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The Business Lifecycle – Unique Legal Challenges at Each Step

by | Jun 6, 2024 | Small Business |

From initial formation to eventual exit, startups and small business owners typically find their legal needs evolve throughout their company’s lifecycle. This blog provides a basic overview of some legal issues you may encounter as a business owner.

At rb LEGAL, our attorneys are here to guide you at every stage of the business lifecycle, anticipating your evolving legal needs, and providing tailored advice. We focus on the legal issues so you can focus on your business.

Stage 1 – Launch

The lifecycle of a business begins in the launch stage – where your idea becomes a reality, and your business exists legally. One of the most critical legal matters is determining what corporate structure to create, whether a sole proprietorship, partnership, limited liability company, or corporation.

It always helps to have a strong foundation – whether it’s well-drafted corporate documents and commercial contracts, securing financing, or a shareholder agreement outlining the commitments and managing the expectations of your initial shareholders.

  • Articles of organization/incorporation
  • Operating agreement/bylaws
  • Investment agreements
  • Shareholder agreements

Stage 2 – Growth

The growth period is one of the most exciting stages of the business lifecycle. As work grows, your business may require hiring employees or independent contractors, broadening your offerings, entering new markets, or securing intellectual property (IP) rights.

As the volume of work accelerates, new challenges can emerge – for example, the need for more office space, formalizing employee expectations, or outsourcing certain tasks to focus skills and capacity.

  • Employee handbooks
  • Independent contractor agreements
  • Contract review and negotiation
  • Commercial lease drafting and review
  • Trademarks

Stage 3 – Shake-out

The shake-out stage can be viewed as the final stage of the growth period. Growth slows, and a period of consolidation occurs, often focusing on increasing profitability and addressing operational issues.

You may look to offload unprofitable parts of the business, remove directors, address employee issues, renegotiate contracts, or invest in property.

  • Commercial lease negotiation
  • Commercial property acquisitions
  • Contract negotiation
  • Corporate restructuring
  • Staff restructuring

Stage 4 – Maturity

The fourth lifecycle stage is what every startup and small business owner aims for. You can focus on maintaining profitability, fine-tuning operating procedures, acquiring similar or complementary businesses, or bringing in key employees as shareholders.

However, with your business operating near its full capacity, this stage can also come with more legal challenges. These could come in the form of contract disputes, IP challenges, dissatisfied customers seeking legal recourse, or employee issues.

  • Mergers and Acquisitions
  • Commercial and IP disputes
  • Employee stock ownership (ESOP)
  • Issuing and transferring company shares

Stage 5 – Exit

Whether your business is large or small, we can help you prepare for, negotiate, and complete the sale of your business successfully. Whether passing the business on to family members, selling to employees, or to an external buyer; whether an asset sale or a stock sale, we have you covered.

Other owners may look to wind down the business and dissolve the entity. You’ll find out that there’s much more to winding down your company than just closing the doors, including meeting your legal and tax obligations, and handling employee matters.

  • Asset and stock sales
  • Company dissolution
  • Confidentiality agreements
  • IP assignment
  • Lease transfers
  • Legal due diligence

This is just a small handful of the legal services rb LEGAL provides business owners. Wherever you are on your business journey, our attorneys are here to offer expert legal advice every step of the way.

We at rb LEGAL are here to help our clients respond to legal challenges large and small – from shareholder agreements to trademarks, from incorporation to mergers and acquisitions. Have a question? Call or text us today at (763) 582-1414, or email us at [email protected].

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