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By Kevin Wheeler
The level of merger activity in the legal market has reached fever pitch, with barely a week going by without a new law firm pairing announcing (or having leaked) that they are in merger discussions. In fact, recent research by Smith & Williamson reveals that 29% of the UK Top 100 expects to merge with another firm in the year ahead.
Increased competition in the legal market is undoubtedly behind this consolidation. Firms see a merger as the opportunity to “bulk up” and gain greater clout in the market, as well as to boost profits by reducing duplicated costs across the newly combined firm. Building a global network capable of servicing clients with international needs is also a strong driver of current merger activity in our sector.
However, mergers are not easy to pull off and firms need to be wary. So much time can be spent focusing on the internal issues – both pre- and post-merger – that the firm takes its eye off the ball and loses its way in the market, with both clients and partners departing in the process.
In fact, so fraught with difficulties is a merger that the Smith & Williamson research reveals that more than half (56%) of current merger discussions between law firms are ending in failure, with a third spending in excess of three months in negotiations before the decision to halt talks is reached. Add to this the well-established research by the likes of McKinsey and KPMG, which shows that in excess of two-thirds of all mergers fail to produce the hoped-for benefits, and you can see that law firm management teams need to think long and hard before contemplating a merger.
So, what should they be thinking about?
Increased market opportunities
First and foremost, firms should be using a merger to increase their strengths in key markets. Anything that delivers added value to clients and helps to d
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Kevin Wheeler has been advising professional services firms on all
aspects of marketing and business development for nearly 30 years. As a
consultant he helps firms to manage and grow their key clients as well
as to win new ones. As a certified coach with WABC he works with
partners and those approaching partnership to improve their BD skills.
0330 161 1234