Some Law Firm Growth Strategies are not for the faint at heart – but bold moves can yield huge returns – especially when it comes to Law Firm Growth by Acquisition.
Here’s what we know right now: There’s never been an easier time to obtain equity or SBA Fund Financing for law firm acquisitions than today. In years past, these companies perceived law firms as too risky – or speculative to value. Not so in 2022. More available cash means growing your law firm but purchasing another firm has become a viable option.
And to create the perfect storm – in a good way – significant numbers of baby boomer law firm owners are reaching retirement age and looking for their Exit strategy.
The convergence of these two marketing dynamics can result in a powerful Law Firm Growth Strategy if you are willing to seize the opportunity.
Now comes the disclaimer – Buying a Law Firm is significantly more complex than purchasing a vacation home. There are a number of key issues to consider –
First off, just because you can, doesn’t mean you should. If you are already struggling and don’t have positive revenues as well as systems and processes in place for scalable growth – then the Growth by Acquisition strategy isn’t a wise move. If you fall into this category, your first matter of business is to get your existing “house” in order before thinking about buying another firm.
However, if your firm is running smoothly, and on the upswing already, then buying another law firm may well be your fast-track ticket to greater growth.
Finding the right law firm to purchase – and knowing how to properly value a prospective firm is critical. While purchasing a strong firm can catapult your growth, purchasing the wrong firm can create immeasurable headaches and financial drain. There are numerable factors that go into evaluating a prospective law firm. You will need to peruse financial data carefully and have a clear understanding of how that firm operates, and their existing case inventory. You need to understand their current place in the market, their branding, etc. You need to be aware of any problems the firm is experiencing, so you are able to go into the deal with your eyes open.
And even if you have located an ideal firm to purchase, you need to spend some significant time in prepurchase planning, to ensure that the acquisition runs smoothly, and that operations are virtually seamless. Merging two firms is a lot like merging two households – it isn’t automatic. There are complex factors to consider, and steps to take proactively so that your acquisition goes forward without a hitch.
If you think you might be ready to take the plunge- and grow your firm by Acquisition- or if you are just interested in understanding more about Buying and/or Selling Law firms, then make sure you attend PILMMA’s upcoming conference: Buying & Selling Law Firms, June 30, 2022, at the Ritz Carlton Hotel in New Orleans.