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Do Mergers Increase Profitability?

<b><i>The Numbers Say Yes, But Not for the Reasons Many May Think</b></i><p>Conventional wisdom has it that mergers enhance profitability through increased revenues and reduced costs. However, the numbers contradict this view: post-merger revenues are lower relative to competitor firms than are the sum of the predecessor firms' revenues, and costs per lawyer increase markedly.

10 minute readJanuary 01, 2018 at 12:02 AM
By
Hugh A. Simons
Nicholas Bruch
Do Mergers Increase Profitability?

The evidence is unambiguous: mergers increase profitability. The merged entities resulting from intra-Am Law 200 combinations climb an average of 23 places in the profit-per-equity-partner (PPP) rankings from the five-years before to the five years after the merger.

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