Successful Law Firm Merging & Acquiring
Over the past decade, law firm mergers have steadily increased. The largest number of mergers happened in 2018, while 2017 was close behind with 102(click here for access to reports by Altman Weil). Similar to the sale or purchase of a law firm, there are many nuances to consider when contemplating a merger. Thorough due diligence of finances, firm strengths and compatibility are important, yes, but there is a great deal of self-examination and discussion that must take place prior to any decision to make a lasting commitment to a law firm merger.
In the end, the assessment can be worth it. According to Jaliz Maldanado, author of The National Law Review recent article Mergers & Acquisitions: How to Successfully Complete a Law Firm Merger (click here for the article), “the well-executed law firm merger or law firm acquisition can reap untold benefits for the organizations involved.” Most experts agree, and common sense dictates, a law firm merger should only be performed when it actually benefits the affected firms. The American Bar Association saying a merger “should serve a broader business goal.” If the goal is expansion into different markets, bringing on a new practice area, or combined cost savings a merger could very well be the proper course of action but if it is mutually beneficial.
To commence merger consideration, partners at each firm need to answer the question of why a merger would be valuable. Maldanado writes, “what tactical imperative would be accomplished by merging or acquiring that could not be executed properly or efficiently (or at all) without participating in the merger in the first place?” In the end, a financial or strategic incentive must be present for a merger or an acquisition to exist. Ultimately, the most significant things to reflect on Maldonado says are “the incentives for the respective firms, the structural and financial underpinnings and goals of each, and the necessary cultural implantation that take place after the merger is completed.”
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