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December 22, 2009

Tenon and RSM Bentley Jennison to form UK’s seventh-largest firm

Andy Raynor and Tony StockdaleTenon Group is to acquire RSM Bentley Jennison in a merger that will create the seventh-largest firm in the UK.

The boards of both firms have agreed to the combination, which must be approved by shareholders at an extraordinary general meeting on 29 December. RSM Tenon will have 3,000 staff and generate annual fee income of £250 million ($409 million).

The firm would leapfrog Baker Tilly, which reported fee income of £204 million in the year to 31 March 2009.

Tenon Group chief executive Andy Raynor will lead the combined entity, while RSM Bentley Jennison national managing partner Tony Stockdale will join the board as well as represent the firm on the RSM International board.

“This deal is a combination of the two most substantial entrepreneurial businesses in our industry. It is the beginning of a new era of opportunity and growth for our teams and provides us with an excellent platform from which to challenge traditional approaches to client focus and service delivery,” Raynor said.

Stockdale told the International Accounting Bulletin the strength of Tenon’s corporate recovery practice combined with RSM Bentley Jennison’s niche risk management business made the merger a perfect match.

“There is a very strong commonality in terms of what we are seeking to do in the marketplace. Our core audit and tax businesses target the same market, principally the SME and mid-market,” Stockdale added. “In addition, we have some wonderful specialist services, Tenon’s corporate recovery business and our risk management business. While there is no overlap there, by putting those two businesses together we’ll have an even stronger range of services to go out to the market with.”

Tenon’s corporate recovery business grew 41 percent to £41 million in the year to 30 June 2009. This was the firm’s star performing business line. The firm reported revenue of about £151 million, which included an underlying profit increase of 8 percent on its previous year.

RSM Bentley Jennison has been one of the fastest growing mid-tier firms in the UK over the past few years. The firm reported annual fee income of £80.3 million in the year to 30 June 2009 and the firm’s 12 percent growth rate is the highest among mid-tier firms (see UK survey: A slow grind). RSM Bentley Jennison has doubled in size every four years since its foundation in Birmingham in 1984.

Stockdale said there will be a review of which business areas might overlap but stressed this does not mean job cuts. He said the main reason for the merger was to provide both entities with a greater platform for growth, which should lead to recruitment.

“Clearly, when putting two large businesses together one needs to look very carefully at what we have and how that should be most properly structured for the future. Obviously that will be done over the course of the next 12 months,” Stockdale said. “But the real point here is the reason we are putting these two businesses together is the platform it gives for growing the businesses in a better and stronger fashion going forward.

“If you look back over the last five to six years, both businesses have achieved pretty substantial growth and we expect that growth to increase. In terms of jobs, clearly if we are going to grow the business we will need more people rather than less people.”

International Accounting Bulletin understands Tenon intends to raise £40 million for the acquisition through a new share offer. The company has also arranged new banking facilities to help fund the deal.

Stockdale confirmed £40 million will be paid to Bentley Jennison, which could be shared among equity partners. Partners will also receive £17.5 million in RSM Tenon shares and another £18 million could be payable over three years on a performance basis.

Tenon is still officially a member of the multi-disciplinary association Morison International, but would join RSM International once the merger ink dries.

RSM International chief executive Jean Stephens told the International Accounting Bulletin the merger caps off a good year for the network, which has grown its presence in Poland, Ireland, Japan and Saudi Arabia.

“This brings an expanded team with expanded capabilities,” Stephens said. “Of course [increased] size, if you use it right, opens up opportunities and then it’s about serving those clients and going after those internationally. In the UK, we will have a bigger base to start from so then we can go after larger companies together.”

Morison International chief executive Liza Robbins said if the merger does go through the association would be seeking to replace Tenon with a quality UK firm.

“The actual impact on our resources is quite insignificant. We have exceptionally good reserves and we had a great year this year,” Robbins said. “But we do need to prioritise the finding of a new UK member firm. Tenon are very good and we will be getting a message out to our clients that it is business as usual. I don’t think there is a concern [referral work could suffer] and both parties will act sensibly.”

Robbins described Tenon’s acquisition of RSM Bentley Jennison as a “commercial reality” for a firm as large and reputable as the UK consolidator.


This table illustrates the 10 largest UK firms once the dust settles on the Tenon Group and Bentley Jennison combination.



Fee income (£m)











Ernst & Young



Grant Thornton UK






RSM Tenon



Baker Tilly



Smith & Williamson/Nexia International





Source: International Accounting Bulletin

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