By Legal Futures Associate Acquira Professional Services
Not a week seems to go by without an announcement of another law firm merger or acquisition. The latest high-profile examples being Royds Withy King and Goodman Derrick, and Weightmans and RadcliffesLeBrasseur.
This is a crucial time for many law firms across the country as they develop their post-pandemic strategies, and research we have undertaken has shown that merger and acquisition (M&A) activity will form a significant part of their thinking.
Our in-depth research with 100 law firms of varying sizes conducted by IRN Research indicates that firms feel they need to move faster than organic growth allows. However, it also finds that they often have a dangerously ad hoc approach to identifying targets for M&A.
This confirms our anecdotal experience as an M&A broker and we find ourselves talking to firms of all sizes at the moment, with nothing and nobody off the table. Although it’s worth saying that it’s a case of acquire or be acquired – we haven’t seen a genuine merger of equals in the last year or more.
As our white paper based on the research explores, this is an eminently sensible move – growth by acquisition has a lot of benefits. It has its risks too, of course, and it remains a source of amazement to me how little due diligence some M&A involves, particularly around identifying suitable firms. This reflects how little experience most lawyers have of doing it – would they advise a client the same way?
Our research shows the market is extremely active – 47 of the 100 law firms we spoke to say they are considering M&A, nearly a quarter of whom (23%) are already in talks about a possible deal, while a further 57% are “actively” seeking one.
There is also a surprising level of interest in private equity investment – surprising because it may not be realistic. Aside from our research, we are aware of a continuous need to hire top legal professionals in these firms to support their growth. In many cases, there is increased demand for technical skills as opposed to those who secure additional clients. Here, it seems that the pace of growth has overtaken the capability to fully support new business.
Our white paper should give law firm leaders a lot to think about as they consider how to achieve growth within the context of their strategic goals and we at Acquira Professional Services stand ready to discuss and support you as best we can. To receive a copy of the white paper, Growth Agenda 2022: The New Era of Law Firm M&A, please click here.