News focus: Consolidators are keen for firms to keep their identity

There is an apocryphal story from an awards ceremony at which two firms were nominated for the same category. At the time, talks were ongoing about an acquisition of one by the other, and when the acquirer’s name was called out, boos rang out from the table of those being acquired. Clearly some had not bought into the plan.

Mergers where one firm is amalgamated into another can be hazardous. Tribalistic staff may feel displaced and uneasy, unwilling even to change email addresses and business cards. The transition may work in time, but intervening tensions give lie to the PR spin about shared synergies and new opportunities.

One solution is the so-called ‘house of brands’: acquiring a firm but letting it keep its brand and identity. No imposition, no decrees – just letting them carry on as usual but under one umbrella.

The MAPD Group, which this month added north-west firm Bermans to a roster including Jackson Lees, Broudie Jackson Canter and Myers & Co, says a firm’s history and legacy cannot be overridden.

Chief operating officer Joanna Kingston-Davies said: ‘We are in the business of acquiring already successful firms and one of the reasons behind that success is the brand. Law is an occasional purchase, therefore consumers place great store in brand, based on personal recommendations or specialist knowledge. Reputation matters.

‘You also need to respect what a brand is – it is way more than a logo, it’s tone of voice, it’s ethos, it represents a way of doing things. It would be arrogant of us to rip all that apart.

‘The firms we acquire have a considerable amount of loyalty – people are loyal to the brands they work with. The continuation of the brand creates stability for our new colleagues and the last thing we would want to do is take that away.’

Andy Poole, finance partner for accountancy firm Armstrong Watson, advises firms on mergers. He said there are a number of transactions ongoing where consolidators do not intend to change the brand. To be successful they need to pull in the same direction, he explained, but not necessarily operate in exactly the same way.

‘Some consolidators, as well as changing the brand, insist on immediately centralising support services and changing the way that the firms operate,’ said Poole. ‘I can see the benefits of that, as it brings consistency, the ability to operate efficiently and greater use of technology – but it does not work for all firms.

‘The newer non-brand-changing consolidators often come in with a mantra of ‘do no harm’. They do not strip out the support functions, but help the acquired firms to assess their processes and help with any improvements and access to technology.’

'I have long wondered at the sense of changing an existing and known brand on day one. I think this new approach is more commercial and also helps with staff transition. Too much change can spook staff, especially in this market'

Andrew Roberts, Ampersand Legal

The trend of buying firms and leaving their identities alone, also adopted by the likes of Metamorph Law and Shakespeare Martineau, is a far cry from 10 years ago, when analysts predicted the emergence of super-brands and large consumer firms with widespread public recognition. The likes of Slater and Gordon and more recently Knights have bought firms with the intention of imprinting their own brands and having a presence in every major town and city.

That model is not necessarily wrong, but it is a tricky balancing act to ensure everyone is happy with the change.

Andrew Roberts, whose firm Ampersand Legal specialises in mergers, said: ‘I have long wondered at the sense of changing an existing and known brand on day one. I think this new approach is more commercial and also helps with staff transition. Too much change can spook staff, especially in this market.

‘I think incorporating works well, with the buyer’s first name first and then incorporating xxx. Then after 18 or 24 months clients and staff know and are happy with the new name and the old one fades away.

‘The benefit for a listed firm is they don’t want too many brands. I know one consolidator who has seven brands and seven different PII policies which does seem a little extreme.’

The mantra a few years ago was ‘go niche or go big’. The current trend rejects that idea, keeping a range of mid-sized firms that neither need to specialise nor to become a nationwide brand.

Announcing the creation of its ‘house of brands’, Sarah Walker-Smith, chief executive of Shakespeare Martineau, alluded to the ‘large and aggressive businesses [who] acquire firms only to destroy the very heart of that brand and the reason they have loyal clients.

‘If a brand is relevant and well-respected in its specific market – whether nationally within a niche market or with a regional focus – it seems odd for us to remove that brand equity,’ she told the Gazette.

‘We want firms to carry on with the great things they already do – after all, they know their people and markets far better than we do.’