The role of the senior executive teams during a merger within the South African legal sector.
Nupen, Lili Alexandra.
ABSTRACT The purpose of this research was to determine and evaluate what key factors are critical for the senior executive teams of two domestic South African law firms to take cognisance of so as to ensure a successful merger between the firms. Four crucial factors were identified through a review of recent literature on the topic, namely effective communication by the senior executive teams, cultural integration between the firms merging, delegation of duties and the importance of trust and reward systems as well as the significance of the timing and execution of the transaction. The veracity of these factors was analysed through a chosen case study, being the Edward Nathan/Sonnenberg Hoffmann and Galombik (SHG) merger which occurred in 2006 and which was classified a success in the South African legal arena. The role of the senior executive teams (including the chairmen) was analysed in light of the four crucial factors identified. The case study assisted in verifying or discarding the views put forward in the literature on the subject. The case study took the form of a series of interviews, which were conducted with an identified group of respondents from Edward Nathan and SHG from all different levels in the corporate chain. These respondents had to have been involved in the merger process or have in-depth knowledge of the process. A number of external consultants were also interviewed to obtain an objective perspective on the merger transaction. From the analysis of the particular case study chosen, and in light of the literature reviewed, it became apparent that certain of the stated critical factors were in fact not as crucial for the completion of a successful merger in the context of a law firm in South Africa. In particular the payment of incentive bonuses or financial rewards were viewed as less important to employees of firms engaged in a merger than that of the employees being able to trust the senior executive teams and their decision to embark on the merger and to follow the proposed merger integration process. On occasion, the proposition made by the researcher had to be modified in order to prove accurate in the circumstances. Furthermore, additional factors were raised during the research which had not been considered in the literature as critical to the success of the merger between domestic law firms in South Africa. These factors are all discussed and analysed in this report. Finding a suitable merger partner and agreeing on the commercial aspects of the deal, such as the price attached to the transaction, is not enough by itself to ensure a successful merger. The more significant factors are those referred to as soft factors, such as the four iii key criteria identified in this report. The greatest challenge seems to be to ensure that the senior executive teams, and in particular the chairmen involved in the merger, take heed of the practicalities associated with the human element of the merger process and implement the key suggestions noted in this report. If this happens, and these key factors are taken into account by the leadership of the firms, then it is more likely that the merger will be a success.
Consolidation and merger of corporations, Law firms.