Last year was a record-breaking year for U.S. law firm mergers and acquisitions, with 115 combinations announced according to Altman Weil MergerLine. This is the highest annual total recorded since 2007, exceeding the last record of 106 set in 2018.
The year was also noteworthy for the predominance of small deals – with 101 acquisitions of firms with 2 to 20 lawyers, or 88% of all combinations announced. Even among AmLaw law firms, 85% of all 2019 deals were acquisitions of small firms. Overall, the average size of acquired firms in 2019 was 18 lawyers – down 33% from the prior year.
“Law firms’ appetite for small, quality acquisitions seems bottomless – constrained only by the available inventory,” says Altman Weil principal and merger advisor Tom Clay. “We know many firms also are considering sizeable combinations, but because those deals are more complex, they are slower to come together and can be more easily derailed.”
Six 2019 deals involved combinations with firms of over 100 lawyers. The largest of these, announced in December, was between Faegre, Baker, Daniels, based in Minneapolis and Drinker, Biddle, & Reath headquartered in Philadelphia. The two AmLaw 100 law firms will make a rare merger of equals to form a new 1,300 lawyer law firm, Faegre Drinker.
Two mid-western combinations – each also involving the Minneapolis market – were among the largest announced in 2019. Lathrop & Gage, a 240-lawyer firm based in Kansas City announced they would merge with 155-lawyer, Minneapolis-based Gray, Plant, Mooty to form Lathrop GPM. Indianapolis-based Taft Stetinnius said they would acquire 135-lawyer Minneapolis firm Briggs and Morgan creating a new 600-lawyer law firm.
Two additional deals involving U.S. firms with over 100 lawyers were announced in 2019, both executed by the global law firm of Dentons. In the first phase of a new initiative to extend their firm’s U.S. footprint, Dentons announced combinations with 178-lawyer Bingham Greenebaum headquartered in Indianapolis and with 144-lawyer Pittsburgh law firm, Cohen & Grigsby.
“Dentons is reportedly experimenting with a new combination model that allows the legacy firms to retain some elements of operational autonomy. If effective, this may make large deals more easily achievable in future,” says Clay. “In any case, Dentons’ stated intention to pursue multiple U.S. combinations in 2020 will likely shake up local markets.”
Dentons was also a highly active acquirer outside of the U.S. in 2019, announcing 12 cross-border combinations over the course of the year and adding another 300 lawyers in total. These acquisitions included six African law firms in Angola, Morocco, Mozambique, Uganda, Zambia, and Zimbabwe; three Latin American firms in Argentina, Honduras, and Uruguay; and three firms in South Korea, Australia, and New Zealand. Dentons’ largest international acquisition was of 113-lawyer Kensington Swan in Auckland.
Foster Pepper and Garvey Schubert merged to form Foster Garvey, a new 200-lawyer law firm which becomes the third largest in that city.
The complete list is available at www.altmanweil.com/MergerLine.
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