Know the Law: How Do I Grow My Business?

Published: Union Leader
June 11, 2023

Q: I started my company 3 years ago and our customers love our products. However, our sales have remained stagnant and we are barely making a profit. What are some ways to successfully grow and scale my business?

A: Growing a business, and doing so successfully, can be challenging. It is widely held that there are primarily four stages in a company’s lifecycle: (1) startup; (2) growth; (3) maturity; (4) and decline/exit. The main objectives in the growth stage are to grow sales, increase your customer base, and make a profit. One avenue for growing and scaling your business is pursuing a merger or an acquisition.

Purchasing a similar business, or businesses, through a merger or acquisition may be an effective growth strategy. A merger or an acquisition might make sense for your business if you are looking to expand into a new market; gain a competitive advantage over your competitors; or acquire new products, services, or technologies. Mergers and acquisitions (M&A) can offer you the opportunity to gain a larger market share without having to do a lot of the heavy lifting, such as market research and product development.

Alternatively, your company may want to grow by cutting cost. Divesting your business of certain business lines may be a viable solution if your company is facing challenges with its cash flow operations. In this scenario, you will want to consider selling certain business assets. Additionally, the influx of cash from selling one of your business lines can help you to invest in new opportunities or strengthen your operations.

As a potential buyer or a seller in an M&A transaction, you will want to engage legal counsel early. An attorney specializing in M&A will assist you with structuring the transaction, negotiating a letter of intent, preparing transaction documents, and closing the deal. As a buyer, an M&A attorney can assist you with raising capital to fund an acquisition of another business. As a seller, you may also want to engage with other consultants and advisors to assist you with the transaction. For example, a CPA can provide you counsel on the tax ramifications of the deal.

Congratulations on steering your business from the startup phase to the growth stage. As you navigate the growth stage, M&A may be the right avenue to growing your sales, customer base, and profits.

Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.