One of your clients, a motion picture producer, has asked your firm to invest $2 million in her latest motion picture production, a movie based on the life of 1960s singing star Janis Joplin. In return for the contribution, your firm will receive a 10 percent interest in the limited partnership that will produce and own the movie. The movie is expected to be in preproduction for four years as rights to the subject matter, script, actors, and director are obtained. Production is expected to take three months, and postproduction editing and promotion will last another six months, after which the movie will be released into theaters domestically. Three months after its theater release, the movie will be released on pay-per-view and premium television channels like HBO. Six months after the theatrical release, the movie will be sold on DVD. As a consequence, the production company is not expected to make a profit for at least five years. Your client wants to form the production company as a limited partnership. Do you believe that the limited partnership is the right business form? What business form may be better? How would you set up that business form to make sure your firm's interests are best protected?
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