There’s never been a better time to think about Buying or Selling your Law Firm.
Buying a Law Firm is Law Firm Growth on Steroids. And Selling your Law Firm can be your Perfect Exit Strategy-
But Growth by Acquisition can be tricky business –
Many lawyers focus their energies on advertising, and digital marketing strategies to grow their firms. Others focus on grassroots marketing and still others shy away from marketing tactics altogether. Instead, they focus on their law practice and hope for referral growth to occur organically. Obviously, I’m a proponent of proactive Growth Strategies for law firm growth. It’s why I started PILMMA (Personal Injury Marketing & Management Association) www.pilmma.org and why I’m still facilitating PILMMA Mastermind Groups of law firm owners all over the country.
That’s also why I’m excited about Growth by Acquisition. It’s a whole new concept that few people know much about and even fewer are talking about. But, and for the right law firms – it is an INCREDIBLE OPPORTUNITY for DRAMATIC LAW FIRM GROWTH.
Growth by acquisition happens through carefully-considered mergers and acquisitions. Although we’ve all seen this growth tool wielded by large corporations such as Amazon, Google, and the likes, most law firm owners never consider growing their law firms by acquiring other firms
Many lawyers assume that such a maneuver costs too much or they do not know how to begin to identify other firms that are viable for acquisition. While growth by acquisition will likely require a sizable financial investment, so do many traditional marketing strategies. For the right firms, growth by acquisition is a wise growth model that produces substantial results.
When does Growth by Acquisition Make Sense?
A law firm owner should consider Growth by Acquisition when one of these two conditions exist:
- You are currently in a highly competitive marketplace and purchasing one or more of your competitors’ firms would both increase your market share and substantially decrease your competition, or
- You want to expand into a new practice area but do not want to reinvent the wheel. By purchasing a firm already specializing in this new practice area, you shorten your learning curve and increase your ability to become an immediate market leader in this new area of practice.
When does Growth by Acquisition NOT Make Sense:
- If you are already running at full capacity.
- If your cash flow is tight.
- If you are currently struggling to service your current clients.
If you are currently experiencing any of the above conditions, you should set about getting your “house” in order before trying to acquire another law firm. You may need to hire additional key employees, review your current budgets and operating expenses, raise your current fees, implement additional processes and procedures that streamline work product, etc. The good news is that these challenges are ones that you can overcome through effective law firm management strategies, although a discussion of those strategies is beyond the scope of this article.
HERE ARE SOME Questions to ASK YOURSELF BEFORE Acquiring another Law Firm:
Assuming you are ready to consider acquiring another law firm, you should ask yourself the following questions:
- Will the Acquisition improve my competitive position in my market?
- What impact will the acquisition have on me, personally, as well as my staff and law firm management team?
- Is the firm I’m considering acquiring a good fit with my existing firm? (An acquisition is somewhat like a marriage- it is critical that you are able to mesh somewhat seamlessly, or it can create loads of headaches and both immediate as well as long term stress.)
- Does the other firm’s culture, values and leadership styles align with those of my current firm? Are they complimentary?
Just because you can acquire another law firm doesn’t necessarily mean that you should do so. There are times when the negatives of acquiring a particular firm will outweigh the positives. In that case, wait for a better opportunity to arise.
What if I’m Ready to Grow by Acquisition – What’s Next?
It is not unusual for a law firm to recognize that Growth by Acquisition is a desirable option for them, but not know where to begin in the search for viable acquisition opportunities. There are several options: First, you can hire someone to send out what I call “feeler” letters, stating that they represent a “potential” buyer. This method allows you to hide your identity while still being able to reach out to potential firms who may be interested in such a sale. I’ve sent out these initial letters for several law firm owners in recent years. In fact, in one case I sent as many as 1500 letters to potential firms in order to identify those that might fit as viable candidates for acquisition for one of my law firm clients.
If you already have some possible law firms in mind- you can also take a more direct and traditional approach by reaching out directly to these firms. Consider inviting their managing partner for a lunch meeting to open possible discussions for a merger or acquisition.
The key as you begin the acquisition process is never to become discouraged. As the old adage says: You have to kiss many toads before you find your prince or princess.
Next week, in part 2 of this blog – I’ll get into the details – Giving you a Guide to What to DO once you’ve Found a Firm you want to buy- a Ready Reference Pre Deal Assessment Checklist, and MORE!
Growing your law firm through acquisition is an exciting and lucrative way to expand your business. But it requires some careful and Strategic planning – and an understanding of what pitfalls to avoid along the way.
FYI – If you want to learn more about Buying and Selling Law Firms, then make sure you Register for PILMMA’s upcoming 1-Day Conference Buying and Selling Law Firms, June 30, 2021, at the Ritz Carlton in New Orleans – I’ve planned this special event for the day AFTER the PILMMA Legal Marketing & Management SUPER SUMMIT. For more information and to grab your seat for this IMPORTANT 1-DAY only Conference, go to www.pilmma.org/summit/