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October 24, 2013

RSM Tenon’s shareholders lose out

A report by RSM Tenon’s administrators Deloitte has revealed that while RSM Tenon’s creditor Lloyds Banking Group will receive £29m of the £86m owed, there will be no return to shareholders.

The report revealed that Baker Tilly UK acquired RSM Tenon for an aggregate value of £30m, comprising: £1m in cash for RSM Tenon’s shares, £22m to settle bank debt and £7m working capital adjustment.

Kato Consultancy co-founder Andrew Jenner said: "Lloyds cut their losses and if they hadn’t come down to this the business would have disappeared."

The report also revealed that on 8 October Baker Tilly UK acquired the client base of RSM Tenon PSL (a subsidiary of RSM Tenon which was not included in the pre-pack deal) for £80 000.

"The jury is now out," Jenner said. "Baker Tilly will have a lot of issues to address and I should hope that they thought about it and have done their due diligence before making their move."

Amongst the list of issues that need to address is the integration of the new staff and offices. "They will have to do some surgery to consolidate offices into one another and face properties and staff issues," Jenner said. "They will be a fall out, because Baker Tilly UK doesn’t need the administration staff nor do they need the partners."

Jenner says that as a result of the acquisition Baker Tilly’s average profit distributed to partners will go down significantly.
"And the highest this figure is the more profitable the business is," he says.

Even though shareholders won’t get any return, overall Jenner believes that Baker Tilly UK’s acquisition was one of the best options: "The shareholders won’t get anything, the creditors will get a third of what they should have received, the staff get to keep their job for now and the business survives. So at least a number of stakeholders are satisfied."

Related links:

Baker Tilly UK shareholders approve RSM Tenon takeover

RSM Tenon sold to Baker Tilly UK in pre-pack

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