RSM Tenon looks to make Merry with new chief

THE FINANCIAL, restructuring and professional services skills accumulated by new RSM Tenon CEO Chris Merry will be put to the test over the ensuing months.

A chartered accountant and former Clifford Chance CFO, Merry finds himself in the top job at the listed-business advisory firm at what could best be described as a crossroads.

The last of the accountancy consolidators listed on the stock exchange, RSM Tenon has suffered a traumatic six months, culminating in the departure of chief executive Andy Raynor and chairman Bob Morton.

Despite turning over nearly £250m for the year ending June 2011 – and profits of £30m – a series of profit warnings, structural concerns and the flagging up of accounting issues have led to changes in the board’s management team.

RSM Tenon’s individual problems would be of concern to investors, but grouped together they require serious remediation.

Revenues for the six months ending December 2011 are predicted to come in 10% lower than the same period a year earlier – which should see the firm post a loss. The costs associated with integrating big acquisitions including RSM Bentley Jennison and Vantis have eaten into the firm’s cash, and subsequently the P&L.

Merry is no stranger to turnaround roles.

Then FD of recruiters Whitehead Mann, Merry stepped up to MD and then CEO after the firm issued a profits warning in 2004 following a failed attempt to expand the business.

By 2006 Merry’s fellow directors became involved in a management buy-in of the business involving investors Palladian. Merry then joined privately-owned financial services business Matrix Group as chief executive.

Aside from the focus on Merry’s future role, RSM Tenon’s recently appointed FD Adrian Gardner has already proved pivotal at the firm.
Having joined in October 2011, Gardner has been running a brush through the firm’s accounts.

A likely restatement of its previous year’s results, flagged up in RSM Tenon’s last trading update, may well have proved to be the straw that broke the camel’s back as far as the existing management team was concerned.

The revision will include some non-cash restatements, while impacting on around half of the 10% revenue decline.

Speaking to Accountancy Age, Gardner attempted to play down the restatements. “We are not talking very big numbers here,” he said.
The words of both Gardner and Merry will be very important to the business going forward.

Analysts have already voiced their concerns about the viability of the business I its current format going forward.

Keefe, Bruyette & Woods analyst Justin Bates warned that he expected to see changes at the business. “You could see a potential break up of certain divisions that don’t sit neatly with the business.”

And it’s not just about convincing the city. As with all people businesses, RSM Tenon’s executives will have to placate office senior managers or risk them splintering the group.

Other key considerations will include looking at its huge insolvency division which has provided disappointing results. Despite tough economic conditions, corporate collapses have come in at a lower level than was expected.

If there were any doubts as to the reasons behind Merry’s appointment, it was crystal clear from chairman Adrian Martin’s welcome statement: “Chris has a strong track record of transforming businesses and I am confident that with his experience, RSM Tenon has the leadership to restore profitability and growth.”

Merry said: “Whilst RSM Tenon is undoubtedly going through a challenging period, there is a strong underlying business and a solid platform for the future. I look forward to working with the executive team to restructure and build the business for the long term.”


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