The Firm

An amalgamation of two local law firms with different ambitions: one looking for continuance and survival, the other looking to grow. The merger created a team of 5 partners and around 40 staff, working from 3 offices: one profitable, one loss making and the other stagnant. Overall, the firm was undercapitalised, had high levels of lock up, low profitability and under-performing staff.

At the time of Pegasus’ intervention, the firm had merged into one office, 3 partners had left with capital shares paid out in full, and had undergone a re-launch. Financially, the 2 remaining partners were in a vulnerable position, the bank were threatening to call in their substantial overdraft, and both were approaching retirement with no succession planning in place.

The Aim

To achieve a position of financial stability; work out the strategic options available to the partners and then to support the partners in implementing those options.

The partners’ sought continuity for their clients; security for their core loyal staff and on-going protection for themselves.

The Method

Over a period of 2 years, Pegasus oversaw a planned programme of key steps:

  1. Resolving the cash crisis/lockup by chasing unpaid bills, billing existing WIP and enforcing key procedures to instigate efficiency at all levels.
  2. Identifying the partners’ immediate objectives to save and modernise the firm.
  3. Identifying the core business areas; allocating resources to the more profitable property and private client areas and then scaling down other stagnant areas.
  4. Identifying the most effective staff and monitoring trading for 9 months to assess on-going viability.
  5. Developing alternative strategies/options to securing the long term viability of the business.
  6. To meet the partner’s objectives, Identifying, targetting and approaching ’good fit’ merger partners and bolt-ons.
  7. The best fit solution was found and an effective take-over was negotiated and implemented.

The Results

By working carefully through a long term strategy, Pegasus was able to immediately:

  • Reduce the overdraft by 70% in 6 months.
  • Avoid redundancies for the committed and loyal staff.
  • Create very advantageous consultancies for both partners.

The Pegasus guidance into the merger negotiations helped achieve a highly satisfactory position for the partners – continuation of their practices (with guaranteed incomes); continuity for their clients; security for their committed staff and a comparatively favourable financial result as the indemnity insurance liabilities, leases; dilapidations and TUPE responsibilities were taken over by the new firm.

Key to the deal was the ‘lean and mean’ firm profile achieved prior to the merger.