The UK publication Legal Week posits that mergers are becoming
an endangered species because, among other things:
- cultural considerations are seen as increasingly central to differentiating
a firm from its competitors, and cultures are inherently difficult
to merge; - it takes two years, optimistically, to integrate the "back end" of
finance, IT, HR, document management, etc., as well as the "front end"
of practice group leadership and office consolidation, which means
two years with an unprofitable internal focus; and - by analogy to the corporate world where an estimated 70% of mergers
destroy rather than create shareholder value, managing partners have
reason to be skeptical on general principles.
So how does one grow? Pick up laterals!
But if this strategy becomes predominant, in short order laterals will
recognize their market value and their price-tag will tend to approach
the net present value of their earning stream—in other words, laterals
will internally capture the value of their acquisition, with little left
over for the new firm. You’ll recall we saw this in the ’80’s;
but that was so, like, yesterday.
