THERE HAVE BEEN a few sniggers, some tutting heads, and chequebooks lined up among the profession over RSM Tenon's plight.
Some have found the situation amusing, many more have offered their opinion on how the firm got itself into such a mess, while others have told me about their tentative discussions over the potential sale of certain offices.
I, for one, am sad about the tough going ahead for its staff. I'm certainly not suggesting they should up and leave - the grass isn't always greener and new CEO Chris Merry will be driven by a number of factors to tidy up the firm as quickly as possible.
What will make him move quickly? The overarching issue will be his duty to create value for shareholders - or should I say try and recapture some value, with shares trading at 8.44p from 37p a year earlier.
Secondly, as I've mentioned already, he will want to keep the best staff and of course don't forget clients. Uncertainty isn't conducive to retaining either of these groups.
Current lenders Lloyds are due repayment on £88m of debt on 31 October. Renewing this facility with Lloyds, or negotiating with another lender, will naturally start before then.
Headcount reductions and efficiency savings are painful, no doubt about it. Perhaps interim restructuring ‘overseer' Donald Muir will have to play the villain on this front, leaving management free to place the business back onto an even keel.
What the whole profession should be disappointed about are the accounting issues Tenon has faced, and the unseemly argument that has been anonymously revealed in the press with its auditors PwC.
If between them they can't cobble together a decent set of numbers then I'm at a loss.
But their spat, which sees to involve the two blaming each other for Tenon's restatements, has the potential to be more damaging to the listed firm than the various other issues it faces.
Whether PwC were in part responsible for the restatements or not, I think Tenon should take it on the chin and move on.
It's tough enough for the firm that, as a publicly-listed entity, it must make statements to the stock exchange. If information over its argument with PwC has leaked once, it will again as the situation progresses. If anything will make it difficult for the firm to retain clients or win new ones, I believe it's this.
With relations as strained as this I'd be very surprised if PwC remains as auditors for much longer.
Part company, I say, and let's see Tenon focus on turning around.
I hope that those sniggering at 10% of Tenon's workforce losing their jobs suffer a similar fate. The spat with PWC is entirely overblown by people who clearly don't have anything better to do than gossip (perhaps they don't have enough work to get on with)
Posted by: Mark, 04 Apr 2012 | 13:13
It has always been tough to be in the middle.
Small firms build close client relationships and when times are tough can 'dig in' to their local community. The big four have a secure base of work that is, and will continue to be, shared out among them, and they have the resources to reposition themselves for changing times. But the middle...
The focus and ambition that created RSM Tenon were at one stage causing ripples of alarm. Small firms don't always fully embody best current practice and they don't enjoy economies of scale; the big four and the next group of domestic majors have sometimes seemed complacent - and often seem to some to have relied on client dependency. RSM Tenon was a very different competitor.
The firm's present trouble shows both how narrow the divide between success and failure can be, and how challenging it is for the profession to deal with the short-term-results-focused and confidence/sentiment-driven stock market. It will be hard for RSM Tenon to arrest the slide: cuts often lead to more cuts, as key staff see the risk and move on - followed by clients.
But it may well pull through. And if it doesn't, the UK industry is ripe for another challenger to rise.
Posted by: Jeremy, 10 Apr 2012 | 07:42
The restatement was mainly the write off of Goodwill.
It wasn't hidden in any way, it was sitting on the face of the balance sheet of the accounts that PwC signed off.
Why shouldn't PwC take it on the chin?
Posted by: Jenny, 02 May 2012 | 14:33
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