Finding the Perfect Firm for a Merger

So you’ve decided you want to find a merger partner. The trouble is there are a lot of prejudices out there and a good deal of misinformation. So you need to adopt a rigorous approach to data-gathering on the potential candidates.

Here’s the checklist I used for what is considered today to be one of the most successful law firm mergers.

With the target firms across the top of the matrix, I obtained the following data, most of which was easily available online, either from legal directories or other sources:

Size (from legal directories)

  • No of partners
  • No of equity partners
  • No of fee earners
  • Total staff
  • Leverage (fee earners divided by equity partners)

Geographical spread (firm websites)

  • Locations of offices
  • Locations of affiliated offices
  • Networks

Financial performance

  • Gross fees (published)
  • Net profits (published)
  • Profits per equity partner (calculated)
  • Fees per fee earner (calculated)

Quality of practice areas (rankings in directories and any notable specialisms)

  • Finance/PE
  • Corporate
  • Disputes
  • Real Estate

Notable clients (from directories and media mentions)

Culture (assessed from early discussions)

  • Values
  • Strategy
  • Style of management
  • Partner remuneration
  • Partner appraisal system
  • HR policies
  • IT capability

Once all the data is gathered and verified, you then need to see which of the firms best meets your strategy. The firm we merged with wasn’t on most people’s radar at the start of the process – and the merger worked out really well.

But beware of culture clashes. There will be differences. But the merger will work if there is a deep respect for such differences. Some firms are better farmers. Others are better hunters. Most successful firms need both.

Beware though! Most mergers fail to deliver on expectations. Here’s why…

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