The final numbers are in for an exceptional year in law firm mergers: 2018 was one of the busiest years on record for combinations.
According to data compiled by Fairfax Associates, the 72 mergers completed in the past year is up from 65 in 2017 and easily outpaces the historical average of 52 mergers per year from 2008 to 2017. In 2001, the last time the law firm merger market was this hectic, 86 mergers were completed.
For consultancy Altman Weil—which tracks announced mergers, rather than completed deals—2018 was a record-breaker. The 103 announcements it tallied in the last year nosed out the 102 publicized in 2017.
“I can’t remember a time when we’ve been asked to conduct more merger assessments—for deals that are already on the table,” Altman Weil principal Eric Seeger said.
The two sets of numbers line up more neatly when taking into account 13 announced combinations that, according to Fairfax, were scheduled to be completed in the first quarter of 2019. Some of these—including Arent Fox’s entrance into Boston with the acquisition of Posternak Blankstein & Lund, Dykema Gossett’s addition of Washington, D.C.’s Loss, Judge & Ward, and Burr & Foreman’s tie up with Carolinas-based McNair—were finalized Jan. 1.
Within the U.S., New York, Florida, Pennsylvania, Texas, Missouri and California proved to be the most desirable locations for firms looking to grow through mergers. Nine New York firms were absorbed into larger firms, according to Fairfax, while there were six mergers involving smaller firms in Florida, five mergers apiece in Pennsylvania, Texas and Missouri, and four mergers in California.
The past year was also a busy one for international mergers, thanks in good measure to Dentons’ continuing eagerness to add on new units. The firm’s eight cross-border mergers completed in 2018 accounted for more than half of the 15 counted by Fairfax. Other major completed cross-border combinations included Bryan Cave with Berwin Leighton Paisner in London, DLA Piper with Delacour in Denmark and with Noguera Larrain & Dulanto in Chile, Eversheds Sutherland with Dvorak Hager & Partners in Prague, and Littler Mendelson with Reliance in Belgium and with CLINT in the Netherlands.
Fairfax tallied 19 cross-border combinations in 2017 and 13 cross-border mergers in 2016. In 2015, only five such mergers were completed.
Expect a similarly active year in 2019, advised Fairfax principal Lisa Smith. Growing competitive pressure is prompting more law firms to consider mergers, not just to increase their market share, but also to expand their client relationships and expand their areas of expertise.
“I foresee a time when the boom slows, but that’s not 2019,” she said.