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What is the Fair Market Value of a Full Service Commercial Law Firm?

What is the Fair Market Value of a Full Service Commercial Law Firm?.

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2 Responses

  1. “Fair market value” implies a willing buyer and seller. Why would anyone buy a law firm? What is there to buy?

    — There are no assets to buy except the vaporous “goodwill.”
    — Your inventory walks out the door every night and may not return.
    — Talent acquisition/development costs are high and turnover is higher. Clients will no longer subsidize OJT.
    — According to the most recent Citi report, operating costs increases outpace revenue growth by 3:1, percentage-wise.
    — Sales are totally random, with no reliable pipeline or basis for projection.
    — Your sales force is part-time, untrained, voluntary and reluctant.
    — Salespeople are free to leave at any time and take clients and talent with them without penalty.
    — Profits are fully distributed each year, with no retained earnings.

    I have no background in finance, but assuming there’s a market (a stretch, IMO), I would think a law firm’s value is pretty close to the current discounted value of accounts receivable and work-in-progress.

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