Venable partner Alan Epstein was interviewed in a January 3, 2017, Daily Journal article on celebrities taking on business ventures outside of the entertainment industry. The past year saw several high-profile deals involving celebrities taking on equity interests in companies and the trend is expected to continue particularly with the growing use of social media.
"The social media platforms allow entertainers and influencers to directly reach their fans in a real time and immersive way," said Epstein. "The ability to link celebrity with commerce has become highly valued in the marketplace due to the high level of free publicity which follows from these type of associations."
Discussing the legal issues celebrities face in the dealmaking process, Epstein added, "One of the most significant legal challenges is to negotiate 'sweat equity' arrangements that are appropriate for the particular situation. There are numerous legal and business issues that need to be considered in order to achieve the desired objective, including the tax treatment arising from the issuance and or vesting of the equity, the impact of a 'change of control' on the equity incentive, the operation of the distribution waterfall affecting how proceeds are distributed to the owners and the operation of the governance provisions."