Thrive in the Upturn – a legal perspective

by | May 4, 2011

We keep hearing about the “new normal” and that the business environment has changed and we must change with it.  It’s still not clear what this “new normal” looks like; but we’re all working toward getting back to business.  In doing so, we are looking at how to communicate our value to customers and get revenues back on track.  For established businesses, now is the time to stand out and take bold action.  Companies looking to grow have many opportunities to do so.  

Acquisitions.  The recession has forced many small business owners to reconsider business ownership.  This environment has created opportunities in many industries to acquire these small businesses as a strategy for growth.   Many of the business owners are highly skilled and happy to stay on in the business adding a valuable resource to the team.  Acquisitions come with specific legal questions that must be answered in advance of proceeding.   You must confirm that all taxes, including employment, state and federal taxes, of the selling company have been paid.  Taxes are one of the few liabilities that can flow to a buyer, even in an asset purchase.  If key contracts with employees or clients are critical elements of the purchase, you must also get a solid understanding of the likelihood that those employees or clients will continue with the new company.  It’s important that you really investigate the company before jumping in, even when the price is right.

Geographical expansion.  Many companies are looking to expand to new markets where they see a gap or need for their services.  Geographical expansion can include opening a new office or buying a company in a different city or state.  You must be aware of licensing requirements in the new geographical area including the tax implications of making such a move.  The overall business structure should be implemented to maximize tax benefits while still accomplishing necessary company goals.  Similarly, employment law differs across jurisdictions, even within a state.  It’s important to modify your employment practices, as necessary, to meet the requirements of new geographical areas. 

Online expansion.  The online space has become very attractive for many businesses.  It’s now simple to set up an online presence with a shopping cart and social media tools.  When expanding your online presence, a Terms of Use and a Privacy Policy must be implemented to protect your business from activities of users.  A critical factor is that these contracts must be based on the specific functionality your site offers.   The required taxes on online sales is another area that may require investigation so you’re sure to calculate and pay it correctly.   

Many opportunities for expansion and growth exist with fairly low capital requirements.  Think about the ways your business can grow rapidly and investigate which ones are feasible for you in this market.  It’s a great time to stand out!