Acquisition Multiple
Definition
Acquisition multiple is the purchase price divided by the royalty stream's trailing annual income. A royalty asset that generated $20,000 in the last twelve months and sells for $140,000 clears at a 7x acquisition multiple. It is the inverse of trailing entry yield before fees.
Why it matters
Acquisition multiple is the cleanest way to compare royalty pricing across platforms. In AltStreet's SongVest vs Royalty Exchange work, Royalty Exchange perpetual marketplace deals cluster around a much lower multiple than SongVest SongShare offerings. That spread shows how much the buyer pays for structure, access, regulation, sourcing, and distribution wrapper.
Common misconceptions
- •A lower multiple is not always better if the income is short-lived, unstable, or inflated by a temporary event.
- •A high multiple can be rational for unusually durable assets, but it demands a much longer payback period.
- •Multiples should be compared by term, income type, catalog age, and fee structure rather than across every royalty asset indiscriminately.
Technical details
Relationship to yield
Before fees, acquisition multiple is approximately 1 divided by entry yield. A 10% trailing yield equals a 10x multiple; a 20% trailing yield equals a 5x multiple.
Issuer versus marketplace pricing
A primary issuer can set a fixed offering price, while a secondary marketplace lets buyers and sellers clear a price by auction. Comparing multiples helps separate asset economics from wrapper economics.