"This is going to confuse everybody," was the response of one perplexed onlooker to yesterday's news that Ince & Co is deep into merger talks with listed law firm Gordon Dadds.

The two firms – one a faltering international shipping icon, the other an acquisitive West End practice which listed last year – are poised to merge under the brand of Ince Gordon Dadds, which, with combined revenues of about £114m, will become the largest listed UK firm to date, if the talks are successful.

But after widespread expectations that Ince was sizing up a merger with a comparable insurance-focused firm, the emergence of Gordon Dadds – which, with revenues of just over £30m is about one third the size of Ince – has come as a surprise. So what's behind the proposed deal?

The premise of the story is rooted in timing. Ince has been struggling for some time, and Gordon Dadds saw an opportunity "to bolt on a massive injured animal", according to one lawyer with knowledge of the deal, who says the acquisition of Ince's name, brand recognition, international reach and goodwill will "kick up Gordon Dadds' market position".

Gordon Dadds, in contrast to Ince, has grown rapidly in recent years, and become the second-ever listed UK law firm last year by way of a reverse takeover, earning an £18.75m valuation. 

By this point, it had already gained an acquisitive reputation, swallowing up administration-bound firms including Davenport Lyons in 2014 and Jeffrey Green Russell in 2015, and since its listing it has continued to bolt on smaller practices, including Cardiff's Thomas Simon and Bristol's Metcalfes, driving turnover to £31.2m. But the potential acquisition of the much-larger Ince raises many more questions.

"Why would partners at Ince vote in favour of a merger?" one City partner asks, before providing the answer: "Because they have no choice."

In recent times, Ince has taken drastic measures to steady the ship, including a partnership restructuring, a redundancy round and a change in management earlier this year. But for many, the decision to tie-up with Gordon Dadds suggests a bleaker picture than had been thought.

"It's an indication of how bad things are at Ince," another partner suggests, adding: "Gordon Dadds acquires organisations in deep trouble, like Davenport Lyons and Jeffrey Green Russell. These were firms in a great deal of trouble. Gordon Dadds' model is about amalgamating distressed products and making it work."

Gordon Dadds' management credentials – particularly in the context of unsettled leadership at Ince following senior partner Jan Heuvels' early resignation this summer – are also seen as a motivating factor behind the merger.

With Gordon Dadds, Ince is acquiring a management that appears to know what it's doing

One source who has tracked the tie-up closely says: "Ince management will have concluded they need strong businessmen at the helm to make the difficult decisions. Gordon Dadds' management team are businessmen. They view law firms as a commodity, and they'll remove people they see to be underperforming."

Another partner comments: "With Gordon Dadds, Ince is acquiring a management that appears to know what it's doing."

Indeed, Ince – long in the market for a merger – has to date been unable to find a willing partner, despite exploratory talks with firms including Hill Dickinson and Watson Farley & Williams.

"[Ince] couldn't find the deal it needed," according to one partner. "In the grand scheme of things, it probably couldn't execute [a Watson Farley merger]. It wasn't achievable, so it looked at other things. The management at Ince will likely have excluded other, more logical, courses before deciding on this one."  

However, in some quarters the proposed deal is seen as a sound commercial move – for both parties. One City partner comments: "It's an odd combination, but it could work. The two will likely maintain separate businesses that don't compete. There will be back-office synergies and cheap and easy access to capital."

Another partner suggests Gordon Dadds may now build up "a conglomerate of firms [that] want to get in on the deal", suggesting there is "significant appeal" behind a tie-up.

"What Gordon Dadds offers is an ability to incentivise staff on share capital rather than the distant hope of partnership. There is an appeal, and it could very well slot in other businesses into that structure.

"For Gordon Dadds, it's transformative; for Ince, necessary."

Other partners suggest the merger "gives comfort" to Ince partners, who now find themselves suddenly "off the hook". "Ince was drowning, Gordon Dadds threw it a lifebuoy," one lawyer says. And the rescue puts Gordon Dadds firmly in the driving seat. 

"What's in a name? Well, quite a lot it seems. Gordon Dadds have that big name they will have wanted," says one partner. "One thing's for sure – Gordon Dadds is in charge. Where it chooses to steer next will be watched with interest."