This client is a medium-sized firm, based in a large regional city centre, with around twenty partners. We had been working together since mid-2009 to help them reduce their overdraft, smooth cash flow and improve all-round financial management. They have a proactive, business-savvy management team and their financial management had certainly not been bad by the industry's standards. However, external events had impacted heavily upon the firm and together we were able to get them back on track financially.
Seizing Opportunity: Conducting a Law Firm Merger
Having succeeded (with our help) in getting themselves on a stable footing, and with the bank now on side, the firm's management was in a strong position to capitalise on opportunities to cement their position in the market via merger and acquisition.
With two suitable candidates identified, we were enlisted to carry out a financial review of the target firms. We focused specifically on:
- Analysis of the accounts information provided by the target law firms
- Interviews with the partners of the candidate firms to assess compatibility, both in terms of the commercial business, and the likelihood of integration into a successful partnership
- Evaluation of the prospects of commercial success, both for the candidate firms, and for the combined entity
Reporting to the Law Firm Management Team
We then presented our findings to the firm's management, and subsequently to a meeting of the full partnership. Our conclusion was that both candidates one technically for merger, the other for acquisition, should integrate well, and that the new law firm would have strong prospects for commercial success.
Naturally, there was some debate within the partnership. However, our recommendations were on the whole positively received, and the next step (which had been tentatively explored up to this point) was to secure funding for the venture.
Reporting to the Law Firm's Bank
We prepared a detailed report for the firm's bank, with whom we had been in regular communication throughout the review process. This covered all aspects of the candidate firms' financial management including cash flow, profit and loss, and balance sheet as well as our assessment of the commercial prospects for the new firm.
On the basis of this report, the bank approved the necessary funding for the venture to go ahead.
A Profitable New Law Firm - A Successful Partnership
The merger went ahead earlier this year and, inevitable teething problems aside, has been a resounding success. We were retained to help with post-merger integration across the firm, but most specifically with the integration of the accounts departments.
Coordinating the various functions, systems and processes of the new accounts department has been no simple task. However, together we have succeeded in getting all involved to be working from the same page (and the same IT system!).
The new firm has continued to go from strength to strength, and is forging a formidable position in their market.