Here are some examples of the challenges we have addressed and the outcomes achieved:
Financial performance: profitability in a professional services firm
The challenge
Although profitable overall, the managing partner had concerns about the performance of several key departments and sought an independent assessment and a fresh way of highlighting the underlying issue to the partner group.
The solution
- Analysis of key departmental data for the last 5 years: fee earner profile, budget/actual income, productivity, direct costs and overheads
- Review of performance trends
- Rework the firm’s Profit & Loss account, both at a departmental and firm level, to include notional salaries for equity partners and a focus on ‘contribution’
- Comments on the firm’s approach to overhead allocation
- Presentation to the partner group
The outcome
By using a ‘corporate’ approach and focusing on ‘contribution’, rather than overall profit, to highlight the inherent problems, the management team had greater clarity about the issue and a catalyst for taking decisions about departmental structure and individual performance.
Financial performance: underperforming technology company
The challenge
The two founder shareholder/directors were frustrated that, having grown from start-up to a £7m turnover business, the company’s profit had plateaued, notwithstanding the appointment of an external managing director to drive the business forward more than two years previously. Their brief was to identify the reasons.
The solution
- In-depth, confidential interviews with the owners, the managing director and two other senior members of the management team to explore their aspirations and views about the business
- Completion of a wide-ranging questionnaire by members of the management team to assess their appetite for growth and their perceptions of the company’s strengths and weaknesses
- Analysis of the results and presentation of the key issues, using supporting rationale and anonymous quotes, to the owners, with suggested actions
The outcome
The process highlighted six key areas for the company to address, of which the single most imperative was the lack of alignment in the aspirations of the two shareholders about the future direction of the business. The founders spent time addressing their differences, appointed a new managing director and, having worked on improving the sustainable profit, eventually, sold the business.
Practice management: retirement of founder partner
The challenge
A professional services firm, with all four founder partners in place, faced the imminent retirement of the eldest partner, but without a partnership agreement or other pre-agreed arrangements having been made.
The solution
- Facilitated discussions with the partners to understand their intentions, particularly regarding the retiring partner’s entitlement, and to establish some common ground
- Explored the financial and commercial implications for the practice, including the impact on cash flow and working capital
- Outlined the options for structuring the outgoing partner’s entitlement and the admission of a junior partner, including capital and profit sharing arrangements
- Advised on issues for the partners to consider to improve the future management of the practice relating to both partnership and operational issues
The outcome
The firm had a clear understanding of the issues that it needed to consider, and the actions it needed to take, to ensure the smooth retirement of the outgoing partner (who has since retired) and the steps required to introduce more structure to future management of the practice.
Strategic planning: national group of independent investment professionals
The challenge
A group of independent adviser firms had a well-established national network, based on some shared philosophies, and sought assistance with exploring opportunities to change the structure and purpose to enhance the mutual benefits.
The solution
- Analysis of key data for each member firm: client profile, service range, financial performance, growth plans, key challenges
- Identifying each member’s aspirations, both for their own business and the network, through use of tailored questionnaires
- In-depth, confidential interviews with each member to explore the existing arrangements, the opportunities and potential barriers
- Collating and feeding back the key messages
- Facilitating a workshop to provide a structured forum for sharing members’ views and exploring the appetite for change and potential solutions
The outcome
Members obtained clarity about their respective priorities and appetite for change. In particular, the process provided a catalyst for extending shared processes and systems to obtain efficiencies and reduce overheads in their own businesses. It also confirmed the ’must-haves’ to be considered in shaping the future of the national network.
Merger opportunity: law firm
The challenge
A seven partner firm of lawyers, with a single office, approached us when in discussion with a larger, local firm about merging their practices. Unfamiliar with such a situation, the managing partner sought guidance on how to proceed: how to evaluate the opportunity for his firm, its clients and the partners and staff, what information to exchange, how to engage his partners with the process; in summary, everything associated with the potentially significant change.
The solution
- Meeting the managing and senior partners to understand the background, the process to date and the potential synergies that had been identified
- Facilitating a process for the partners to identify the ‘big picture’ issues: the strategic and cultural fit, the potential, high-impact ‘deal breakers’ for the partners, the reasons for each party being attracted to the concept, the relative financial strength of the two firms, the impact of the merger on the shape of the combined firm
The outcome
By writing down their own aspirations and identifying their personal ‘deal breakers’ individually, before sharing and debating them collectively, the partners developed a high level way of assessing the approach that had been made, avoiding becoming embroiled in the extensive list of potentially time-consuming operational issues. They called off the merger discussions, feeling more united as a group and confident about their strategy and, for the time being at least, the benefits of remaining independent.
Strategic planning: “We need to get bigger”
The challenge
The managing partner of a six partner law firm approached us explaining that the firm needed to ‘get bigger’ and seeking our help to achieve their objective.
The solution
- Exploring the real drivers for needing to ‘get bigger’; did they want to or did they need to?
- Identifying each partner’s aspirations, both for their firm and themselves, through the use of tailored questionnaires
- Confidential, one-to one interviews with each partner and the financial director (who held a senior, quasi-partner position), to explore the firm’s existing strengths and weaknesses, and the opportunities it had in the next five years
- Collating and feeding back the key messages at a meeting of the partner group
- Facilitating a workshop with the partners to diagnose the market opportunities, and the potential profitability and risks associated with each area; ranking the priorities and agreeing next steps, with responsibilities and actions
The outcome
By applying some structure to the process, the partners developed a common goal and a rationale for assessing potential opportunities. As a result discussions with two firms were dropped and the partners focused on improving their profitability. The firm has since merged with a different firm, rebranded and relocated.