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Australia’s hyper-competitive post-GFC legal market inspired a surge of non-organic growth strategies at many firms, both as offensive and as defensive plays, and a key strategy for many of these firms has been growth by acquisition. After building to a crescendo of 24 deals in FY18, M&A has decreased to 20 deals in FY19. Interestingly, deal size has decreased as well.

Nationalisation of full service corporate & commercial firms drove mid-tier consolidation in the first half of the 2010s. The second half of this decade has seen the pattern repeat in specialist segments of the market, particularly insurance, where firms including Barry.Nilsson., DWF, Hall & Wilcox, HWL Ebsworth, McCabe Curwoods and Sparke Helmore have nationalised their insurance offerings. The last 18 months has also seen rationalisation of the mid-tier as a number of the full-service firms that had expanded earlier this decade are now integrated into larger firms.

Globalisation has also played its part in shaping M&A trends for the Australian legal market. The early parts of the decade saw the first wave of international law firms entering the market through mergers with full service firms in both top-tier and mid-tier segments of the market. The second wave of international firms entering the Australian market, meanwhile, have acquired focused practices or whole offices instead of entire firms.

Consolidation in the NewLaw segment has shaped the landscape as well. Lawyers on Demand (LOD), for example, can trace its lineage in Australia to the merger of Advent Lawyers and Balance Legal in 2012 that created AdventBalance.  AdventBalance subsequently merged with LOD, which, earlier this year, merged with Lexvoco. An increase in private equity capital entering the NewLaw segment should see further consolidation in the Australian market, if events such as Elevate Services’ acquisitions in the UK, US, Hong Kong and Singapore markets earlier this year are any indication.

Diversification is our last main influencer of M&A in the Australian legal market.  Cornwalls’ acquisition of Jarrah Capital Group (corporate advisory), HopgoodGanim’s acquisition of Effective Governance (corporate governance), and MinterEllison’s acquisition of ITNewcom (IT consulting), are each examples of diversifying into a parallel practice.  The Big Four accounting firms’ activities, meanwhile, provide an interesting counterpoint of diversification back into legal services, with acquisitions recorded by EY Law in tax and PwC Legal in its corporate practice.

A snapshot of our Australian law firm M&A report is below. Navigate by clicking the forward and back arrows, and explore the data with your mouse.

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Eric Chin

Principal | Strategy, Innovation

Graeme Grovum

Principal | Innovation, Technology

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