A Practical M&A Intergration Approach for Law Firms
Charting the path to sustainable, profitable growth is not easy. From strategic analysis to execution, Alvarez & Marsal has the experience and expertise to help law firms meet the challenges of enabling future growth.
How Do Law Firms Best Achieve Growth?
In an era where growth defines success, law firms constantly face the pressure to sustain and accelerate growth.
For firms that don't have the time to grow organically or through lateral hires, a strong alternative method to grow quickly is through combination with another firm. Consolidation within the legal industry through mergers and acquisitions (M&A) can rapidly create economies of scale, expand practice group capabilities and broaden geographic reach. Firms aspiring to accelerate growth should evaluate M&A as a potential big-bet strategy.
While choosing the right path can be difficult, the real challenge lies in execution. Realizing the full benefit of a M&A transaction requires having a practical approach that can mitigate execution complexities.
How Does A&M's Integration Framework Work?
A&M's integration framework addresses the biggest concerns of the M&A process, including how to prepare, effectively execute and achieve and exceed expected desired outcomes.
With substantial expertise in addressing M&A challenges to deliver outcomes, Alvarez & Marsal is a trusted partner for law firm leaders. Our leadership, seasoned experience, swift execution and pragmatic solutions are tailored to effectively manage the intricacy, urgency and financial objectives of any transaction.
Pre-Close
How do you prepare?
Determine the Basis of the Deal: To set the foundation for integration, ensure firm leadership has a unified understanding of the projected benefits of the deal, to provide clarity of purpose. Assess the capabilities of each firm to establish a clear starting point and to identify gaps.
Assess Practice Capabilities and Global Reach: The success of the merger relies on the expertise of the people that comprise both firms. Evaluate leadership's capabilities against firm needs, identify potential talent risks to develop a strategy to retain key staff and compare compensation and pay philosophy. Clearly articulating the value proposition and gaining consensus amongst partners is vital to deal execution.
Set Common Organizational Goals: Successful integration requires a unified culture and an optimized organizational structure. Unify culture by identifying areas of divergence between the two firms and building a culture plan that includes decision-making frameworks. Determine the initial organizational structure and capabilities based on the target operating model.
Determine Change Approach and Develop Plans: Identify change impacts and affected stakeholders and rationalize the roles and responsibilities between the firms. Keep a clear, open line of communication throughout the merger while ensuring sensitive discussions remain private until the right time.
Set up Governance Structure: Governance is critical to running a successful integration. Appoint Integration Management Office (IMO) leadership and define integration objectives, milestones and success metrics. Address any conflicts that arise and identify the necessary resolution.
Evaluate Technology and Plan for Integration: Start the integration of technology by assessing technology capabilities against the needs of the newly combined firm. Use this baseline to determine target tech architecture, immediate budgetary impact and the strategy for online presence.
How A&M Can Help:
We can be your Integration Management Office (IMO); we will partner with you to create the integration roadmap (including organization design), define transition services, identify synergies, understand change impacts and execute Day One.
First 100 Days
How do you effectively execute?
Drive Deal Vision Through Communication and Behavior Alignment: Influential partners in both firms need to support the merger and understand the benefits and opportunities it presents. Engage them first to enable leadership to role model deal vision and desired firm culture, then launch culture, communications and change plans to staff.
Frame Changes and Enable Stakeholder Transitions: Targeted change management ensures positive client, associate, lawyer and staff experiences. Identify critical staff and implement talent retention tactics to align their interests. Communications should address concerns, manage expectations and facilitate a smooth transition for all stakeholders.
Execute New Organization Structure: Optimizing the organization structure is critical to realizing and sustaining M&A synergies. Define clear roles, responsibilities and required competencies for the combined firm. Outline and communicate the target operating model and ways of working.
Monitor Progress and Effectiveness: Executing the integration requires constant monitoring: identify and measure adoption key performance indicators (KPIs) (e.g., milestone tracking, employee turnover, service disruptions, etc.) and implement a feedback mechanism.
Launch New Organization: Launch and communicate the new organization structure, ensure all external stakeholders are informed about closing and what this means for them and conduct firm management roadshows to unify the new firm.
Evolve Governance: Transition the IMO and post-migration activities to the business and functional owners and re-deploy firm integration resources to their functions. Roll the synergy and efficiency targets into the business area/functional budgets.
Execute Technology Integration: Combine networks of the merged firms, execute a firmwide technology support model to mitigate risks of business disruptions and rationalize the portfolio of projects. As you execute, ensure access to data to support practice area work efforts. Looking forward, build applications, infrastructure and cyber roadmaps for rationalization/migration.
How A&M Can Help:
In the first 100 days, we can execute the integration plan by launching and managing integration efforts, monitoring and reporting on progress, taking actions to manage risk, facilitating the communications plan and managing change.
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Originally Published 26 March 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
