After a somewhat sluggish second half of 2022, the music M&A market has come roaring back to life this year.
The first quarter of 2023 was marked by some of the highest-profile acquisition deals yet seen, including Blackstone-backed Hipgnosis Songs Capital’s purchase of Justin Bieber’s entire catalog (released before December 31, 2021), for an estimated USD $200 million.
In fact, the entire field of music M&A has exploded in recent years, and now the field is expanding yet again, with what’s being billed as the first-ever dance music investment company.
Amsterdam-based Armada Music – the indie label behind such dance/techno legends as Chicane, Paul Oakenfold and Paul Van Dyk – has announced the launch of investment company BEAT Music, with plans to spend $100 million on M&A in its first two years.
BEAT, which stands for “Best Ever Acquired Tracks,” has already announced two acquisitions:
The master recordings catalog of KMS Records, which was founded by house and techno legend Kevin Saunderson.
The master and publishing catalogs of musician, DJ and producer ARTY, a.k.a. Alpha 9.
“It adds a new dimension to the work we’re doing with Armada Music, and we’re super excited to bring in more incredible labels, artists and songs to boost and complement our current catalog of 40.000 tracks.”
Maykel Piron, Armada Music
In the longer run, Armada, which reports to generate 1 billion streams per month, said in a statement that it plans for BEAT to grow its investment portfolio to at least $500 million.
BEAT’s launch “adds a new dimension to the work we’re doing with Armada Music, and we’re super excited to bring in more incredible labels, artists and songs to boost and complement our current catalog of 40,000 tracks,” CEO Maykel Piron said.
The investment company is backed by Pinnacle Financial Partners, a Nashville, Tennessee-based financial services firm with $42 billion in assets as of the end of 2022, including $2 billion in entertainment-related assets.
Among its most recent initiatives in music, Pinnacle was the lead bank in a consortium that raised $100 million for Cutting Edge Group, an investment company that buys music rights for movies, TV, video games and other media.
“The opportunities presented by BEAT resonated perfectly with Pinnacle and our goal of supporting creative communities across the globe,” Brett Ross, Pinnacle’s Senior Vice President for music, sports and entertainment, said in a statement.
Armada Music claims to be “the biggest independent dance music label in the world”. It was founded in 2003 by Armin van Buuren, Maykel Piron and David Lewis.
BEAT’s arrival comes amidst a revival of music M&A activity in the past several months. After a red-hot 2021, activity slowed down in 2022, which some industry observers blamed on a global spike in interest rates.
In a March 2022 article, the Wall Street Journalgave voice to concerns that the rising cost of debt could put a damper on music rights acquisitions – though, frankly, the same could be said of just about any investment class, from real estate to blue-chip stocks.
But as investors got used to the new, higher-rate environment, M&A activity came roaring back.
BEAT noted in its announcement Thursday (April 20) that part of what had spurred its creation was the fact that Piron had been “pursued by numerous investors as part of the rapidly growing appetite for music catalogs.”
The fund is the latest music rights investment company to launch out of the Netherlands in recent years.
Back in 2021, we told you about a new fund in the Netherlands called Pythagoras Music Fund (PMF).
PMF is financed by private and institutional investors, who committed €100 million (approx USD $107m) to acquire copyrights. PMF’s managing partners are John Ewbank, Hein van der Ree, Rob Hendriks, Michiel Boere and John Brands.
While BEAT will focus on Dance music catalogs, PMF says it will look to strike deals with iconic artists, or “local Bob Dylans”.
