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Merging Professional Partnerships the essentials to success Peter Scott Peter Scott Consulting

Merging Professional Partnerships the essentials to success Peter Scott Peter Scott Consulting. Putting mergers into context. A fragmented profession Legal Services Act implications Client needs are changing Greater regulation and compliance Greater need for resource

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Merging Professional Partnerships the essentials to success Peter Scott Peter Scott Consulting

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  1. Merging Professional Partnerships • the essentials to success Peter Scott Peter Scott Consulting PETER SCOTT CONSULTING

  2. Putting mergers into context • A fragmented profession • Legal Services Act implications • Client needs are changing • Greater regulation and compliance • Greater need for resource • A need to become more competitive PETER SCOTT CONSULTING

  3. The essentials to success • Planning and negotiating mergers • Dealing with potential deal breakers • Financial considerations • Management and implementation issues PETER SCOTT CONSULTING

  4. Planning and negotiating mergers PETER SCOTT CONSULTING

  5. Merge for the right reasons • Merger is not a strategy – it is a means to an end – to gain competitive advantage • Merger can help build RESOURCE – to enable a firm to provide its clients with what they want • Firms need to ask themselves: “Will we be able to achieve our objectives on our own” If not, then merger may need to be considered PETER SCOTT CONSULTING

  6. Develop a vision • Before you approach your target • How to choose your target • Look beyond what each firm now represents and consider what the two firms together could build • To excite and enthuse both sets of partners • The leaders of both firms need to be ‘ad idem’ on the vision • Choose your negotiating team carefully PETER SCOTT CONSULTING

  7. Ensure CULTURES are compatible • Compatible – not necessarily the same – the laws of magnetism! • Are we like them? • Do we have the same work ethos? • Can we see ourselves working well together? • Do we like them? If not – walk away PETER SCOTT CONSULTING

  8. Develop a strong strategic business case • Merger is not a strategy – it is a means to an end • Develop a tested business case - will it be good for clients? - will it have the ‘wow’ factor? • Will merger help you win and service more and better quality work from existing clients and new work from potential clients, that neither legacy firm could hope to win individually? • Will merger help you to achieve your ambitions? PETER SCOTT CONSULTING

  9. Develop a strong financial case • A merger - with a strong business case - if well implemented - should achieve greater profitability • But – inevitable disruption of merger will mean even greater financial management is required • Carry out a financial evaluation covering first [2] years based on realistic and prudent assumptions NB – do not believe your own hype! PETER SCOTT CONSULTING

  10. Dealing with potential ‘deal breakers’ PETER SCOTT CONSULTING

  11. Potential ‘deal breakers’ • Partners • Name • Goodwill • Profit sharing • Management positions • Debt • Others? PETER SCOTT CONSULTING

  12. Partners How many of your equity partners are you going to bring into the merged firm? PETER SCOTT CONSULTING

  13. Name The goodwill of your firm is likely to reside in the abilities and reputation of your partners as a group, rather than in your firm’s name. PETER SCOTT CONSULTING

  14. Goodwill Someone will most likely have to bear the pain of writing off goodwill as the price of achieving the merger PETER SCOTT CONSULTING

  15. Profit sharing • An opportunity to make a new start • Can reflect different ‘cultures’ • May need a transition to a different system PETER SCOTT CONSULTING

  16. Management positions • Managing the ambitions of partners • The leaders of each need to be ‘ad idem’ PETER SCOTT CONSULTING

  17. Management and implementation PETER SCOTT CONSULTING

  18. Management and implementation • The hard work begins once the merger agreement is signed! • Management and implementation are key to successfully integrating the two firms ‘Sweat the assets!’ PETER SCOTT CONSULTING

  19. Management and implementation Do we have a MANAGEMENT TEAM capable of successfully taking forward our new firm to achieve our vision? ‘Do we have the required skills?’ PETER SCOTT CONSULTING

  20. Management and implementation Assemble the best possible TEAMS to manage integration of the two firms and for longer term management: - to manage groups / offices / projects - to manage - finance - HR - marketing - IT - facilities - other functions PETER SCOTT CONSULTING

  21. Management and implementation Learning from each other • How can we incorporate the best of our respective firms into the new firm? • How are we going to manage performance in the new firm? • How are we going to change things? PETER SCOTT CONSULTING

  22. Communicate, communicate, communicate • Internally - What will it mean for me? • Externally - Will the market place give our merger the thumbs up? Ideally, use external professional advice PETER SCOTT CONSULTING

  23. Mergers can deliver their promises – if those involved never lose sight of the real objective – to build a more competitive and profitable firm

  24. Any questions? PETER SCOTT CONSULTING

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