Four Acquisition Red Flags

Ortus Group has more than 18 years experience in mergers, acquisitions and executive search for law firms. The team provides systematic guidance in what can be a fraught process to ensure smooth transitions for all parties and has advised on more than 50 completed mergers.

Our experience tells us that there are several factors that can wreak havoc to any merger and acquisition if not investigated further. If they do turn up, it’s important to weigh the odds to determine whether you ought to pursue the path or seek an alternative.

Poor team communication
It is not unusual to hear of mergers that complete without the full knowledge of the wider partnership where many have been left in the dark when an M&A is in progress. The uncertainty and speculation that emerge can lead to an exodus of partners who take key clients and team members with them, diminishing the true value of the acquisition.

Clash of the (leadership) titans
A culture clash is something that most firms need to brace for during an M&A. If leadership teams are not aligned with the common objectives and their roles towards the strategic vision of the future together, it will likely create tears in the fabric of the new organisation.

Oversmitten by the potential and vision
It is good to go into an M&A with optimism for its future potential and have a desire to work through any areas that don’t quite hit the mark. However, it is important to draw the line between desire and strategy. One may desire to go ahead with an acquisition despite impracticalities with hope to defeat the odds, but true strategy recognises the red flags and the likelihood of remediating them.

Insurance and compliance risk
The expensive premiums that larger firms tend to have give them the ability to consider absorbing the risk and associated costs of becoming the successor practice where smaller firms may struggle with this or alternatively invoking run-off which could make any potential deal too expensive to be feasible. Aside from engaging the brokers early to gain their insight into the risk and cost profile, looking at compliance procedures and staff operation will quickly indicate the real risk profile as well as likely training requirements.

Considering an acquisition or looking to merge? Email Colin White at or call 0330 100 5420.