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December 19, 2014

Baker Tilly in the UK reports double digit growth thanks to Tenon acquisition

By Vincent Huck

Baker Tilly in the UK (Baker Tilly), former member firm of Baker Tilly international, which has now joined RSM international, has reported 47% growth in in the year ending 31 March 2014 up to £245m ($348.7m) following the acquisition of RSM Tenon.

Baker Tilly acquired RSM Tenon in a pre-pack deal in September 2013 and subsequently left Baker Tilly International to join RSM International. However the firm is the owner of the Baker Tilly brand and negotiations are still ongoing as to where the brand will go.

The contract binding Baker Tilly International and its UK firm contained a legal provision which stated that if the UK firm was to leave the network the brand ownership would be transferred to the international organisation for a fee, IAB has learnt. This would suggest that the current negotiations are around how much that fee would be.

Whether Baker Tilly UK’s move to RSM Tenon was beneficial will be determinate in time, but the acquisition of RSM Tenon certainly served the UK firm as it has reported double digit growth in in all service lines and nearly doubled the advisory practice size.

Audit and assurance revenues were up 23% to £66m, tax and advisory revenues increased by 41% to £107m, restructuring and recovery up 14% to £27m, corporate finance grew by 35% to £16m and the newly launched risk advisory service line generated revenues of £15m.

"This has been a transformational year for the group which has seen a full integration take place within a year of our acquisition," managing director Laurence Longe said. "Although the financial performance of a professional services firm in the year following any major merger or acquisition can often be a challenge, it is certainly pleasing to note that both consolidated profits and partner profits rose by significant amounts."

Longe said that it was equally pleasing to see that the firm had fully repaid the long term loan of £32m taken to finance the acquisition of Tenon.

"This was largely made possible by the sale of the financial management businesses acquired in the Tenon transaction which were not considered to be core to our long-term strategy and we have now returned to a net cash position," he said.

Looking at 2015, Longe said he saw signs of growth in all service lines but that the firm strategy focused on a greater emphasis on advisory services.

"Nearly 80% of our revenues are considered recurring from our current client base and, while this provides inherent stability, it also provides an ideal platform from which to grow new advisory service lines to meet ever changing client needs," he concluded.

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