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Raynor goes as RSM Tenon shares slump

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25th Jan 2012
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Shares in listed consolidator RSM Tenon plummeted this week after the firm issued a profit warning and announced the immediate resignations of chief executive Andy Raynor and chairman Bob Morton.

In a trading statement on Monday, RSM Tenon revealed that revenues in the six months to 31 December were approximately 10% lower than the same period in 2010 due to pricing pressure and reduced demand for its services. It also announced that CEO Andy Raynor and chairman Bob Morton were stepping down "with immediate effect".

Adrian Martin, currently deputy chairman and senior independent (non-executive) director, took over as executive chairman. The board appointed Michael Findlay as deputy chairman and brought in former BDO chief executive Jeremy Newman as a consultant. Martin, who has an 8% share in the company, will remain on the board as non-executive director.

Martin said: “The company's performance is clearly disappointing and my immediate priority is to instigate and execute the necessary actions to improve profitability and cash generation.”

CFO Adrian Gardner is leading a review of expected performance for the remainder of the year and intends to carry out any “necessary actions” to improve the company’s performance.

Shares in the company plunged by two-thirds in the past three months with Raynor warning in December that “challenging conditions” were hitting the firm hard. Following Monday's announcement, shares in the firm fell 29%. 

As predicted by some, the flagship for accountancy’s consolidation movement has come unstuck. Like Target, but on a much larger scale, RSM Tenon appears to have overstretched itself in tough market conditions and hasn’t able to trade its way out from under its £33m debt.

Created through the merger of Tenon and RSM Bentley Jennison in December 2009, the firm joined the stock market in May 2010, and added the advisory divisions from the remains of Vantis in June 2010.

In a speech at last year’s CCH UK conference, Raynor said: “Growth is not a natural state. Growth is never a constant. Don’t assume it.” He argued against the opinion that growth increases risk: “The process and structure of how you get there can cause it. It’s not an issue of finance that makes people trip up, it’s to do with the management overextension that can come with growth.”

Mark Lee, a long-time consolidation sceptic, commented this week: “I think it's sad. I always thought Andy was running the business effectively. Especially with the restatement of its accounts, only insiders will know whether the firm struggled to fund partners pay in the current conditions, or if the business model is fundamentally flawed.”

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David Winch
By David Winch
25th Jan 2012 13:06

Share price

Shares in RSM Tenon are currently trading at about 6 pence.  A year ago they were trading at around 60 pence. Ouch!

David

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By Brugesbear
27th Jan 2012 12:09

For "challenging conditions"...

...read greedy directors in board room.

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