Here are 5 tips when researching whether a merger or acquisition is right for your firm .
1 . Define the desired outcome
Contemplating a merger solely to grow your firm is not enough . Take the time to really define what you want to achieve by joining forces with another firm . Perhaps you want to expand practice areas in which you ’ re able to serve clients and you ’ re looking for a firm to partner with that specializes in litigation that you currently do not . Or , maybe you have such a heavy caseload that you need to add significant staff and back office operations in order to accommodate client needs . In that case , perhaps you ’ d reach out to firms that have similar expertise and a solid reputation . Law firm mergers or the acquisition of another firm can also act as a way to more quickly expand your geographic scope , enabling you to reach new markets via a firm with an established presence .
Whatever the case may be , you should spend substantial time outlining the goal of the merger and specify what type of synergies you will need in a partner firm to achieve your identified goals .
2 . Start at the top
Once you ’ ve established exactly what you hope to achieve , you can begin to determine if there ’ s another firm that ’ ll fit the bill for a strategic partner . It ’ s advisable to keep the beginning stages of the process relegated to the partners and leadership of the firms , while you evaluate how the other firm may and may not be a good fit .
Bringing your attorneys and staff into the process should be done carefully , so you can foster a cohesive atmosphere down the road once a match is officially made . Accordingly , company culture is a major component of combining teams so that ’ s a good place to start the conversations . When speaking to potential candidate firms , talk with the owners and partners about how they run their firms , what values they hold paramount and how that translates to their employees . Are they very much one unit working together , or do their attorneys operate in silos largely as individuals ? Do they place importance on work-life balance and is the staff generally content with the work environment ? If company cultures don ’ t line up , it ’ s unlikely a partnership will be successful in the long run . Be sure to have the tough conversations upfront , so as not to waste time on either firm ’ s end if it ’ s ultimately not going to be a good fit .
3 . Do your due diligence
Like any business transaction , due diligence is an integral component . You ’ ll need to evaluate a potential partner firm ’ s structure , business model , case portfolio , financials , operations , attorney compensation , and more . If your firm makes distributions differently than the other firm , you ’ ll need to hash out what method makes the most sense for the new firm after the merger or acquisition . Make sure each side knows what they are getting — transparency is key .
Look for conflicts early on in these discussions and address them from the start . If you run into an obstacle and aren ’ t able to come to a resolution , it may be a deal-breaker . Thus , it ’ s best to uncover these potential roadblocks earlier rather than later in the event that it may halt the new arrangement .
4 . Use the opportunity to start fresh
A merger or acquisition can be used as a springboard to establish best practices for the new firm . Ideally , you have two strong firms coming together or at least can value certain aspects of the other firm . Use this opportunity to take the best from each side and establish common protocols for moving forward . Perhaps one firm has mastered back office operations and you want to implement those processes that have already been proven . Maybe the other firm has an employee incentive program in place that energizes its staff to put their best foot forward . Draw from each firm ’ s strengths to set forth policies and procedures from the start to pave the way for a cohesive team , well before the deal is done .
5 . Stay vigilant post-transaction
The challenges don ’ t end once the transaction is finalized . In fact , that ’ s when the hard work begins . Use the best practices you ’ ve developed to immediately portray the new firm as a cohesive unit operating as one team . Each side will come with their opinions and emotions about the deal , and you want to abate any resistance whenever possible . Fostering a sense of collaboration that motivates everyone to work toward building this new and even better entity will be imperative .
Be sure to watch for warning signs that may indicate things are falling through the cracks , such as weakening financial performance , employee turnover or loss of clients . Though these things may occur on some level , as change tends to bring about more change , anything beyond what has been deemed as “ expected ” should be carefully monitored as it may indicate a larger problem . Your clients can also provide a good barometer of how well the transition is going — if they feel that the new firm is equally or even more effectively meeting their needs , things are likely on the right track .
If your practice has business goals you feel can ’ t be met as an individual firm , it may be wise to research the possibility of a merger or acquisition . Proper planning and lengthy discussions with potential candidates are critical to both parties ’ success . Taking the time to find the best match for your firm will help ensure future growth toward building a new and better firm together .
The Trial Lawyer x 21