FOCUS FEATURE


THE LEGAL PROFESSION


‘Given the risks involved, a merger should always be approached with caution’


For a start, reputations can be enhanced. When Chamber member Knights bought Darbys in 2015, it propelled the company into the public eye as a top 100 firm. At the time, Knights’ CEO David Beech said: “It’s our first


major stepping stone, it puts us on the radar and by acquiring another business clearly demonstrate what we can do with our platform.” Similarly, at the time of writing, Chamber member


Browne Jacobson looks set to break into the UK top 50 with the proposed merger with insurance law firm Beale & Company. The combined firm would have offices in eight cities and a workforce of more than 1,000 staff. Specific benefits can include, but are not limited to,


broadening expertise and specialisms, increasing market share, entering new geographic territories or consolidating the areas a company already operates in and utilising new connections, leads and clients that can inevitably come from such deals. Ultimately, the raison d'être of any merger will be to put the acquiring – if applicable – firm in an enhanced, stronger position to compete in what can often be a congested, challenging and highly competitive legal market. But what of the pitfalls? It’s clear that the rationale for a


merger must be crystal clear from the outset, rather than the view offered earlier that, in some cases, mergers can be the result of simply wishing to come to the party, so to speak. In an article for the Law Society Gazette, Rachel Rothwell


suggests that: “Given the risks involved, a merger should always be approached with caution. According to the experts, the biggest trap is to regard the merger as an end in itself. Rather, it needs to be a way of achieving something specific: to dominate part of a market, to grow geographically, or to develop capability in certain sectors, for example.” The need for due diligence and a clear plan, as well ensuring the right kind of fit, is a view shared by David Williams, who oversaw Geldards’ merger with Robinsons in 2014. He said: “You can take your eye off the ball. You can spend a lot more time worrying about being acquired than carrying on with the business, which can damage the business and similarly to an extent the acquirer, which is why we did it in a more digestible way. “We researched the market really hard. We wanted to


continue broadly as we were but when opportunities came along, such as Robinsons whereby the managing partners wanted to step back from management, it was a very comfortable thing to bring their practice into ours and we could absorb it without changing our culture.” It’s the last part of that particular quote that is perhaps


the most revealing. While the reasons for merging can vary depending on a specific firm’s circumstance, a commonly recurring theme seems to revolve around the notion of culture, values and ethos and the ability, or inability, to create a workable synergy between two organisations. Deloitte’s Leading through transition: Perspectives on the


people side of M&A report expands on this by stating that executives pursue mergers, acquisitions, and joint ventures as a means to create value, but the business world is littered with integrated companies that have lost value


36 business network April 2017


The culture – and compatibility – of the firms involved can be crucial to the success of a merger


for shareholders. So what forces are powerful enough to counteract the value-creating energy of economies of scale or global market presence? The report states that culture has emerged as one of the dominant barriers to effective integration – in one study, culture was found to be the cause of 30% of failed integrations. It is culture that, potentially, can be the difference


between a merge between law firms being hugely successful or the complete opposite. Time and again, CEOs or spokespeople involved in


merged or acquiring firms speak of a joined cultural ethos and it is this, alongside commercial reasons, that seems to be the common denominator in determining whether such deals are ultimately fruitful and successful short-, mid- and long-term. It’s a view epitomised by Nelsons Solicitors’ Chief


Executive Tim Hastings when speaking of Nelsons’ acquiring of Moody and Woolley back in 2015. He said: “Both practices have a broad base of


commercial and private clients, a similar ethos and strong reputation among the East Midlands business community. “Moody and Woolley is a Derby firm which has a long


history and a great reputation. It is an owner-managed firm with a broad client base and we felt it was just the right practice for us to join forces with.” So it’s clear that in an ever-changing and diversified


world where the ability to adapt and evolve can be the difference between success and failure, there’s a definite place in the legal profession for mergers and acquisitions that can be a win-win for everybody involved. But it’s also clear that the conditions of such deals and,


more specifically, the compatibility of cultures, are of fundamental importance if they are to be successful.


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