We surveyed professional practices from various sectors, and of various sizes, to understand appetite for growth and the key challenges they foresee in growing their practice in the immediate future.
Below are highlights of our findings. You can also download a full PDF of our report at the bottom of this page.
The mood in the market – what is on the minds of firms?
We asked our respondents for their view on the single biggest operational challenge over the past 12 months. Recruitment was seen as the biggest factor (42%), and this is not just availability of staff, but also the quality of candidates that pose the biggest challenge. Only 2% said cashflow was the biggest challenge.
Succession planning
When asked how partner succession is managed, there were some interesting findings, with a significant percentage of firms looking at internal progression, among other options. Worryingly, almost 30% said they had no formal strategy for succession planning.
An important message was clear from our research – firms must always make sure that partner succession is prioritised and viewed as a long-term project to ensure a seamless transition of key client relationships.
Where does this leave firms’ plans around M&A?
With people being such a key element of firm’s strategies, we asked what drives the growth strategy. Over 60% of firms see potential mergers and acquisitions as key ways to grow.
M&A in the current economic climate
The current climate has encouraged firms to accelerate their M&A strategy. Over 50% of firms now have more focus on new M&A deals – the key driver behind this being the potential to ‘futureproof’ their firm.
However, the majority of respondents cited the biggest challenge to the success of their strategy was identifying suitable firms to acquire or merge with.
Acquire or be acquired?
When asked about merger, acquisition or sale, over 50% of our respondents said they would be interested in acquiring smaller firms and over 30% said they would be interested in merging with smaller firms as being a part of their M&A strategy, and there is a greater appetite for M&A now than at any point in recent years.
Laying the foundations for a merger or acquisition
Almost all of the firms we surveyed said a starting point for any merger or acquisition would be to speak with firms already known to them. A smooth integration with a firm that may have a similar culture would be advantageous. Other strategies noted were to speak to existing professional advisers, but also to look at the market, and speak with other dedicated advisers/brokers in the sector.
Risk vs. reward – what makes a merger worthwhile?
Overall, loss of culture was seen as the biggest potential threat to firms when considering a merger, but there was also significant concern around losing established brand equity and the potential to inherit claims / regulatory history from a merge partner.
The consolidation of costs and sustainability of profits were, unsurprisingly, cited as two of the biggest positives of a potential merger.
If you would like advice on your growth strategy and its wider implications for your firm, please contact your usual Saffery partner. Alternatively, speak to Jamie Lane, head of our Professional Practices Group.
