Your product is validated, you have end users, your revenue is growing, and your team is getting bigger. And then it stops, and the founders can not understand why. This does not happen because the market changes or because the product fails. It’s because legal and structural foundations were built for a startup, and nobody updated the structures for a growing company. Every day, we see these problems in growth-stage Nigerian businesses, but these five are the most consistent, and we fix each one.
- A COMPANY STRUCTURE THAT HAS OUTGROWN THE BUSINESS
Having outgrown the business, many Nigerian growing or growth-stage businesses are operating in a corporate structure designed for their founding context: Two equally invested co-founders, with no institutional investors, a simple CAC registration, and annual returns handled by a company secretary. That structure worked well from the start. This was unsuitable for Series A.
Companies face new investors with specific governance requirements, senior hires who need equity, new business lines with different regulatory requirements, potential international expansion etc. Here the original structure creates additional problems such as:
- A capitalization table is not compatible with institutional investment.
- Articles of association are not suitable for series A or B governance.
- Share classes that do not represent the economic reality of the company.
- No way to issue options or warrants to key employees.
A structural review of the articles of association, shareholder register, corporate governance framework, and if a new holding structure is required, the most tax-efficient way to reorganize is through the new Nigeria Tax Act 2025. More quickly and easily, this review can be done.
- CONTRACTS DESIGNED FOR A MUCH SMALLER OPERATION
Contracts designed for much smaller operations are signed by larger counterparties for larger values, but many of these businesses are still using the same contract templates they drafted (or downloaded from the internet when they started out). The exposure from inadequate commercial contracts grows as the business expands. Among the business-prone gaps that we observe in Nigerian growth-stage business contracts are:
- Uncovered liability provisions that give the business unlimited financial risk in a single contract.
- Intellectual property clauses, which assign the most valuable assets of the company to clients, suppliers, or contractors.
- Paying on long credit terms creates cash flow frictions – especially in contracts with large corporates or government entities.
Force majeure clauses that were last updated in 2019 are now standard and do not cover the full spectrum of disruptions that are now commonplace, making them unworkable in a real dispute.
