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Course Descriptions

Course Descriptions

Business Planning: Structuring and Financing a New Enterprise (Fall 2017)

  • Course Number: LAW-627
  • Class Number: 03268
  • Instructor: Alan J. Levine

Course Description

 

           This course will examine the legal and business concepts, principles and practices, financial and operational structures, economic models, distribution platforms and other issues encountered in connection with the formation, structuring and financing a new media enterprise (“Newco”). Using the motion picture business as a proxy for any media content producer or other new business, this is a “hands on” course that follows a running hypothetical based on actual businesses (involving a series of real transactions) engaged in the development, production, financing and distribution of entertainment content. This is a “skills” course that will progressively cover each phase of the structuring, formation, financing and operation of Newco as a startup independent motion picture production company. The instructor is a veteran entertainment, tax and corporate attorney, studio chief executive, investment banker, and financial and media consultant with more than 46 years of practical experience in the entertainment and media industry.

            Like a real-life corporate attorney or other key advisor, students will encounter a wide gamut of legal issues and business considerations, including corporate, securities, production, financing, marketing, distribution, tax, intellectual property, accounting and financial reporting, and other critical issues facing business executives, entrepreneurs, attorneys and other representatives in connection with the establishment and operation of a new business enterprise. Students will examine the details of numerous transactions, and the documentation and analyses encountered, in all phases of the formation and initial operation of Newco, including the creation and structuring of the business plan and operational strategy, the operating budget, the distribution plans, and the issues and transactions involved in raising capital for the financing the production, marketing and distribution of Newco’s products. Students will focus on the “art of the deal” as well as reviewing and drafting term sheets, deal memos and formal agreements documenting such transactions; students will examine each transaction from all sides of andwill also engage in “mock negotiations” of some of the more important deals and agreements examined in class.

            This Business Planning course is sometimes described as a course in Counseling the Startup Company. It may also look like a survey course covering the financing of the production and distribution of content in many kinds of different media (e.g. motion pictures, television programing or digital content) with an emphasis on developing the skills also addressed in advanced courses in Contracts, Entertainment Law, Management, Corporate and Business Law. While the basic business of Newco (including its market considerations and customary practices) is the traditional motion picture business, the issues, skills, legal principles and concepts presented can easily be applied to any legal, business or corporate environment in most industries or advisory practices.

Course Enrollment

            While Business Organizations and other qualifying courses for a business law or entertainment law certificate are desirable, they are not prerequisites. Registration is open to upper division JD candidates and JD/MBA and MBA candidates; however, it is suggested that 2L and first-year MBA candidates wishing to register for this course submit a request for enrollment indicating their reasons for taking this course and providing any additional background information from previous academic, employment or other relevant business or media experience. Enrollment is not limited to a particular number of students.

Class Meetings; Credit & Grading; Assignments & Final Exam

            This class will meet twice a week for 4 units of credit for a numerical grade only. Class sessions will be held from 10:00 am to 11:50 am on Monday’s and Wednesdays in Room 130. Attendance and class participation will be graded within law school parameters. The final grade will be based on a combination of in-class participation and several short class assignments given during the semester and a final in-class exam. The short class assignments will be based upon topics from the Course Material or class discussions. The final exam will be open-book (using only hard copies of the Course Materials and the student’s notes); students are encouraged to use a laptop computer with SofTest for the final exam. The final exam will be based on assigned readings from the Course Materials and any other matters discussed in class. Comprehensive review sessions will be held during the last two class sessions at the end of the semester.

Course Material; Assigned Reading

            All assigned reading will be from a Course Reader (including term sheets, formal agreements, financial notes and illustrations and class slides contained therein) prepared by the instructor that will be made available to students at the Copy Center before the first class session, and additional handouts and class slides distributed in class and/or posted on Blackboard during the semester (all of the foregoing “Course Materials” herein). The Course Materials attempt to cover as many material issues, concepts and principles, as well as commentary and documentation, that are relevant to the subject matter of this course and the transactions described in the course hypothetical; students will use it as a handbook or reference guide for reading assignments, the short class assignments and the final exam. Students may not be required to read and/or master some of the topics in the Course Materials; however, all of this material has been included to give students exposure to its existence and an understanding of where it fits in the sequencing of the transactions in the hypothetical, and to make it available for those students who are interested in examining such topics included in greater depth.

