The seven deadly sins of law firm mergers
8 Mar 2013
The seven deadly sins, also known as the capital vices or cardinal sins is an idea that can be applied to the area of law firm mergers where one wrong move can have damaging consequences for a firm.
Lack of expertise
Many firms have an unstructured approach to identifying candidates, determining the viability of a merger, and ultimately, negotiating and executing it. As a result mergers and acquisitions can die of their own weight. Guidance using outside expertise can pay dividends for a successful merger.
Research is secondary
Too often businesses start on the road of a merger without properly understanding the viability of the venture. Early market research and a clear strategy will help iron out any stumbling blocks later on in the process. Most of these potential stumbling blocks can be dealt with rationally early on in the process.
Absence of a growth strategy
We are seeing more and more firms utilising the potential a merger or acquisition offers but there have been a significant number of mergers that have made little or no strategic sense. A successful merger can move a firm forward in terms of size and capability but it’s crucial that the business adopts a growth strategy along the way. Part of this strategy will be market research, maximising the chances of a successful fit.
Neglect talent retention
During M&A activity, developing talent in the business can take a back seat. This can be potentially damaging for a business where expertise and knowledge plays an important part. It’s important to develop the people in the business with the knowledge, expertise, initiative, imagination and collaborative skills to take the business onto the next level.
Failure to integrate
Post merger integration involves establishing a shared culture. Negotiation and open communication can assist in achieving a successful post merger business. A detailed integration place with tasks, responsibilities and timing is essential to ensure everyone is on the same page.
Inability to move forward and embrace change
Many firms understand the value of a merger but when it comes to the crunch, some managers find it difficult to embrace the new position and instead focus on the legacy firm and that way of working.
Ignoring red flags
Red flags are often signs to stop and re-evaluate. Don’t shut your eyes to red flags and they will always appear later on in the process. A big red flag may be the cultural gaps and will make it difficult to integrate people and departments – cultural incompatibility is certainly one red flag not to ignore.