IS RSM TENON a good business?
Obviously Baker Tilly thinks so. Or at least one with potential.
Without having to carry RSM Tenon's full Lloyds debt burden on its own books, on the face of it the deal becomes more compelling. Indeed, the RSM Tenon executives have led a big restructuring at the business which saw it entering a period of relative operational stability.
It will be interesting to see whether RSM Tenon CEO Chris Merry considers the deal a ‘success'. It will certainly secure many people's jobs, but won't look too hot on his CV.
Let's not forget the long-suffering shareholders who are out of pocket.
While Merry and the other directors were unable to reconcile the debt issue with Lloyds, Baker Tilly has been able to swoop in. As Merry said to Accountancy Age on his appointment last year, "a people business is about confidence". Many of their partners, shareholders and financiers lost confidence.
And there is more dirty work to do, which will fall into Baker Tilly's lap.
RSM Tenon has been haemorrhaging partners, and Baker Tilly's intervention doesn't mean that process will end. Indeed, it will want to see if anyone's hanging around that needs ‘retiring'. And the cost of pushing people out of the door, looking at office mergers and bringing together back-office functions and systems is painful.
Ask Grant Thornton about its post-RSM Robson Rhodes shenanigans.
And, speaking of RSM, the international network faces another search for a UK incumbent.
UK mid-tier firms face succession planning issues, a stagnant market with too many players, plus big and small firms encroaching into their space.
It has been predicted for many years, but now the time has come for change. The BDO/PKF and Baker Tilly/RSM Tenon deals will not be the last.
Firms will live, and firms will die. But at least things will be different.
Kevin Reed is editor of Accountancy Age and Financial Director
Brilliant article and so so true. There are loads of Partners at RSM 'waiting retirement' - when you look at why they collapsed you can't just blame management although they have to take a huge share of the blame but also remember the people actually charged with doing the deals and bringing in the new work - too many were laughing with a decent employee contract ( gone were the equity partner risks and rewards) so when things went wrong ....yes I'm upset but do you know what actually I still get my salary so I will just keep going on as before ....at least 7 locations where RSM and BT have an office each...well lets think about what happens there shall we....then the network issue - the RSM network is dominated by McGladrey in the US - the BT network is much stronger in Europe - McGladrey has been vital in providing inbound work to the London RSM office...what will happen now? In summary as the article says there is much pain to come as integration on this scale always involves casualties be it in support or other central functions but the bottom line is that the new merged firm will have a few large head aches to deal with and they will take at least 1-2 years to sort out.....and that is before we think about audit methodology / whatever accounting system they both currently use / their individual practice management systems / their IT systems... The list goes on but this is one deal that will certainly take a long time to make harmonious.....
Posted by: 2010 and never again, 23 Aug 2013 | 18:55
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.