Accountancy M&As – like buses

Accountancy M&As - like buses

There's been little M&A activity for years and then two come along at once

IT’S BEEN YEARSsince mergers and acquisitions of note have hit accountancy headlines. Then two come along at once. We have seen BDO amalgamate PKF into its brand and now, RSM Tenon has been sold to Baker Tilly. 

Although RSM Tenon and Baker Tilly were open about their discussions (mainly due to the former being listed), I wrote earlier this month my prediction that a pre-pack might be on the cards. With the secured debt at RSM Tenon, estimated to be in the region of £88m, attached to the parent company; but the trading business has no debt but all the clients and working capital – why not buy just the trading business? The only way to separate the two would have been through an insolvency of some description.

The writing was on the wall for RSM Tenon back in January last year, when the firm had to restate its accounts showing that revenues would be 10% lower than expected, for the six months ending December 2011.  It has been unable to rearrange its banking arrangements and was heading towards breaching its bankng covenants.

The listed business reported a loss on continuing operations of £71m after being stung by a goodwill charge of £60.7m. However, the firm did well not to collapse immediately following the discovery of an accounts black-hole. For example, listed Black Cab maker Manganese Bronze discovered a £3.9m black-hole in August 2012 only for the company to enter into administration just two months later in October, which was sold to Geely UK in February.

To keep the clients happy enough to stay and the business attractive enough for a buyer more than a year later is no easy feat. However, it will be interesting to see what response the rest of the accountancy market will have to the two new super powers and how Baker Tilly will begin the task of amalgamating RSM Tenon.

Rachael Singh is senior reporter for Accountancy Age and Financial Director

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

3m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

4m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

5m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

5m

Related Articles

Late payments like "crack cocaine" for large businesses

Business Recovery Late payments like "crack cocaine" for large businesses

2m Tom Lemmon
More bad news for Debenhams

Business Recovery More bad news for Debenhams

9m Emanuela Hawker, Reporter
Insolvency and corporate governance

Business Recovery Insolvency and corporate governance

9m Chris Laughton
Impact of Brexit on restructuring and insolvency

Business Recovery Impact of Brexit on restructuring and insolvency

11m Emma Smith, Managing Editor
Toys R Us UK and Maplin enter into administration after failing to secure buyers

Business Recovery Toys R Us UK and Maplin enter into administration after failing to secure buyers

1y Alia Shoaib, Reporter
How to avoid a Carillion collapse

Business Recovery How to avoid a Carillion collapse

1y Russell-Cooke
Carillion collapse: The week so far and industry reaction

Business Recovery Carillion collapse: The week so far and industry reaction

2y Emma Smith, Managing Editor
Carillion: PwC appointed as special managers – what happens now?

Business Recovery Carillion: PwC appointed as special managers – what happens now?

2y Emma Smith, Managing Editor