A large part of the reason for merger discussions taking so long or falling through is that, very often, the partners in the firm being approached have not had the discussion amongst themselves first about how they should respond in the event of such an approach. So then, when an approach comes along “out of the blue” (when it shouldn’t take any decent firm by surprise these days), only then do the partners start to think through the issues and possibilities seriously … and that takes time. There will usually be some serious conflicting interests to address. How much better it would be if partners were equipped to deal with an approach from another firm in advance – getting your partners into the strongest possible negotiating position and minimising the amount of time needed/wasted in the early important early stages of discussions where the agenda for further discussion is set. At this stage, partners prepared to consider the advances of another firm have to try to present a coherent position in these discussions. This is a view shared by Managing partners and CEO’s in law firms that are actively going out to find merger partners now and it’s a problem for them. The inability of firms to respond effectively to their approach can mean that – by the time the partners have found the time to meet and discuss options seriously – the opportunity has already gone to another firm, enthusiasm has waned or the active party has set down ground rules that have become inflexible. A question for partners:
Would it strengthen your position in discussions with other firms if you could clearly identify your objectives and negotiating position early on?
If you can, you are likely to be able to participate more actively, by establishing more of your ground rules, priority topics and boundaries that enable you to define and protect your position; driving the outcome more in your direction, rather than allow it to drift towards the more active firm. Interestingly, firms that don’t have strong leaders and sound management are most likely to be “acquisition” targets than “merger” targets because that is where there is most potential for a merged practice to capitalise on untapped opportunities. These are also the partners least likely to prepare themselves for these discussions – so it’s a double whammy!