Not even two years ago, I remember speaking to the then chief executive of RSM Tenon, Andy Raynor, who with charm and enthusiasm told me about all the exciting news at RSM Tenon and how the firm was planning to continue growing by M&A and was expecting strong double-digit growth.
The interview at the time was for our UK survey in December 2011 and only a month after publication something went very wrong at the firm and now we see it sold in a prepack deal to Baker Tilly UK.
On the one hand this could be interpreted as a great and encouraging demonstration of the ambitions of mid-tier companies and may foretell similar deals elsewhere in the world, especially as the mid-tier attempts to be perceived as a force to be reckoned with and a credible alternative to the Big Four.
However, on a more sentimental note, the move also means the loss of one of the UK’s well known accounting firms, which did adopt a somewhat bold business strategy and even dared to be listed on the London Stock Exchange. It also means a change for more than 2,500 Tenon employees, who are to be integrated into Baker Tilly UK and despite no job loss announcements as yet, there will certainly be changes as the two firms merge and set out new business goals.
Hopefully, this process will be smoother than RSM Tenon’s unhappy unions with Bentley Jennison and Ventis which it acquired in 2009 and 2011 respectively, with those deals and their unsuccessful integrations quoted as one of the main reasons for Tenon’s demise.
Additionally, the loss of RSM Tenon leaves RSM in want of a new UK representative, which could be prove to be difficult and, once found, is highly likely to leave another network or association firmless in the UK, leading to additional chain reactions.
While PKF International decided on a change of approach to the UK market following the loss of PKF UK in a merger with BDO UK earlier in the year, it’s unlikely RSM will follow suit. PKF International, for example, decided to rebuild part of its representation by appointing two smaller UK practices – which combined are only about a third of the size of former PKF UK.
RSM, as the seventh-largest network globally, and with very strong member firms in key economies such as the US, has as good a value proposition as any firm in the market. However there are very few market players of a similar size to RSM Tenon that could, with one move, fill the gap. As this magazine was going to press there was as yet no announcement of a new UK member firm; however not rushing into a decision on UK membership might be wise as, for any network, it’s key to have a strong representative ready to take on the increasing competition among top mid-tier firms.
A wake-up call
On to more recent events, in mid-September we marked the fifth anniversary of the Lehman Brothers collapse and IAB approached several industry experts for their opinions of how the profession has changed since and whether enough’s been done to prevent another such collapse..
While accountants were cleared of any major responsibility leading to the collapse, many believe it served as wake-up call for the entire profession.
From several comments received we also gathered more can still be done to improve corporate governance and protect stakeholders and hopefully debates such as the overhaul of auditors reporting in the US (see pages 8 to 10) and increased emphasis on integrated reporting will go some way to facilitate that in the future.