Thursday, February 16, 2012

When Should A Small Practitioner Merge Into A Larger Firm?

Succession: Most smaller firms do not have a succession solution internally. For those firms, it is an obvious and important matter to secure your succession with an external firm.

Cross selling, growth. There are many niches out there and many smaller firms have clients that may be receptive to certain niches but lack the time, knowledge, capacity and, or licenses to deliver. Also larger firms may enable you to attract additional clients.

Back up, security. Many small practitioners fear the risks associated with short and long term disability, death, the desire to go away on a vacation and have someone watching the fort.

Thursday, February 2, 2012

5 Biggest Reasons Mergers Fail

1. Ego. Normally this is manifested in unwillingness on the part of the partners in both firms to adapt to the new way of doing things required to make a merger work.

2. Culture. While the larger firm’s culture usually primarily survives, adopting features of both firms’ cultures will normally lead to a better environment after the merger.

3. Change. Instituting change slowly wherever possible will lead to less impact on clients and staff and can help maximize the retention of both types of constituents. Mergers without high levels of staff and client retention often are not successful.

4. Inadequate capacity. In mergers where some partners or critical staff members may soon be leaving due to retirement or succession, or where there is planned staff attrition, professionals need to be replaced soon after the merger is effective. If the successor firm lacks the existing excess capacity to handle the new requirements, and fails to execute on its plan to acquire new resources, in most cases the deal will eventually fail or at least struggle.

5. Communication. Management teams that fail to fully communicate to the combined team the rationale for the transition plan, what is expected, and how to obtain help when it is needed may find people not executing the plan and resentment building.