Mergers with the Benefit of Hindsight.
Anne Harnetty: Brown Dog Books £14.99.
As the legal sector continues to anticipate a flurry of alliances, Peter Noyes examines the proposition that the strategy of mergers can profit from the lessons of hindsight.
It is often said that many things would have been better with the benefit of hindsight.
Anne Harnetty’s recently published book Mergers With The Benefit Of Hindsight will hopefully prove that saying true and assist firms who embark on a merger and acquisition strategy in the future.
The concept and great attraction of the book through the gift of hindsight is that it provides insight through quotes from managing partners, senior partners, and CEO’s and COO’s who have been previously fully involved in the merger and acquisition journey between 2012 and 2020. Therefore, it is what they have learnt, what they may have done differently that has such value.
It is this experience from over fifty mergers from people who have been there and done it wrapped around chapters from other experts in the legal sector who have penned five of the chapters that hopefully make this not just an easy read but one that it was it that is an important part of the toolkit for any firm embarking on the merger and acquisition journey.
It has been said for several years that the legal sector is due a merger and acquisition boom, now whether that will come from consolidators or more traditional marriages of firms remains to be seen. The reason for the merger is also key but all those aspects are covered in the book.
Whether for a firm the only way out of avoiding a painful professional indemnity run-off insurance payment is to find a merger partner or it is a neat geographical fit or an enhancement of services for the existing client base, the sensible advice is there to use.
This process should never be one that has left the last minute but one that is part of the firm’s strategy for the long-term. This should not be seen as a matter of weakness as it is surely the aim for any business for the continuation of its service and offering to its clients going forward.
With an increasingly challenging recruitment arena this brings even more into focus succession issues at practices. Another reason why it is beneficial for partners to identify talent and future successors at an early stage to hopefully facilitate their own smooth transition into retirement. Where this has not been achieved, another reason that the sector is so merger and acquisition hungry.
Recent deals I have been involved with both generated Goodwill payments, so do not believe this is not possible but on the flip side do not operate in a deluded state that your firm that has barely covered your own moderate drawings will be something that someone else values highly, or at all. I cover this aspect along with the fact that valuations at present do need to consider recent COVID spikes, especially around conveyancing.
Whilst it is recommended you keep all your advisers in the loop and it is best to get all the issues out of the way early, one contributor rightly or perhaps bluntly suggests “a pig wearing lipstick is still a pig” and that perhaps brings out one particular point that a merger should never be a vanity project for either side or for one dominant partner in a firm; sound reasoning and business case, understood by all involved is a must for the transaction to succeed. It needs a well thought out strategy behind it, a project team (internal and external) who can keep momentum and a collaborative approach on both sides to create something that is bigger than the sum of the parts.
What the book covers well also is what can stop integration once the merger has been completed. There are many reasons why “them and us” can remain and commentary around culture, communications, behaviour of partners and staff along with the strangely, sometimes, overlooked client considerations. There also great input on marketing and IT to enable you to plan and focus that successful integration achieving the aims and aspirations that often are simply straplines but with the benefit of hindsight they can be reality and this publication brings together those who have been there and done it for your benefit.
The Chapter “What did we learn” highlights key points that have come out of the research, so certainly a useful summary and, like most sensible business guides, a lot of common sense around strategies to bring into play. This Chapter picks out a few of these to keep at the top of your list before, during and after the merger process and a useful final checklist to end with that you can dip into throughout the process to benefit from hindsight.
Mergers with the benefit of hindsight by Anne Harnetty is available in both paperback and kindle versions from Amazon
Peter Noyce is a partner at Menzies LLP
This review first appeared in the Law Society Gazette on April 1. 2022.