Following a pandemic driven drop in the number of law firm mergers in 2020, based on what our practice is seeing, 2021 will see a substantial increase in combinations. It seems like scarcely a week passes without an announcement of another law firm merger.
We have been particularly interested in the pending Thompson Knight – Holland & Knight transaction.
This reported combination appears to be experiencing some unwanted attritionthat is fairly common in large mergers. This article reminded me of how important it is to ensure that key firm assets understand the strategic value and support the deal.
There are a number of solid strategic reasons for law firms to consider merging. In my opinion, three at the top of the list are:
- The addition of specific expertise and technical capabilities necessary to better serve existing or targeted clientele;
- Succession planning; and,
- Financial stabilization.
I have been encouraged by the fact that two of the recent mergers our firm was privileged to consult on were specifically driven by succession concerns. In each case, senior partners made the strategic and selfless decision to seek a culturally compatible merger partner in order to provide a platform of future opportunity for its younger lawyers.
Unfortunately, a significant percentage of mergers are driven solely by the misguided idea that getting bigger is better.
Why do I say “unfortunately” and “misguided” Isn’t growth a good thing?
Simply put — I believe the numbers-driven strategy is the root cause of a majority of failed merger initiatives. Getting bigger often only magnifies and compounds existing deficiencies.
If your law firm is considering a merger, what is driving the pursuit.