Earnout Examples

 

Taylor Swift's Revenge Imperils $50 Million Earnout

When Shamrock acquired the rights to Taylor Swift's first six albums, the purchase price included an earnout payable to Scooter Braun (Ithaca Holdings) and Carlyle if the asset hit certain metrics. The purchase price of $300 million included a $50 million earnout. An article in The Financial Times provided some additional detail: 

The Swift catalogue earns about $15m a year, according to people who have seen its financials. So Shamrock’s price at $250m works out to a multiple of about 16 or 17 times its historic income.

Swift did not have an opportunity to approve the transaction and was at odds with Scooter Braun. In response to the original acquisition of Big Machine from Scott Borchetta, Swift announced that she would re-record the albums. In response, Braun and Carlyle began looking for a new buyer.

Unfortunately the transaction with Shamrock included the above mentioned earnout, which meant that Braun and Carlyle would continue to benefit from Swift's albums. Consequently, Swift decided to continue re-recording albums.

The article didn't comment on how this could potentially affect the value of the earnout, but Swift's loyal fans are there to support her. Many have taken to posting detailed tutorials to prevent the old Shamrock-owned tracks from appearing on their Spotify feeds.

Per the article, her new albums are also outperforming the old versions. A new recording of Fearless was streamed 3 million more times over the course of a single week in October.

“To extract maximum value from music assets you absolutely need, if not co-operation from the artist, you at least need them to not be actively angry,” was the summary of one fund manager who passed buying on the catalogue.

Source: Anna Nicolaou | “Taylor Swift’s battle to shake off the suits” | The Financial Times | 11/11/2021 | Visit

 

 

Shamrock Capital Acquires Rights to Taylor Swifts Early Albums

Shamrock Capital acquired the rights to Taylor Swift's first six albums for $300 million from a group including Ithaca Holdings and a portfolio company of The Carlyle Group.

Ithaca originally paid a reported $300 million for Big Machine Label group in June of 2019. Swift originally recorded her first six albums with Big Machine Label Group, but reacted poorly to the transaction.

Swift was angry with Ithaca Holdings founder and famed music manager Scooter Braun. In November of 2019 she claimed that Braun was trying to prevent her from performing her old music. The transaction with Shamrock took place without her knowledge, and Shamrock only contacted Swift after the deal was signed.

In this process, Swift learned that Braun would continue to benefit financially from the transaction, which further angered her: "I was hopeful and open to the possibility of a partnership with Shamrock," she wrote. "But Scooter's participation is a non-starter for me."

Source: Adam Lewis | “Shamrock scoops up part of Taylor Swift's catalog in $300M deal” | PitchBook | 11/17/2020 | Visit

 

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