Mergers for law firms: Making a merger happen
In the final installment of a series of blogs looking at mergers in the legal sector, Moore and Smalley’s head of professional practices, Karen Hain, explains how the merger process works and gives her top tips for legal mergers.
Now that you’ve gone through the process of preparing your law firm for a merger, you reach the crucial stage of actually making it happen.
Mergers in the legal sector tend to fall into one of three main merger types each with its own set of challenges.
Different types of legal merger
There are mergers where a small firm gets swallowed up by a bigger firm. This tends to involve the sale of the clients and the transfer of staff to the larger firm, with the partners in the smaller firm possibly leaving the merged practice, or perhaps working in a consultancy capacity to ensure a smooth transition.
Then there are what I would call true mergers which involve two or more firms of a similar size and strength coming together and taking a merged name. These are more difficult as they involve two distinct groups that must be integrated. Challenges here include how two different cultures or ways of working will come together as a successfully merged practice.
Then there are mergers between different types of practices, such as between a partnership and a limited company. This presents questions over what is the right type of structure for the two practices to merge into.
Karen Hain’s tips for legal mergers
While no two mergers are ever the same, they all share common traits and there are some key pieces of advice that will serve law firms well in most merger situations.
Here are some top tips for a successful merger:
1. You have to know in advance whether there is synergy between the merging firms. Identify shared values and goals at the outset of the process.
2. If there is no existing relationship between your firm and the merger target, consider asking a third party advisor to make the approach on your behalf. This will enable the matter to be handled sensitively and discreetly.
3. Identify potential sticking points early and have frank conversations at the beginning of the process. If some issues are going to be insurmountable then it’s best to walk away at the beginning than for the merger to fall at the final hurdle.
4. Appoint a project manager to oversee the merger. This will allow you to keep the momentum of the merger process going and allow fee earners to focus on servicing client work. Having a project manager may enable the initial due diligence to be conducted in house.
5. Similarly, set action points and deadlines for the due diligence process to stop it grinding to a halt.
6. Ensure any potential issues affecting the merger go in the heads of terms document. This will help when it come to discussing indemnities and guarantees.
7. Where possible, communicate effectively with staff members throughout the process to put people’s minds at ease and quash rumours.
8. Plan well in advance for what will happen when the merger becomes official. This will involve a quite intense period of aligning cultures and working practices.
For more information and advice on any of the matters raised in this blog, please contact me on 01772 821021 or firstname.lastname@example.org