A marriage made in heaven – or hell?
With the increasing pressures placed on law firms from the economy, competition, tighter regulation and a general squeeze on profits, many firms are questioning how to move forward with their businesses.
Difficulties in realising value on exit, the high cost of run-off cover and a fall in interest from younger members of the legal profession to take on the risks of ownership have led to a marked increase in the consideration by solicitors of merging their firm with another. Is this a viable route? If so, how are we, as accountants and advisers to those legal firms, able to assist them through what is often a traumatic experience?
Smaller firms are feeling the pressure perhaps more than most. The attitude of the banks to lending often highlights a merger as a way of bolstering the financial position of the firm and achieving economies of scale to improve flagging profit margins. Key to all of this is having a plan – a strategy that not only satisfies the longer term objectives of the partners but also safeguards the future of the firm, as that is where the capital of value of the partners lies.