The music industry witnessed a significant shift when Hellman & Friedman, a leading private equity firm based in San Francisco, acquired a majority stake in Global Music Rights (GMR). Valued at an impressive $3.3 billion, this acquisition marks a pivotal moment for GMR, which was co-founded by Irving Azoff and Randy Grimmett in 2013. Despite the change in ownership, GMR's commitment to elevating songwriters' value remains unwavering, driven by its elite roster of artists and robust operational structure.

Empowering Songwriters: A New Era Begins

A Strategic Investment in Music Royalties

Hellman & Friedman’s decision to invest in GMR underscores the growing interest from private equity firms in the music sector. The stability and predictability of collecting music royalties make performance rights organizations attractive targets. While Hellman & Friedman has not previously ventured into music assets, it recognizes the immense potential within this niche market. The acquisition aligns with the firm's expertise in technology and financial services, signaling a strategic move into media and entertainment.The deal positions Hellman & Friedman as the owner of nearly 90% of GMR. However, the Azoff Company and Grimmett will continue overseeing operations, ensuring continuity and leveraging their extensive industry connections. This arrangement is crucial for GMR’s ongoing success, as Azoff's influence and portfolio of companies significantly enhance the organization's standing.

Exclusive Membership Fuels Growth

GMR's invitation-only membership model sets it apart from other performance rights organizations like ASCAP and BMI, which operate under U.S. Department of Justice consent decrees. SESAC also employs this selective approach but has recently downsized its membership from 35,000 to 15,000 over the past five years. In contrast, GMR maintains a highly exclusive roster of 150 to 200 top-tier songwriters and estates, including luminaries such as Bruce Springsteen, Billie Eilish, and Bruno Mars.This exclusivity contributes to GMR's remarkable growth, generating estimated revenues between $400 million and $450 million annually. With a net publisher share approaching 50%, GMR's profitability is evident. If the company retains around $200 million after royalty payouts, the $3.3 billion valuation represents a substantial 16.5 times multiple. Building a company to this magnitude in just a decade highlights GMR's exceptional achievements and the industry's confidence in its business model.

Ripple Effects on the Industry

The acquisition's impact extends beyond GMR, potentially triggering further consolidation within the performance rights sector. The high valuation has reportedly sparked interest in SESAC, another prominent player in the market. Private equity firms are increasingly drawn to music assets due to their consistent performance and lucrative returns. As one investor noted, many firms were "shocked" by the final valuation, yet they remain eager to capitalize on opportunities within the music industry.Hellman & Friedman’s investment in GMR exemplifies the broader trend of private equity firms recognizing the value of media and entertainment properties. Previously, the firm invested in Axel Springer and Getty Images, although it has since divested from these ventures. The new focus on GMR signifies a strategic pivot towards sectors with stable revenue streams and long-term growth prospects.

Continuing the Mission

Despite the ownership transition, GMR remains committed to its mission of transforming the music industry and enhancing value for songwriters and publishers. The management team assures that there will be no changes for writers or internal operations. Moving forward, GMR aims to maintain its position as a leader in performance rights while exploring innovative ways to support its elite members. The future looks promising for GMR as it continues to thrive under its new ownership structure.