What makes a merger work?

A recent announcement touted the merger of two relatively large firms to make one larger firm of almost 800 lawyers. Why? One doesn’t know the real reason, the personal agenda of the moving players. But one can look at the outside and prognosticate the likely success of the merger. What are the characteristics that will help achieve success?

First, and foremost, is the culture. Do the firms think and act in a similar fashion? This is perhaps the most difficult characteristic to address because it’s subjective. And, in truth, sometimes different cultures can be blended, resulting in "new blood" being inserted into both firms creating a new, and revitalized "third" firm. But, a clear and conscious effort must be asserted. "Integration" is an overused word, but under-utilized activity in the merger field … without which there will be a collapse of the new entity. As said, it’s imperative that the leaders of both firms come together with an integration plan that is implemented with care and diligence.

Other factors can be more objective. Factors such as the differential in compensation levels and methodology, profitability and target clients are important when analyzing two firms. Another factor to consider is whether the rationale is to expand the services offered to existing clients or to enhance and make more effective existing services. Is this a sale of one firm to another? (Lawyers never speak in this language, so one must look at the economics to answer the question.) Or, is this really an amalgamation of two equal or nearly equal groups? The answer will determine the approach to be taken in putting the two together.

Mergers of larger service organizations are never easy … Ego always is a significant factor … and great effort is required.

Categorized in: Management