The industry standard in tracking law firm mergers, Altman Weil’s Mergerline, has had this to say about activity in the wake of the Global Financial Reset (emphasis mine):
- 2011: “There were 60 law firm mergers and acquisitions announced in the United States in 2011. The annual total was up 54% from 2010 and at the highest level since 2008. … “The momentum for law firm mergers built throughout 2011 and the year ended very strongly,” said Altman Weil principal Ward Bower. “We think the trend toward larger deals will continue and the pace of mergers could accelerate in 2012.”
- 2012: “After a year largely characterized by small strategic acquisitions, the fourth quarter of 2012 saw four large, international law firm combinations announced. … “There were 19 new law firm combinations announced in the fourth quarter, including the four major cross-border deals” said Altman Weil principal Ward Bower. “We’ve now seen nine straight quarters of steady deal-making since the legal industry shook off the worst effects of the recession.”
- 2013: “There were 88 law firm mergers and acquisitions announced in the United States in 2013. The total is up 47% from 2012, and is the highest number of law firm combinations recorded in the seven years that Altman Weil MergerLine has been compiling data.”
- 2014: “There were 82 law firm combinations announced in the United States in 2014. Although down 7% from last year’s record-setting mark of 88, this is the second highest annual total recorded in the eight years MergerLine has been compiling data.”
- Q1 of 2015: There were 29 law firm mergers and acquisitions announced in the United States in the first quarter of 2015. [This is an annualized pace of 116 mergers, which would be a 32% increase over the all-time record—Bruce.] The quarter’s announcements included the largest-ever law firm combination.”
Let’s look at this through the eyes of Wall Street, shall we?
Understandably, your reaction might be, “Bull rampage! What a strong market!”
Not so fast. Let us turn to the redoubtable Andrew Ross Sorkin, founder of the New York Times’ “DealBook” column, who wrote the other day in Mergers Might not Signal Optimism:
A boom in mergers and acquisitions usually signals confidence in the economy, and recent headline-grabbing deals evoke images of chief executives and directors cheering about their business prospects and overall growth.
So far this year, deal-making activity in the United States has topped $775.8 billion, up nearly 50 percent compared with figures in the period last year, just behind deal volume in 2007, according to Thomson Reuters. A steady parade of multibillion-dollar deals have been announced…
But in contrast to previous merger booms, this recent spate of deals shouldn’t necessarily be considered a barometer of a healthy economy. If anything, it might be an indicator of the troubles that lie beneath …. In many cases, companies are pursuing takeovers not because they are excited about a growing economy, but because their own growth prospects have waned.
The numbers tell the story: Revenue growth at United States companies has declined every year for the last five years, to about 5 percent now from 11.2 percent in 2010, according to a report by Citigroup. The bank put the problem bluntly: “Many companies will therefore require a source of inorganic growth to meet analyst revenue projections.”
If you can’t build it, then maybe you can buy it.