Strength in Numbers

Why is it that Fortune 500 companies can't seem to get enough of gobbling each other up? Companies merge, the large company now acquires a smaller one, then another, until the company becomes too large and diverse to effectively manage. Before you know it the company is involved in an accounting scandal that the CEO "never knew about", or the company falls to pieces as a result of risky subprime bets. Then, guess what? A white knight swoops in and... yup, you got it - acquires the collapsed business.
While there are many lessons (Do's and Don't Do's) to be learned from the world of mergers and acquisitions, here are a few reasons why companies choose to merge.

- Consolidate redundant functions and cut costs
- Gain tax advantages
- Increasing market power
- Compensating for weakness in key areas

How does this apply to litigation marketing?
Tip: There is strength in numbers.

The same principles that apply to these large companies also make sense for smaller entities. I have seen a perfect example of this in a NY no-fault/PIP firm that has brilliantly combined partner merger activity, superior marketing and client communications, technological efficiency and operational exellence to blow their competition away and gobble up market share. The merger was the catalyst for everything else that followed.

They combined one partner's marketing expertise, with another's client base, another partner brought strong operational capabilities to the table and together they created efficiencies and pooled resources. This in turn allowed the partners to focus on their respective areas of expertise, cut costs, increase marketing spending and it wasn't long after until no firm in the marketplace could keep up and they put much of their competition out of business.

Now, I am not suggesting that mergers, or even joint ventures are for everyone. In the legal field, or even as a legal vendors, getting in bed with the wrong partner can be disastrous. However, it is important to be mindful of the flip side of this coin. Make sure that you do not get so caught up in your business routine, that you ignore opportunities to strengthen your firm's or company's strategic position - your competitors may be doing just that!