September 2018 | LA Lawyer Magazine

Tips and Traps in Structuring Equity Deals for Social Media Influencers

Shane Nix, Michael Bloom, and Elizabeth Stieff published "Tips and Traps in Structuring Equity Deals for Social Media Influencers" in the September 2018 issue of the Los Angeles County Bar Association's Los Angeles Lawyer. Here is an excerpt:

Business have long recognized the benefits of using a celebrity or "influencer" to market their products or services. As opportunities for direct engagement between influencers and the public grow through social media, so do the influencers' abilities to impact the shopping habits of their followers. Realizing their growing impact on consumer behavior, many influencers are reconsidering traditional flat-fee compensation for their endorsement services in favor of equity (or equity equivalents) in the business they are promoting. From the company's perspective, granting an influencer equity can be an effective tool to maximize the influencer's incentive to promote the business with minimal cash outlay, but such arrangements must be carefully structured.