Opinion: Putting people at the heart of successful mergers

By Colin White, managing director, Ortus Research

It is difficult to make a merger work and the hours it consumes are unforgiving, so why does this masochistic trend look set to continue in the legal world? Many firms ranging from high-street practices seeking critical mass, to international firms desiring a specialist bolt-on, are actively engaged in this complex activity. I questioned the partners responsible for some of the UK’s more recent tie-ups, together with those working with me on current merger projects, to gauge their opinions on what delivers a successful outcome.

First, test the business case early in the design process to avoid spending huge amounts of time and resources on a fruitless exercise. Mike Ward of Gateley Wareing says: “Set out what you believe the benefits will be to all parties and speak with five to ten clients and/or intermediaries to ascertain whether your belief is or is likely to be correct.” This is effectively your reality check to make sure the business plan makes sense to everybody, not just those sponsoring the idea.

Political issues are inevitable and must be dealt with pre-emptively. One partner who oversaw a mid-size merger in the late 1990s told me: “Because of allowing politics rather than skills to dictate who ran which teams, profits suffered and teams took a long time to feel truly integrated.” With a merger, it is often tempting to share senior positions equally between the legacy firms but this can be a mistake. Both sides must have representation at a senior level, but the politics must not detract from fulfilment of the business plan and identifying who is best suited for each position, regardless of former allegiances.

To win the hearts and minds of the staff, inclusion during the planning phase is vital. Stephen Gilmore of Cobbetts said: “Someone leaked our discussions to the press at a very early stage and this turned out to be a blessing. This enabled us to have a very open dialogue with our people at all levels and they bought into the concept very early on.” Everyone concedes that open consultation must take place with people at all levels because they must feel that their opinions matter for them to take more ownership of the newly created entity and, consequently, strive harder to make it succeed.

The most revealing question I asked was, with the benefit of hindsight, what would you have done differently? Interestingly, almost every comment related to having underestimated the importance of cultural fit and the integration process. One partner told me: “We should have probably taken wholesale groups of people and moved them between offices to speed up integration. We allowed two separate cultures to continue to the detriment of the firm, perpetuating the division.” Once the merger goes live, get people moving between offices if more than one location is involved. Organise secondments to encourage integration and sharing. TLT went one better and moved the entire staff into new premises within the first year. Managing partner David Pester said: “Never underestimate the importance of cultural differences and working towards a new culture.” It is perhaps no coincidence that TLT is widely perceived to be an excellent example of a merger showing early and durable success.

Clearly the art of merger is difficult but there are enormous dividends if done well from inception through to integration. Make sure you pay sufficient attention to people rather profits, because that is the main difference between those mergers that succeed quickly, over those that struggle.

Colin White is managing director at Ortus Professional Search. He can be contacted at colin.white@ortussearch.com