Any of the recent stories on law firm mergers can be summarized as “firm X seeks merger in wake of partner exodus.”
As anyone can tell you, bargaining from a position of weakness is not a good strategy. Too often mergers are seen as recourse for a failing firm and look more like acts of desperation than of business strategy.
If you are a strong firm, you may be a target for suitors seeking a merge. This is a great opportunity to expand your practice. The trick is to only merge if the suitor’s business is complementary to yours. You don’t want to buy something just because it’s cheap. Like the snake that dies choking on a meal it couldn’t swallow, improper selection of a merge partner can lead to the demise of your firm.
Not all suitors in mergers are failing firms looking for a way out. Some are profitable concerns looking to grow business through acquisition or merger. A firm may choose to merge with a competitor to increase its market share. Firms with complementary practice areas may merge to provide more complete client services. A San Francisco firm may choose to merge with a New York firm to increase its reach.
In addition to the business considerations, the cultures and philosophies of the separate entities must be compatible for a combination to be successful.
With any acquisition or merger, it’s imperative that proper planning and due diligence happen before discussions commence. Too often, firms enter into discussions with little or no strategy. These discussions often continue for months and years without progress and, in some cases, have disastrous consequences.
Whatever your reasons for contemplating a merge, having the outside expertise of someone who’s been there before is crucial. Nancy Grimes, of Grimes Legal, which has initiated, managed and directed over 24 major mergers in the past decade, says “Experts would argue that you lack an “objective and clear” distilled analysis of your company because your circumstances are too close and you are emotionally invested one way or the other.”
Every cloud has a silver lining, and the decrease in revenues means there will be some great opportunities for acquisition and merger!