Blog Category: Royalty Investing

It's been a rough half-decade for income investors.

Read this week's Royalty Review and learn how royalty income streams continue to produce in the face of falling interest rates. In this week's Royalty Review column, Jonathan Hoenig discusses how music royalties have the potential to outpace inflation and grow the purchasing power of one's savings, as part of a diversified portfolio.

Read the full article to find out more! Music royalties should be on every investor's checklist! Read this article to learn why. When it comes to music royalties, the entry price is important because music royalties are income streams.

Royalty Investing Blog Articles | Royalty Exchange

To learn more, read this week's [.. Want to learn more about business and investment opportunity in solar energy? Then this article will start you on that journey. Thanks to Constance Gustke of Bankrate. Royalty financing arrangements offer a number of advantages to small businesses. Compared to equity financing, royalty financing enables entrepreneurs to obtain capital without giving up a significant ownership position in the company to outside investors.

The founders of the company are thus able to preserve their equity position, which may help motivate them toward continued success. In addition, royalty financing arrangements—since they most resemble loans—are not subject to state and federal securities laws as some equity financing deals are. Thus the company is able to save the time and money it might otherwise devote to complex filings and legal fees.

Royalty financing also increases a company's ability to structure deals with individual investors, who might be attracted to the idea of receiving a monthly or quarterly yield over the life of their investment.

The Hidden Risk of Royalty Exchange Music Investing

In contrast, equity financing arrangements often show no yield until the stock is sold. Compared to debt financing, royalty financing provides more convenient payback terms and less severe penalties for default. In addition, the infusion of cash may help the company increase sales, which may make it a better candidate to obtain more financing later.

Finally, royalty financing enables a small business to keep its options open for later financing rounds.

Royalties if the Rates Don't Rise

In contrast, a company that incurs significant debt or sells a great deal of equity in its early stages may find it difficult to attract investment later. If the company repaid the investment over 10 years, then the investors would earn a compound annual return of A small business interested in royalty financing may be able to negotiate a grace period so that royalties will not begin to accrue for a quarter or more following the close of the deal.

It may also be possible to establish a lag between the time revenues are realized by the company and the time royalties are paid to investors. This sort of arrangement can give the small business time to put the capital to work and increase sales before paying a percentage of sales as royalties.


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