recoup-deal-analysis

What this skill does

# 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:

```text
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`.

```text
✅ 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