The end of consolidation?

Those of you with an eye on the stock markets, as well as the accountancy
sector, may have noticed that a little circumnavigation could be on the cards
for Tenon.

Last week saw the so-called consolidator announce that it might well go
private, as chief executive Andy Raynor and finance director Lesley Spencer
explored options for a management buyout. Of course, that could see Tenon return
to a partnership structure, the very thing it was set up to avoid back in 2000.

With the disappearance of fellow consolidator Numerica last year, events at
Tenon appear to herald the end of the consolidator project. The final act in a
noble experiment that turned out to be intriguing, but ultimately inconclusive,
as far as progressing the business of accountancy was concerned.

Tenon certainly went through the wars. Just two years after launch, it had
lost a chairman, FD and CEO to resignation at the same time as the company’s
performance dipped dramatically.

In came Raynor and new chairman Neil Johnson to take the helm, and a bit of
management restructuring followed in which some of the old partners were given a
greater role in determining Tenon’s future.

Performance improvement followed and the Raynor/Johnson double act began to
feel confident about the future. But for some reason, the share price has
remained flat, a fact that seems a mystery to the men running the company.

And given that many have substantial investments in Tenon, that’s not a very
happy state of affairs. Hence the question: should it all return where it began
­ private ownership with the owners running the business?

As tales of company evolution go, Tenon’s journey is fascinating, however
circular it may seem. But could it be more revealing about how an accountancy
business has to be run?

It could reveal that you can’t teach old dogs new tricks, and these ones
really need to have a big stake in the business to make it work well. Likewise,
it could reveal that investors know too little about the business to make it
really work as a listed company.

And here’s a telling face. While Vantis, the third of the consolidation
triumvirate, appears to be going very well, there’s no sign of another
consolidation project on the horizon. That in itself speaks volumes.

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