Overview: Tenon -consolidated effort

Tenon, the AIM-listed accounting group, has had a difficult time of it over
the last few months, but after slogging through a strategic review and
considering a management buy-out the firm has taken the bold step of appointing
AIM firebrand Bob Morton as its new chairman.

Morton is a familiar personality in the circles of the junior exchange. He
has an impressive collection of AIM chairmanships (four including Tenon), and an
even more formidable reputation.

Morton has aggressively grown AIM companies and his appointment is a clear
signal from Tenon that it is tired of putting up with a market that doesn’t
value it fully.

What’s Happened?

Morton and Tenon go back a long way together. In 2003 Morton’s family
investment vehicle, Southwind Limited, snapped up almost 15% of Tenon’s share
capital and since then Morton has remained a major shareholder in the company.

There was even speculation at one time that Morton was plotting a merger
between Tenon and its AIM accounting rival Vantis, as Morton had been a partner
at one of the four founding firms in Vantis, Morton Thornton.

Tenon’s new chairman no longer holds shares in Vantis, but he remains a
significant influence in a number of other companies. Just this month Morton
grabbed the headlines when he threatened legal action against Interserve, the
building company that was forced to wipe-off £25.9m from its accounts because of
accounting problems.

Morton replaces long-serving Tenon chairman Neil Johnson. Tenon’s chief
executive Andy Raynor said Johnson had been ‘terrific’, but added that Tenon
needed to change direction, and that Morton was the man to do it.

What’s Going To Happen?

It might be an overstatement to say that Morton’s appointment is
make-or-break for Tenon, but it probably is one of the last cards Raynor is able
to play. The Tenon chief executive has admitted that after completing the
strategic review in July and listening to offers, it was clear that ‘the grass
wasn’t greener on the other side’.

That doesn’t mean that it had been an easy ride on AIM either. Tenon’s share
price has underperformed that of Vantis, and analysts expressed concern about a
£30m debt on the company’s balance sheet.

With the stock market undervaluing the business and the buy-out route
unattractive, Tenon called on Morton to come and sort things out, and already it
seems as if the move has paid off. Since Morton’s appointment was confirmed,
Tenon’s share price has perked up nicely and Raynor has sounded far more bullish
on the business.

Tenon has to build on this momentum. Its new chairman will not tolerate
anything less.