The Broccoli family’s recent joint venture agreement with Amazon MGM Studios to cede creative control of the James Bond franchise but retain an ownership interest is being cited as a smart way to monetize a valuable asset.
Half-siblings Barbara Broccoli and Michael G. Wilson had exerted substantial control over the movie franchise they’d inherited from Albert “Cubby” Broccoli in 1995 — shaping Bond’s makeover in recent decades with the selection of actors Pierce Brosnan and Daniel Craig.
Though joint ventures can be risky and often fail — with 31% of large deals being terminated within the first five years — they can be an option for family offices sitting on a legacy asset, joint venture experts say.
“Ideally, it can be a win-win, where you get two parties with assets or things that they’re bringing to the table in terms of resources or expertise or capital or access to distribution channels,” said Peter Shelton, a partner at the Cleveland-based law firm Benesch Friedlander Coplan & Aronoff.
Family offices are likely to have plenty of reasons to pursue such a deal, especially as newer generations take the helm and make decisions about legacy assets that ensure a future revenue stream. It’s similar to musicians selling the rights to their music, said DJ Van Keuren, the Denver-based co-founder of the real estate investment firm Evergreen Property Partners, who has worked with prominent families including the Giorgios and the Marriotts.
The first questions they should ask: What’s the objective? Why pursue a joint venture rather than outright selling it?
Next, it’s key to choose the right partner to meet that objective, said Shelton.
Then, the family should consider the governance and management of this newly formed entity. “Who will have the decision-making power, and will everything be jointly decided?” he said. “Or will there be some form of a board, and who will control the board?”
Shelton cautions against 50-50 joint ventures because they can often lead to deadlocks over key decisions. “It helps to have somebody who’s ultimately making the decisions or has the ability to play that role so you can move forward,” he said.
Family offices can take a longer-term perspective, especially when preserving their legacy, so they should concentrate on protecting their interest, said Van Keuren. For them, it’s important to focus on the joint venture operating agreement — “where they can ask for greater control or board seats or veto rights,” he said.
Even if families give up creative control, they can ask for restrictions about the use of the brand in the agreement. “You don’t want James Bond acting inappropriately — that’s gonna come off bad on the family,” said Van Keuren. “They need to make sure they’re protecting their legacy and reputation.”
To minimize their capital gains for tax planning, Van Keuren said, family offices should put the asset into a trust before entering the joint venture agreement.
Finally, it’s important to consider the lifespan of the agreement and for families to think about their exit strategy. “It will be split up based on some agreed percentage, and it will have to be liquidated either through a sale process or some other means,” Shelton said. Or families could have an agreement in which each side has the opportunity to propose a buyout.
Said Shelton, “It’s key to think about it on the front end rather than getting into it and just saying, ‘Oh, we'll figure that out down the road.’ ”