Bidders still keen on Tenon despite losses

AIM-listed accounting firm Tenon confirmed there were still buyers lining up
to challenge the management buy-out led by chief executive Andy Raynor, despite
a £1.5m interim loss booked last week.

Even though it was still unclear who the interested parties were, the news
will come as a setback to Raynor’s MBO plans. In January, it appeared that the
road was clear for Tenon’s chief executive to bid unchallenged as BDO Stoy
Hayward, PKF, Vantis and Grant Thornton ruled themselves out.

A spokesman for the group said a number of interested parties had taken a
‘proactive interest’ in the entire business and were in advanced stages of
negotiations. He added, however, that a ‘transaction’ was not the only

‘Tenon is a strong stand-alone business with a progressive strategy and
benefits. Interest has been for the business in its entirety, and an MBO is one
of the options on the table,’ the spokesman said.

The unnamed parties have remained interested in the group even though Tenon’s
interim results for the six months to the end of December 2005 were

The group revealed last week that it had managed to grow revenues from £47.2m
in 2004 to £52.1m, but could not avoid posting a

statutory loss of £1.5m, compared with a profit of £1.9m in 2004. Profit
before tax, goodwill amortisation, terminated operations and other exceptional
items were also down, halving from £4.2m to £2m.

What is certain, irrespective of the group’s results, is that Tenon will not
be broken up in the same way as Numerica, the now-defunct AIM accounting firm
that was carved up between BDO Stoy Hayward and Vantis last year for £15.8m.

The spokesman said Tenon would not close down or spin-off the less profitable
parts of its business in favour of services like outsourcing, financial services
and taxation, which all generated double-digit growth and were the main revenue

The group’s share price has not reacted to the bid speculation and has
remained flat at around 23p. Raynor initiated the MBO at the start of the year
to spark Tenon’s share price, which has lagged that of rival accounting firm
Vantis, even though the revenues and profitability of the two groups are
similar. A deadline for the bids has yet to be finalised.

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