From Big Law to Boutique: Eric Pacifici's Journey in M&A Law

Eric Pacifici, a partner at SMB Law Group, discusses the current state of small business M&A, focusing on transactions under $15 million in enterprise value. He explains the profile of typical buyers and sellers, the impact of SBA financing on deal structures, and the evolving market conditions affecting valuations and deal terms.

The conversation delves into the challenges of self-funded search, the risks involved in buying small businesses, and the importance of understanding the operational aspects of acquired companies. Eric provides valuable insights into the due diligence process and the potential pitfalls buyers should be aware of.

Throughout the discussion, Eric offers a candid look at the legal industry, comparing the economics of big law firms to smaller, specialized practices. He shares his experience transitioning from a large firm to founding his practice, highlighting the unique challenges and opportunities in the legal services market for small business M&A.

The episode also touches on the role of social media in building a niche law practice and the potential for expanding into a full-service business law firm to better serve small business clients.

Episode Highlights:

[00:00:53] Introduction to SMB Law Group and its focus on small business M&A
[00:02:02] Current market trends in small business acquisitions and valuation changes
[00:07:53] The role of SBA financing in small business transactions
[00:18:40] Risks and challenges of buying small businesses
[00:24:50] Insights into law firm economics and the challenges of the legal industry
[00:38:01] Discussion on big law firm profitability and partner compensation
[00:41:24] The impact of social media on building a niche law practice

Quotes:

"We are transitioning slowly to a full-service law firm to be able to support anything that folks need in business."
"When we launched the firm two years ago, we were looking at a lot of, you know, 4.5 5 times multiples. Now you're seeing a lot of threes and, you know, sub-four multiples."
"Entrepreneurship and business buying and building is always going to be enormously difficult no matter what the circumstances are."
"Most really good lawyers now don't even want to commute after remote work. And after the pandemic, you know, they're super excited about the idea of working for a firm that's not gonna ask them to come to an office."
"I don't know how big law attorneys continue to out-earn, you know, their profit per partner is at $7.7 million. It grew 10% so it grew $700,000 per lawyer in a year."

Episode Resources: