Mid-tier consolidation on the cards
Consolidation between mid-tier firms is inevitable if they are to survive the economic crisis, says Tenon chief, Andy Raynor
Tenon chief, Andy Raynor
Tenon chief Andy Raynor has predicted other firms in the mid-tier will be
forced to team up if they are to survive the economic turmoil.
Raynor said that consolidation would be inevitable for cash-strapped firms
without the ability to refocus their services on meeting the hike in demand for
insolvency work.
‘There will be more consolidation,’ said Raynor. ‘Between [accountancy firms
ranked] seven and 30 there are businesses that have succession problems, ageing
partnerships, working capital issues and not generating the kind of revenues
that allow them to commit resources into their recovery arms.’
One practice watcher said that there were a number of top 20 players that are
under pressure. ‘There are quite a few in the Top 20 that will have to consider
their positions because of the extent of their borrowings and the cost bases
they have to cover.’
All of the Big Four and members of the chasing pack, including BDO Stoy
Hayward, Grant Thornton PKF and Tenon, had to take steps which included offering
staff voluntary redundancies or sounding them out about working a four-day week.
A total of 5% of Tenon’s 1900 staff found their jobs under threat, but the
Top 10 firm has ploughed resources and redeployed staff with transferable
skill-sets into its recovery arm to meet the hike in demand.
Asked whether Tenon had been sounded out about a possible association, Raynor
said: ‘[Tenon is] always talking to businesses.’
On the question of whether Tenon had made any advances, his answer was the
same.
The firm has just posted half-yearly revenues of £74.9m, slightly down on the
£75.8m it made for the 6 months to 31 December 2007, suggesting it has balanced
out the peaks and troughs in activity hitting the profession’s service lines.
Raynor said: ‘We’re doing pretty well. Our business recovery arm has grown
nearly 43% compared to the six months to 31 December 2007. 20% is organic
growth, but the division now accounts for 26% of turnover to the half-year.’
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Raynor added: ‘If anybody tells you that it isn’t hard work then they’re
lying. It’s hard, but funnily enough we’re looking forward to the next 6months
to 2 years. The business is well-designed to take advantage of any type of
market.