            The financial information and projections included in the Course Materials is intended to give students exposure to the type and form of financial projections that are commonly used in many of the transactions to be discussed in class to illustrate what other professionals are using in the preparation and analysis of the business planning and legal work necessary to complete the transactions covered in this course. While the fundamental understanding of such basic financial information is necessary, students are not expected to master the more sophisticated financial projections contained in the Course Materials. Students will be advised when a basic understanding of the structure and purpose of such information and projections is expected.

Course Topics

            This Course is organized to generally correspond to the Chapters in the Course Reader; one or more Chapters may be covered in a given class session, and it may take several class sessions to cover just one Chapter. The following is a general outline of the type of topics covered in this Course:

§  Introduction & Background Reading

-          Course Description

-          Running Hypothetical; your role in this course

-          Contract review process

-          Introduction to business planning and other related topics

-          The Motion Picture business as a proxy for any industry

-          Discussion of industry players

-          Guild and union collective bargaining agreements

-          Distribution windows and revenue streams for Newco’s films

-          Calculating “film ultimates”

-          Motion picture industry economics and statistics

§  Initial steps for Newco

-          Putting the team together: attorneys/law firms and their engagement and fee arrangements; talent agents and personal managers; accounting firms and business managers; public relations firms and publicists; investment and commercial bankers; and other advisors and consultants

-          Making career choices and the decision to form Newco

-          Choice of entity and other formalities for the formation of Newco as a sole proprietorship, general partnership, limited partnership; corporation (“C” or “S”), or limited liability company           

§  Preparation of Business Plan & Budget for Newco

-          Preparation of Newco's business and operational strategy and plan

-          Establishing the distribution network

-          Examination of distribution alternatives

-          Creation of key distribution assumptions for business plan

-          Structuring, drafting and negotiation of distribution deals, term sheets and agreements

-          Construction of other key plan assumptions, including the slate of pictures, creation of financial database, sensitizing financial results, overhead and development assumptions, performance projections, and capital needs; review plan output

§  Raising Capital for Newco

-          Types of capital (debt, equity, other)

-          Designing capital structure for Newco

-          Preparation of offering materials

-          Identifying sources of capital

-          Private offerings and other securities law considerations

-          Role and engagement of investment bankers or financial advisors

-          Preparation and review of investment advisor engagement letter

-          Negotiating terms of the equity investment

-          Arranging and structuring debt and the preparation of loan documents

§  Drafting and Negotiation of Organizational Agreements

-          Newco formation, shareholder and operating agreements

-          Newco executive employment agreements; I.R.C. Section 83(b) election

-          Distribution term sheets and agreements

-          Senior and Junior Credit agreements

-          Security agreements; lab access letters

-          Final Business Plan & Budget

-          Assignment and contribution of capital and in-kind assets

§  Closing and Funding; Newco’s Future

-          Final due diligence; closing memo

-          Scheduling and holding closing

-          Funding of initial capital

-          Newco’s future (e.g. organic vs. external growth; additional rounds of financing; recapitalizations; M & A activities; exit strategies; sale, reorganizations, bankruptcy or liquidation)

            A more detailed Course Syllabus will be posted on Blackboard before the first class session on August 21, 2017. If there are any questions regarding any of the matters covered above, please email the instructor at alevine@law.usc.edu

Course Details

  • Unit Value: 4
  • Grading Options: Numerical Only
  • Schedule: M/W 10:00 am - 11:50 am
  • Room Number: Room 130
  • Exam: In-class exam
  • Writing Requirement: No
  • Skills Requirement: yes
  • Participation: Points will be awarded