Growth-oriented companies constantly prepare for business synergy opportunities. Small businesses owners often must find resources without an internal law department, a seasoned board of directors, or a dedicated acquisition search team.
The good news for owners contemplating growth is that the search for business opportunities is now more accessible. A database through the Commercial Alliance of Realtors (carwm.com) identifies potential business opportunities in addition to commercial real estate for lease or sale.
To fund acquisitions, small businesses — ranging from sole-member limited liability companies to corporations with revenues up to $20 million — can enhance their “bench strength” through outside professional advisors who may also help fill certain roles to position for expansion.
Like the coach in the movie “Hoosiers” who measured the rim’s height, emphasized passing, and never looked beyond the next game — valued advisors start with fundamentals, build teamwork by connecting synergies, and focus on incremental improvements.
Business law coaching is no exception.
At its core, every business entity originates as a set of legal agreements — starting in many cases with the articles of organization or articles of incorporation. As businesses begin to grow, their structural “backbone” of legal agreements begins to expand and develop. Well-structured formation, operational and governance documents will anticipate, control and guide the organization’s future development and growth.
Small business owners are asked for their core legal documents when applying to banks and other lenders for commercial credit facilities. Commercial lenders have also returned to business fundamentals when evaluating potential credit facilities — starting with the basic legal agreements that form and control their borrower entities, and more specifically, the authority of officers, directors and other agents to obtain loans and pledge collateral.
The return to business law basics is critically important: Recent developments in limited liability company law can, in some circumstances, allow the managing member of an LLC to contract fiduciary duties. This is one acute example of why business owners, lenders and investors must read and understand the core business documents when structuring companies and evaluating deals.
Well-managed privately held organizations also incorporate sound business law practices into their daily routine, which should emanate from the board’s or management committee’s practices throughout the organization.
Although self-imposing all of Sarbanes-Oxley’s rigors is unlikely, certain practices — such as active adherence to conflict of interest policies and the use of independent auditors — are a start to building a strong legal business structure.
With assistance in updating the core legal formation, operational and governance documents and preparations for commercial lenders, growth-oriented small business are better prepared to acquire new business opportunities.
Michigan’s small business owners are open — and prepared — for business. When combined with sound coaching and a bench of outside advisors, well-structured core legal documents enable small businesses to attract capital and investors and compete in today’s growing marketplace.
Steven K. Stawski is a member of the American Bar Association and the State Bar of Michigan. He specializes in real estate law, business law and construction law, and is a certified mediator through the Michigan State Court Administrative Office. He can be reached at (616) 307-1200 or info@StawskiLawOffice.com.