Title: Merging law firms
1- Merging law firms the essentials for
- success
- Peter Scott
- Peter Scott Consulting
- www.peterscottconsult.co.uk
-
PETER SCOTT CONSULTING
2The scope of todays session
- Selecting a merger partner
- Negotiating a merger
- Dealing with potential deal-breakers
- Due diligence
- Post-merger integration
3The merger process needs to be managed
4The steps to merger
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5Merge for the right reasons
- Merger is not a strategy it is a means to an
end to gain competitive advantage - Merger can help build RESOURCE to enable a firm
to provide its clients with what they want
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6Selecting a merger partner
- Can you trust your market knowledge?
- Complement existing strengths, or fill the gaps?
- Using other advisers
- Geographical issues
- Bigger / smaller, richer / poorer
- Culture?
7Develop a vision
- Before you approach your target
- Look beyond what each firm now represents and
consider what the two firms together could build - To excite and enthuse both sets of partners
- The leaders of both firms need to be ad idem on
the vision
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8Merger partner criteria
- Culture?
- A business fit?
- A financial case?
- The Wow factor how will clients react?
- Others?
9Ensure CULTURES are compatible
- Compatible not necessarily the same the laws
of magnetism! - Are we like them?
- Do we have the same work ethos?
- Can we see ourselves working well together?
- Do we like them?
- If not walk away
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10Develop a strong business case
- Merger is not a strategy it is a means to an
end - Develop a tested business case
- - will it be good for clients?
- - will it have the wow factor?
- Will merger help you win more and better quality
work from existing clients and new work from
potential clients, that neither legacy firm could
hope to win individually?
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11Develop a strong financial case
- A merger
- - with a strong business case
- - if well implemented
- - should achieve greater profitability
- But inevitable disruption of merger will mean
even greater financial management is required - Carry out a financial evaluation covering first
2 years based on realistic and prudent
assumptions - NB do not believe your own hype!
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12Negotiating a merger
- Understanding the process
- Selecting your negotiating team
- The extent to which other partners should be
involved - Secrecy and confidentiality agreements
- Timescales and deadlines
- Negotiating styles and tactics
13Communicate, communicate, communicate
- Internally
- - What will it mean for me?
- Externally
- - Will the market place give our merger the
thumbs up? - Ideally, use external professional advice
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14Dealing with potential deal breakers
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15Potential deal breakers
- Partners
- Name
- Goodwill
- Profit sharing
- Capital
- Management positions
- Others?
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16Partners
- Both sides to ask themselves and the other
- side
- How many of your equity partners are
- you going to bring into the merged firm?
- (i.e. how many of your partners should really be
equity partners?)
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17Partners
- Managing their
- - insecurities
- - ambitions
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18Name
- The goodwill of your firm is likely to
- reside in the abilities and reputation of
- your partners as a group, rather than in
- your firms name.
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19Goodwill
- If goodwill exists then someone will most
- likely have to bear the pain of writing off
- goodwill as the price of achieving the merger
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20Profit sharing
- An opportunity to make a new start
- Can reflect different cultures
- May need a transition to a different system
- A part of managing future performance
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21Capital
- What will be the working capital requirement of
the new firm? - How is this to be provided?
22Management positions
- How is the new firm to be managed?
- Managing the ambitions of partners
- The leaders of each need to be ad idem
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23Due diligence
- Use of advisers
- The need for a high level financial evaluation
- Financial assets and liabilities
- Turnover and profitability
- People
- Premises
24Post-merger implementation
- The beginning not the end
- Sweating the assets making 2 2 5
- Identifying strengths of the new organisation
- How is the firm to be managed?
- - identifying a management structure to meet
the needs of the new firm - - Selecting a management team
- How to manage performance in the new firm?
25Management and implementation
- Learning from each other
- How can we incorporate the best of our respective
firms into the new firm? - How are we going to manage performance in the new
firm? - How are we going to change things?
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26Management and implementation
- The hard work begins once the merger agreement is
signed! - Management and implementation are key to success
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27Management and implementation
- Do we have a MANAGEMENT TEAM
- capable of successfully taking forward our
- new firm to achieve our vision?
- Do we have the required skills?
- Do we have the leadership required?
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28Management and implementation
- Assemble the best possible TEAMS to manage
integration - of the two firms and longer term management
- - to manage groups / offices / projects
- - to manage
- - finance
- - HR
- - marketing
- - IT
- - facilities
- - other functions
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29The merger process needs to be managed
30Communicate, communicate, communicate
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31- Mergers can deliver their promises if those
involved never lose sight of the real objective
to build a more competitive and profitable firm
32PETER SCOTT CONSULTING