WOULD ANDY RAYNOR still be in a job if RSM Tenon was privately owned, rather than listed?
I guess you could also ask: if yes, then would he deserve to be?
One of the main issues surrounding the listed accountancy firm model is how to keep both the ‘partners' (technically directors) and shareholders happy.
Tenon's system of salary + bonus for its partners seems to have worked fine, and is an area Raynor has spoken of with pride in the past.
But it's one thing communicating to internal staff and keeping them happy - pushing the big picture out to the investor community is another matter entirely. Tenon doesn't seem a broken business - but it's having a tough time. The board is presiding over an impending loss, an impending restatement of accounts (lined up by relatively new CFO Adrian Gardner) - while sorting out new banking facilities. Investors are spooked.
Bear in mind that this has all come around pretty quickly, with the firm admitting its revenues can't live up to its cost base (its acquisitions of Bentley Jennison and Vantis apparently not stacking up as well or as quickly as hoped). Squeezed margins and lock-up increasing are signs of a tough trading environment - not helped by a fairly hefty insolvency division that hasn't brought in the funds like hoped.
But there are a lot of firms in a similar position or worse. Tenon posted an operating profit of £30m for 2011. I'd bet that within a traditional partnership or LLP Raynor would still be sitting tight.
But Tenon's not, and Raynor isn't. Going to the markets to raise capital ultimately leaves you at the behest of the shareholders. If they're not happy, they let you know with their feet. And now Raynor - and chairman Bob Morton - have followed them.
Oh, and a small word for CFO Gardner. It was good to see him stick his head above the parapet and talk to the press yesterday about some of the issues at the firm. Nice to see that some finance directors can brave journalists.
Read the background on RSM Tenon here.
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