recoup-deal-analysis

Deal Valuation Analysis

Analyze normalized music catalog cash flows and project value. Do not apply a multiple to headline royalties until you understand what income is sustainable, what rights are supported, and what risks change the buyer's actual cash flow.

Decision tree

Start here based on the user request:

• Clean ingest package exists -> validate the canonical catalog, royalty ledger, rights map, and source lineage, then analyze.
• Only raw data-room files exist -> ingest first. Valuation before ingest is unreliable.
• Publishing catalog -> analyze Net Publisher Share (NPS).
• Master catalog -> analyze Net Label Share (NLS), recoupment, reserves, artist royalties, producer points, and distribution fees.
• Mixed rights catalog -> segment publishing and master income separately, then reconcile to a blended view.
• Quick value estimate requested -> give a clearly labeled diagnostic range and list open deal-review items. Do not present it as a full valuation.

If inputs are too incomplete, say what cannot be valued yet and list the minimum files needed.

Core workflow

1. Validate inputs. Confirm the catalog table, royalty ledger, rights map, and source lineage are present or explain what is missing.
2. Define the asset. Separate publishing, masters, neighboring rights, sync, or mixed rights. State whether you are calculating NPS or NLS.
3. Compute raw earnings. Calculate LTM/TTM, three-year average, and trend by source, song, artist, platform, territory, and period.
4. Analyze concentration. Show dependence on top songs, artists, platforms, territories, rights types, and income sources.
5. Normalize run-rate. Bridge raw LTM to sustainable NPS/NLS by removing or haircutting non-recurring or fragile income.
6. Check rights and cash-flow support. Tie meaningful income to ownership, contracts, registrations, recoupment, reserves, restrictions, and transferability.
7. Segment risk. Separate evergreen, recent, sync-heavy, bonus-driven, one-stop, fragmented, supported, and unsupported assets.
8. Project scenarios. Build downside, base, and upside cash flows using explicit growth/decay, recoupment, reserve, and rights assumptions.
9. Value the catalog. Use market multiples and/or DCF, then reconcile to a supportable range.
10. Write the memo. Lead with value range, normalized cash flow, key risks, open deal-review items, and recommended holdbacks or haircuts.

Run deterministic scripts from scripts/ when the required files exist:

• calculate-concentration.py for song, platform, territory, and source risk.
• calculate-nps-nls-bridge.py for reported-to-normalized cash-flow bridges.
• validate-evidence-ledger.py before relying on memo citations.

Required bridge

Always show a bridge from reported royalties to underwritable earnings:

Reported LTM NPS/NLS
  - one-time sync and direct-license spikes
  - viral, playlist, death-bump, or campaign spikes
  - settlement, audit recovery, and accounting catch-up income
  - non-repeat PRO bonus or premium income
  +/- current run-rate trend adjustment
  +/- admin, collection, reserve, recoupment, or contract adjustment
  +/- undercollection or missing-registration adjustment
= Normalized run-rate NPS/NLS

Use real source amounts when available. If you must illustrate, label the number as illustrative and do not mix it into the final valuation.

Critical gotchas

• Headline NPS x multiple can be wrong. Multiples apply to sustainable underwritable earnings, not whatever happened in the last twelve months.
• PRO income is not one number. Decompose by PRO/society, use type, format, territory, credits, bonus/premium participation, and cue-sheet support when available.
• Bonus/premium royalties can be fragile. A song that earned from a threshold-driven radio or TV bonus may not repeat that income.
• Sync is usually upside, not baseline. One-time sync fees should be excluded, averaged, or heavily haircut unless a repeatable library pattern is proven.
• Master gross is not NLS. Artist royalties, producer points, distributor fees, reserves, and recoupment determine the owner's actual cash flow.
• Unrecouped accounts can flip. A catalog may look more profitable before artists recoup. Model the post-recoupment margin.
• Track count is not diversification. A 500-track catalog with one income driver is concentrated.
• Unsupported income is risky. If the rights map cannot support meaningful income, separate financial performance from transferable value.
• Do not fabricate assumptions. Unknown decay, split, recoupment, reserve, or reversion data must stay visible as open deal-review items.

Outputs

Use these outputs for a full analysis:

• Executive valuation summary.
• Quality-of-earnings bridge.
• Revenue mix and concentration analysis.
• Rights-support and deal-review exceptions.
• Normalized NPS/NLS calculation.
• Downside/base/upside cash-flow scenarios.
• Market-multiple valuation.
• DCF valuation, when enough data exists.
• Sensitivity table.
• Risk register.
• Recommended holdback, escrow, haircut, or follow-up deal-review items.

Templates and memo structure are in references/output-templates.md.

Operational pipeline (deal workspace)

When working inside a deal workspace (not a one-off valuation question):

1. Run python3 scripts/run-deal-checks.py deals/{deal-id} first. Cure validator failures before analysis.
2. Compute or review normalized NPS/NLS, then write the bridge JSON files the dashboard reads: workpapers/nps-bridge.json, workpapers/nls-bridge.json, and workpapers/valuation-summary.json (with normalized and scenarios keys — see recoup-deal-start Phase 4 for the schema).
3. Run python3 scripts/calculate-concentration.py and python3 scripts/calculate-nps-nls-bridge.py when normalized inputs exist.
4. For material deals, launch specialist sub-agents for rights, royalty, and valuation review in parallel (a single message with three Task calls).
5. Write workpapers and findings before drafting any memo.
6. Refresh the customer dashboard with recoup-deal-dashboard, then validate: python3 scripts/validate-dashboard.py deals/{deal-id}.

Label quick estimates as preliminary. Do not finalize a valuation while material blockers (split sheets, recoupment schedules, sample clearances, chain-of-title gaps) remain open in findings/findings.json.

✅ Analysis layer in place.

Headline:
  Normalized NPS run-rate $X.
  Normalized NLS NPV / run-rate $Y.
  Preliminary value bracket: $LOW – $HIGH.
  N material blockers · K high-severity items.

Open: deals/{deal-id}/DASHBOARD.html

Next:
  recoup-deal-dashboard — refresh DASHBOARD.html + run the pre-share QC gate
  recoup-deal-report    — assemble the IC memo and export a shareable PDF

Diligence deep-dives (read the one the deal needs)

This skill is the single diligence surface for the plugin. The valuation workflow above is the spine; pull in the matching deep-dive when a deal's shape calls for it. Each reference is a self-contained playbook.

When the deal involves…	Read
Splits, assignments, samples, reversions, chain of title	references/rights-review.md
Gross-to-net, duplicate imports, retro adjustments, suspicious spikes	references/royalty-audit.md
A lender / advance / debt sizing against catalog cash flow	references/financing-underwrite.md
Prepping a seller's catalog before going to market	references/seller-prep.md
Administering a catalog after the deal closes	references/post-close-admin.md

For the buy-side material deal, run the rights review and royalty audit deep-dives together with the valuation spine — those are the three specialist lenses dispatched in parallel by recoup-deal-start Phase 3.

What to read next

• For valuation mechanics, read references/valuation-framework.md.
• For performance royalty traps, read references/pro-performance-income.md.
• For deal red flags to watch, read references/red-flags.md.
• For memo and table formats, read references/output-templates.md.
• For workspace-level evidence rules, read references/deal-workspace.md.