Tips of the Trade:

Attracting Investors by Attaching Talent

I have noticed that many of my clients have been placed in a difficult money raising situation. How can a Producer attract investors without attaching named talent? On the other hand, if the investors' money is to be kept in a blocked escrow account until a certain minimum amount is raised (see Escrow Accounts), where does the Producer find the money to attach talent?

I have been recommending that Producers attempt to attract two classes of investors (Class A and Class B Limited Partners or LLC members, depending on the legal entity utilized) and issue two separate offerings. One offering is the Development Offering and the second offering is the Production Offering. The Development Offering funds are spent right away for the purpose of normal and customary development activities, including making pay-or-play offers to talent so that they may be attached. The Class B funds from the Production Offering, are kept in a blocked escrow account in order to protect the investors. By obtaining the Class A monies immediately, the Producer may attach talent, provide a copy of the contract with the Prospectus, and by doing so may make it easier for the Producer to attract production budget money or obtain distribution presells.

Also see Sections regarding Blocked Escrow Accounts, How Do Offerings Work?, Suggested Rates Of Return For Investors, Prospectus/Business Plan, Securities Issues and Subscription Agreement.