Updated: How to Find and Exploit Marketplace Gaps With Standing Orders

UPDATED 11/13/2020

Automated investing through our new Standing Orders feature is a powerful way for investors on Royalty Exchange to acquire a royalty portfolio quickly.

But Standing Orders are only as good as the offers made through them. Many Standing Orders are left vacant with no catalog to fill them, for several reasons:

1. The Standing Order overlaps with too many competitive orders for the same catalog criteria and the better offers win
2. The Standing Order is matched to a catalog, but the offer multiple is so low that the asset owner rejects it
3. The Standing Order criteria is too narrow, and as a result, many potential matches are not connected

Gaps in Matching Orders

In our first Gap Update in June, we noted that 10-Year Term catalogs with a Dollar Age between 3 - 3.9 with an LTM over $8,000, had no corresponding Standing Orders placed to match them. Since 13 catalogs entered the Royalty Exchange system with those parameters, they were never presented with offers because of this lack of a matching order.

In this update (11/13/2020), we've re-examined the status of all Standing Orders placed to identify any new areas of opportunity. Below is a video detailing the updated table of potential catalog iterations available for a 10-Year Term Standing Orders by investors, from a 3-year Dollar Age catalog earning $1,000 in the last 12 months, to an 8-year Dollar Age catalog earning $25,000 in LTM.*

(*Investors who are not All Access members are limited to placing Standing Orders only on 10-Year Term catalogs with $25,000 or less in LTM. 10-Year Term catalogs with an LTM of more than $25,000 are also matched to Life-of-Rights Standing Orders).

Additionally, we're making available a view-only spreadsheet that presents this data in a static format for further examination. Please note the different tabs in this spreadsheet to fully absorb all the data presented.

Click To Expand

Gaps In Offer Multiples

Now, just because a match is made doesn’t mean it will be accepted. The offer still must prove enticing to the seller, or the offer will be rejected.

This raises another opportunity to leave smart, competitive Standing Orders. Many of the Standing Orders in our system have the potential to match incoming catalogs, but the offer multiple falls far below our Analyst Benchmark price analysis. (The Analyst Benchmark is simply the median sale multiple for similar catalogs on our marketplace).

The further below the Benchmark price, the less likely it is to be filled, which gives investors the opportunity to place more competitive offers closer to the Benchmark price.

How To Use This Information

We realize this is a lot to absorb at this time. We’re sharing this raw data and analysis with you in a spirit of sharing and transparency. We also intend to update the graphs that illustrate gaps in the Standing Order marketplace every month to help you make more informed offers.

But we realize that ultimately we must use this data as the backend to a more intuitive offer interface feature, so you can benefit from the analysis at the point of making your offer without the need to interpret the data and do the calculations on your own.

To that end, we’d love to hear any feedback, suggestions, or helpful criticisms, so we can design this feature to your benefit.