RSM Tenon enters administration as Baker Tilly sale is agreed

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RSM Tenon has appointed Deloitte as administrators and an immediate sale of the firm to rival Baker Tilly has been agreed

RSM Tenon announced this morning it does not expect to continue to meet its liabilities and its sole lender, Lloyds, had informed the firm it was unwilling to waive any covenant breach.

It has therefore appointed Deloitte as its administrators.

Immediately following their appointment, the administrators agreed a sale of the company’s trading entites to Baker Tilly. The sale is expected to be completed within two weeks.

In this morning's stock market announcement RSM Tenon said, “Lloyds Banking Group plc informed the Company this morning that, should the Company, as expected, be in breach of its banking covenants, it would not be willing to grant a covenant waiver. Consequently, and in the absence of any other available facilities, the Company does not expect to continue to be able to meet its liabilities as they fall due.

“The Board of the Company therefore concluded that, in such circumstances, the appointment of administrators was the most appropriate course of action."

The sale agreed by the administration will realise no value for shares in RSM Tenon. The sale of the firm, which had net borrowings of £80.4m as of 31 December, means Lloyds “will not recover its secured debt in full”, the statement said.

Baker Tilly said the deal allowed for the "ongoing success of RSM Tenon’s profitable trading businesses, free from the burden of the group’s historic debt obligations, as part of an enlarged and financially strong Baker Tilly group."

The firm said it had been given financial backing for the acquisition by Lloyds TSB bank. Laurence Longe, Baker Tilly’s national managing partner, said, “As a people business, the key asset of RSM Tenon has always been its highly skilled and professional workforce of partners and staff.

“Baker Tilly and RSM Tenon are businesses of a comparable scale operating in similar markets across the UK and internationally, and so combining our strengths and skills will provide us with new opportunities for growth, as well as further strengthening and expanding our offering to the market.”

Deloitte’s Matt Smith, Nick Edwards and Clare Boardman have been appointed to handle the administration.They said the proposed sale would mean no job losses are expected.

Smith said, "We believe the proposed sale to Baker Tilly represents the best outcome for the RSM Tenon group. The management of the group have stabilised the business, returning it to profitability over the past 18 months and making this transaction possible to secure its future.

"In the meantime we are working closely with the directors of the trading entities and their management and staff to continue to support the business until the sale is completed. We appreciate the cooperation and support from the staff, customers, suppliers and landlords during this period."

The announcement ends six weeks of speculation after Baker Tilly announced in July it was considering a takeover approach for the firm. Shares plummeted in RSM Tenon following the announcement, and this morning shares in the firm were suspended. Baker Tilly announced it would not be making any offer for the entire share capital of its mid-tier rival, but hinted that it remained interested in the company and the potential acquisition of other parts of the firm.

RSM Tenon will continue to trade as normal. A cancellation of RSM Tenon shares is expected imminently.

Helen Roxburgh


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  • Comment by Anonymous

    From day one, a good number of years ago, it was clear that TENON were incompetent in their management. Buy practices, create specialist departments, tax, receivership, audit, small business. Attractive salary packages, to entice quality staff, refurbished offices, but no consideration to the possibility of a slow start. Very young and naive to a merging of PARENT control. A great idea that was doomed to fail. I knew many great professional staff who sadly saw this was a certain FAILURE.

  • Comment by Asia Bibi

    As a former employee of Baker Tilly, I think this is shrewd business for the company. They have cherry picked the assets of the business. You will be naive to think there will be no redundancies in 12 months time. There has to be to "consolidate" the companies. BT are still lagging behind in terms of brand and competence when compared to BDO and Grant Thornton. Ideally BT needs to be acquired by a big four firm should it wish to be successful.

  • Comment by Anonymous

    First Vantis and now Tenon. Two quoted accountancy firms. I can't begin to think what the public perception is of our profession. Perhaps ' accountants, they can't even run their own firms' ??

  • Comment by Richard

    I do not know the particular reasons for RSM Tenon's demise. It is however a sad state of affairs and frankly embarassing for our profession which is starting to look impotent following the recent financial crisis. We need to up our game.

  • Comment by Neil Thomas

    Tenon will drag Baker Tilly down with it! their corporate cultures are too different

  • Comment by Anonymous

    The demise of RSM Tenon is the familiar story of greed of those at the top table. The frantic drive for "growth" at any price was motivated by the greed to attempt to push RSM Tenon's share price up so as to benefit the few at the top table who had awarded themselves huge amount of share options. The £76 million take over of Bentley Jennison in 2009, funded by reckless bank borrowing, to enable RSM Tenon to move from AIM to LSE full listing was the fatal step that led to RSM Tenon eventual demise. This was no different from RBS' disastrous gamble in spending huge sums acquiring businesses and investments of dubious value, and rewarding those responsible. Rumors had it that those at or near the top table of RSM Tenon tasked with assessing the viability of the take over of Bentley Jennison were promised big rewards on the completion of the take over. Such conflict of interest did not occur to those at RSM Tenon's top table who were blinded by pure greed.

  • Comment by Geoffmw

    How many of the partners in RSM Tenon who are qualified accountants will now suffer from investigation by their professional body?

  • Comment by Anonymous

    What about the staff at Tenon? Surely there will have to be redundacies, and who will foot that bill?