Merger activity among the top-100 UK firms reached record levels in 2013 – the second consecutive year that the record has been broken.
Legal consultant Jomati said today that 28 deals were announced last year involving at least one top-100 UK firm, or firms that have entered the top 100 following a merger.
That followed 26 mergers in 2012 and provides further evidence of growing consolidation in the legal market as firms deal with falling revenue and competition from alternative business structures.
Key merger trends in 2013 included:
- National firms such as Slater & Gordon and DWF acquiring firms affected by changes to the personal injury market.
- The need to build UK-wide coverage forcing firms to seek mergers with Scottish practices.
- Desire for greater critical mass leading to deals such as the Wragge & Co/Lawrence Graham merger.
- International firms making tactical acquisitions around the world, such as Hogan Lovells’ merger with South Africa’s Routledge Modise and the Norton Rose Fulbright takeover of Canada’s Armstrong Mitchell.
Jomati principal Tony Williams, a former managing partner at magic circle firm Clifford Chance, said 2014 is likely to see merger activity increase further.
‘The personal injury and insurance sectors will see several more years of consolidation. In addition, many of the UK’s most ambitious commercial firms will see that they do not have time to grow solely organically when so much is changing around them and will seek to merge with regional, and also City, peers.
‘Quite simply, larger firms have the capacity and visibility to grow their client base and invest in new premises, new practices and new locations, especially internationally.’
Williams predicted more international acquisitions across Africa, Canada and Australia, as well as within Europe, especially as the UK economy grows.
But he said the prospect of mergers between US and UK firms is less certain due to the 'disparity in profitability' between the two jurisdictions, with US firms being more profitable.
‘There is still a strong level of interest if the right merger candidate can be found,’ he added. ‘In any case, 2014 will see further consolidation of law firms right across the UK top 100 and beyond.’