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Q. Is there a preferred structure for investing in
films or film funds?
A. Whether investing individually or in a group, Limited
Partnerships rule.
- Parties interested in investing in movies may do so individually,
or within a group form by IFR. Both ways have their merits.
- However, few people desire to make a sole investment
in a film. Also, several parties pooling capital normally can move into
a different realm of movie-making.
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Group investing offers diversification of risk and better properties:
Participation
in multiple properties as hedges against a film's loss.
Participation in better funded properties
and attachments.
Participation by smaller investors to share in larger properties.
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Whether funded individually or by group investing, feature
films are customarily structured through a Limited Partnership, using the "standard
movie deal" for the investment payout, where the investor is the limited partner and IFR, as producer, is the
general partner and perhaps a limited one.
-
Limited partnerships offer many advantages of which tax
shelter and professional centralized management are but a few... to say nothing about the complications of other offerings
structures.
- An IFR Film Investment Group may be formed to buy a specific
screenplay or slate of screenplays which IFR recommends for their commercial worth. While movies are speculative
in nature, we will provide (1) industry data showing what other films of a similar nature accomplished at the box-office,
in video, TV and/or other venues plus (2) a list of attachments which are made via our Development Fund.
- Alternatively, IFR may have already optioned a screenplay(s) and be
forming a FIG(s). Depending upon the desires and goals of the investor, IFR may "suggest" an investor to specific
FIG.
- Either way... the next step for the investor is to obtain a Partnership
Agreements from IFR for review. And upon the investors diligence, make a go / no-go investment decision.
If positive, the investor will make a deposit into an escrow account, secured through a reputable escrow agent, under
an all-or-none arrangement based upon a time deadline.
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