Davies Arnold Cooper (DAC) has stepped in to save London and St Albans firm KSB Law after merger talks with expansionist South East firm DMH Stallard collapsed.
A source revealed that DMH broke off the merger talks, which were first reported by The Lawyer (28 May), in June after a due diligence inspection into KSB's finances. KSB partners were offered the option of disbanding the firm and joining DMH as lateral hires, but they declined.
DMH managing partner Tim Aspinall released a statement to The Lawyer that read: "DHM Stallard had discussions with KSB Law about a merger, but this did not proceed and KSB has subsequently started discussions with DAC."
DAC confirmed that it began talks with 18-partner KSB a month ago and that these talks are at an advanced stage, as reported on www.thelawyer. com (7 August).
DAC managing partner Rowan Planterose said: "We specialise in dispute resolution and real estate, so we feel there are a lot of synergies there."
Planterose said a decision will be made by September. If the merger goes ahead, it is understood that the merged firm will take DAC's name.
Turnover at KSB fell to £8m this year from £8.2m a year ago, a drop of 2.5 per cent. KSB managing partner Ken Smith attributed this dip to the end of the revenue stream generated by the firm's volume operation, which was wound down in 2004, and said 2005-06's turnover would have been £7.9m without that income.
Smith said: "We've been talking to several firms and we've now made the decision that DAC represents the best long-term interest for us. It wasn't a competition."
As reported by The Lawyer (11 June), DAC's average profit per equity partner nudged up by just 4 per cent to £345,000 from £333,000, while turnover rose by 5 per cent to £32m.
DAC's and KSB's combined turnover would be £40m, with Smith predicting that the merged firms would hit £42m by the end of 2007-08.