Our report examines merger and acquisition (M&A) activity in the legal sector in the year to 30 June 2023.
There are a number of competing pressures for law firms and M&A is now either a strategic priority or, potentially, a necessity to maintain earnings and continue to develop service lines and depth of expertise in an ever more complicated world.
There has been an increase in transactions involving UK law firms during our period of analysis, and much of this activity stems from the wider benefits that M&A brings, including broadened service offerings and economies of scale.
Private equity interest in professional services looks to be increasing, highlighted by the news of global law firm DWF being taken private by Inflexion in a £342 million deal.
Interestingly, but perhaps not surprisingly, the majority of acquisitions are of smaller firms with 20 or less employees. Cost pressures, particularly professional indemnity (PI) insurance renewals, are becoming increasingly painful and therefore merging with another firm is helping to mitigate the impact on profits.
We’re also seeing mid-size firms looking to acquire smaller counterparts to provide critical mass, and small firms looking to merge with larger equivalents.
This will likely increase activity in the future and with a continual change in economic conditions across the UK and globally, we may see further consolidation in the market.