By Jason Bramwell
Baker Tilly UK
completed the acquisition of the trading operations of top-ten UK accounting and consulting services firm RSM Tenon
on September 2, after Baker Tilly shareholders unanimously backed the plan.
RSM Tenon will continue to trade under its current name for a short period of time until the firm operates fully under the Baker Tilly banner.
The jobs and employment rights of RSM Tenon's 2,300 partners and staff in its thirty-five offices across the United Kingdom will be unaffected by the merger, and the professional services both firms provide to their clients will continue without interruption, Baker Tilly announced on September 2.
"This merger is an excellent outcome for the clients, partners, and staff of both firms," Laurence Longe, Baker Tilly national managing partner, said in a written statement. "Bringing the professional skills, strengths, and expertise of Baker Tilly and RSM Tenon together as one firm will significantly enhance our offering to the market and provide further opportunities for growth – both nationally and internationally."
RSM Tenon endured a difficult 2012, announcing to investors at the start of the year it would be restating its accounts for the year ending June 30, 2011, after discovering accounting irregularities. The firm admitted to "significant errors" in its last full-year financial statements, including in the way it accounted for employee bonuses and revenues from some contracts.
This announcement was followed by the departure of key members of the RSM Tenon executive team at the start of 2012, including CEO Andy Raynor and Chairman Bob Morton. The firm also took a 27 percent hit to its shares.
Last October, RSM Tenon announced it had cut 400 jobs, but in May 2013, the firm said an award of £5.5 million would push its accounts into a profit of £2.8 million for 2013. However, the firm warned it was still in talks with its lenders.
On August 22, RSM Tenon's parent company, RSM Tenon Group PLC, entered administration, with Matt Smith, Nick Edwards, and Clare Boardman of Deloitte LLP appointed as joint administrators. They immediately sold the trading operations to Baker Tilly UK Holdings Ltd. in a pre-pack arrangement.
According to the Association of Business Recovery Professionals
, a pre-pack is a "deal for the sale of an insolvent company's business and assets which is agreed in principle before the company goes into a formal insolvency process, usually administration."
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Baker Tilly had publicly expressed an interest in purchasing Tenon in July when it announced it was considering an offer for the share capital of the firm; however, after failing to make an offer for the firm's share capital, the pre-pack sale went forward.
Smith, Edwards, and Boardman were also appointed joint administrators of Premier Strategies Ltd., a subsidiary entity of RSM Tenon which provided tax advice, but ceased selling new business in March 2012.
"This transaction allows for the ongoing success of RSM Tenon's profitable trading businesses, free from the burden of the group's historic debt obligations, as part of an enlarged and financially strong Baker Tilly group," Baker Tilly said in a statement August 22. "We believe this is an excellent outcome for RSM Tenon's clients and employees, allowing for enhanced service excellence and career development opportunities."
Given RSM Tenon's level of debt, any potential transaction would require the support of its sole lender, Lloyds Banking Group.
"Financial backing for the acquisition has been provided by Lloyds TSB Bank PLC, whose past financial support to RSM Tenon has been essential to safeguard the jobs of all those working for the business," Baker Tilly stated.