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Succession and Merger

About the client
North West Firm, 4 Partners, 40 staff, full service firm with areas for development looking for solutions to successions issues.
The Challenge
To successfully plan the succession process with two partners approaching retirement.
Help broker a merger
All parties satisfied with the deal.

This client was grappling with issues of succession and the best route forward for the partners who stayed with the firm, and we helped them to think through their options before brokering a successful merger with an ideal partner firm.

The challenge

This was a particularly long-established and well-known firm operating from a single office in the North of England, with five partners – two of whom were approaching retirement when we started working with them – and around 40 staff. With a mix of work including both commercial and residential property, family, litigation and a very well-regarded Private Client team, they had revenues of under £2m but profits approximately 25% below the benchmark and borrowings equivalent to two months’ turnover.

The major challenges facing the partners were strategic. Succession was a key issue, with a number of recent retirements and two partners approaching retirement age, and the question was whether to remain independent. Irrespective of the chosen route, profitability would need to improve in order to make the firm attractive to incoming partners or to achieve a merger on advantageous terms.

The firm therefore wanted to identify a clear direction of travel, and to develop a roadmap to enable them to deliver their chosen strategy. Having found us online, one of the partners made contact and, following an initial consultation, we set about analysing the data and interviewing key staff. We then facilitated a partner retreat to consider the available options, the outcome of which was the decision to maintain their independence for a few more years and seek additional potential partners, whilst strengthening their financial position.

Our analysis showed that they were excellent lawyers in all their main disciplines, but that confidence was lacking and business development and financial management had suffered as a result. We therefore designed and delivered a training, coaching and mentoring programme to improve the quality and quantity of work intake for all fee earners, and introduced better financial and management information to help turn effort into recorded time and Work in Progress into cash.

With each partner taking a specific role in the improvement programme, and with us acting as project managers and providing strategic direction, we helped them significantly to improve business development and tighten up financial management – while recruiting some very capable new fee earning staff. Unfortunately, owing to circumstances beyond the partners’ control, some of the existing talent left the firm.

This approach was adopted over the course of a year, resulting in better turnover, better profits and reduced borrowings, but with no net increase in fee earner numbers, the partners decided to entertain the possibility of finding a merger partner. Discussions brokered by us with two candidate firms showed potential but were ultimately deemed unsuitable – and this was the point at which we introduced another of our larger, more ambitious clients, helping negotiations and acting as a crucial ‘honest broker’. The outcome was a very successful merger, and the combined firm has gone from strength to strength since.

Over the course of three years, we acted as financial managers, trainers, coaches, mentors and business development advisers, designing and implementing performance improvements and supporting discussions that ultimately led to a merger on optimum terms for our client.


Our Impact

Having helped broker a successful merger, our involvement allowed all of the partners to achieve a satisfactory return on their capital accounts and, for those partners who were nearing retirement, to crystallise their plans for the future. With only one exception, all other partners and key fee earners are now in a better position with greater security and, indeed, we have never known a more satisfied set of clients.


Lessons Learned

What became clear throughout this lengthy but rewarding process was that, irrespective of objectives – including independence or merger, it is absolutely vital to be on a sound financial and management footing to be an attractive proposition – either to new partners or to potential merger partners.

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