defined and target specific outcomes. This ensures everyone is aligned on what we aim to achieve, whether it’s growing the portfolio or improving operational efficiencies.
• Measurable: We set measurable criteria for each goal to track progress. For example, a goal might be to complete a certain number of new deal introduction calls.
• Achievable: While we like to push boundaries at Pier, we ensure our goals are achievable based on available resources and market conditions. This balanced approach helps us stay focused without overextending.
• Relevant: Each goal is directly tied to our firmwide strategy, ensuring that the steps we take support the long-term objectives of Pier.
• Time-bound: We establish clear deadlines, whether it’s for the upcoming quarter or by year-end, to keep us accountable and on schedule.

As we move into Q4, we’ll evaluate how we performed against our Q3 goals and set new targets for the remainder of the year. This is also when we assess our progress toward Annual goals and determine what needs to be accomplished in Q4 to meet those targets.

- Jillian

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Music catalogs trade on multiples of royalty revenue from the trailing twelve months (“TTM”).

Headline deals – think Bruce Springsteen or Justin Timberlake - trade as high as 20x TTM. Queen sold this summer in a $1.2B eye-popping deal at a 24x multiple. At 20x, this means a buyer is expecting a 5% yield on their purchase price assuming everything stays the same with the catalog, artist, music industry, and economy in general. Buyers of these catalogs are generally securitizing the portfolio and have a marketing strategy for making the catalog more popular to generate a bit of extra spread.

For smaller catalogs, deals for different royalty rights, younger catalogs, or deals without copywrite ownership (the ability to market the catalog), trades ranging from 10-18x TTM are possible, so roughly a 7-10% unlevered yield. Additionally, online retail investors have been purchasing the smallest recording rights in the 9-11x TTM range for the last two years.

However, Pier has identified a sweet spot in size between the two – where the multiples are lower and lead to much more attractive yields. Focusing on opportunities that are not hugely scalable, but are attractive nonetheless, is something Pier has built our business around. Music is not the only specialty finance area we have identified with this aspect, but it is a great and simple example of deal size being a driver of excess return.

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- Conor