Armanino Blog

How to Avoid Post-Merger Stumbles

by David Roberts
July 13, 2017

Consolidation remains a hot topic in the legal industry. According to a report by legal consulting firm Altman Weil, 2016 was the fourth consecutive year that saw 80 or more law firm mergers or acquisitions. Industry expectations for 2017 are for increasing competition for acquisition targets as the market for desirable merger options shrinks. In short, you’ll need to work harder and smarter to get a good deal signed.   

But the work doesn’t stop there. In fact, the real effort is just getting started. In your daily business practice, the hard part comes before the deal is signed, then everyone congratulates each other and moves on. Not so with mergers. When you are combining two organizations, the tough work starts in earnest after the contract is executed.

The post-merger period is where the measurable gains and lasting success that come from expanding market share, geographic reach and service lines are either achieved or not. The larger the firms, the more difficult it is to join successfully. To keep an acquisition or merger from turning into a disappointment, or even a disaster, you need to pay attention to two critical aspects: change management and culture.         

Get the nuts and bolts of integration right
Change management guides how your combined firms address both strategic and tactical post-merger integration. These strategic aspects can include taking steps to realize greater economies of scale, maximize new revenue sources, and broaden the reach and market share of the firm. On the tactical side, you need to carefully plan and execute myriad aspects of the merger, including:      

  • Human resources: You’ll need to resolve differences in everything from leave policies and job roles to profit sharing. 
  • Technology: Another major task is determining which technology to use for the combined company and then converting operations to a standardized set of systems, including accounting, billing, payroll, records management, time and expense management, email and more.  
  • Operations: This bucket encompasses everything from processes and procedures, to facility upgrades and physical moves, to liability insurance. Your change management plan for operations will need to be a long checklist of items that you review and revise as needed.  
  • Marketing: Once you decide on the name of the merged firm, you need to address marketing issues such as signage, business cards and letterhead, websites, press communications and more. It’s also critical to spend time crafting the messages you want to send to your combined list of clients and the market in general.            

Appoint a chief integration officer
Merging two sizeable legal firms requires an air-tight integration plan that addresses all of the above and more, but a plan is not enough. You must also have someone to lead the effort. You need a chief integration officer.

He or she must be a senior executive from within the merged company, and here’s why. The chief integration officer absolutely needs to have the experience and insider knowledge to understand what it will take to win the hearts and minds of everyone impacted by the merger, because culture clash can be a deal breaker.   

Mergers are not routine, and many people have not experienced one in their careers. This sort of change is always a challenge, and it’s always emotional—even when it comes to objective, left-brain thinkers like lawyers.

That’s why change management in post-merger integration is about emotion.  You should really think about your chief integration officer as your chief culture integration officer.  The person you choose for the role must be prepared to soothe and smooth over the emotions involved in resolving the inevitable differences caused by the merger.        

It’s a tough job, but help is available
While the chief integration officer must be an insider, this does not mean that he or she has to go it alone. An outside advisor with law firm merger experience can be invaluable in helping you create a solid change management program, because they can provide practical insights and weigh in on best practices, such as those around reconciling conflicting human resources policies or consolidating multiple accounting systems. This will free up your change management leader to focus on making sure the human element of the merger gets the attention—and emotional support—needed for a successful integration.     

July 13, 2017

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