After discussions with more than 50 private equity and other investment professionals, merger and strategic consultants, and senior law firm personnel, including managing partners, chief financial officers, and treasurers, we developed a method for valuing a law firm.
Our procedure is based on the classic investment-banking technique of developing cash flow multiples to value companies. We started with each firm’s net, made deductions by assigning equity partners with a notional salary, then applied a multiple that varied depending on the firm’s size, its average growth rates in revenue and profits, and its brand strength. We then used this formula to calculate values for our Global 100 list of the world’s highest-grossing law firms.
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