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Consolidator in 2010 why not now?
Well there are 4 reasons why Jobtel believe that it will take till then for them to pull together the next consolidator
1) The stock market prices are down right now of the exiting consolidators, Tenon 41 with a P/E of 8.3 and Vantis at 68.50 and with P/E of only 5.9 are both affected by this current recession. In Jobtel's view both businesses are now doing fine and Jobtel expect these shares to rise. Although Begbies P/E seems high at 24.1 the extra profits from the recession work are not yet factored in. So in all three cases the results and share prices will be more appropriate in Jobtel's view in 2010 when the market should have returned to normal and these businesses can be seen in a more representitive light. This fillip in prices is necessary to put the doubters minds to rest.
2) Larger firms financial results are expected to be hurt in early 2008/09 but hopefully will return to a more "normal" level in late 2009/2010 so that they would be going into a Consolidator on the way up rather than down - this would affect their firms valuations and hence what the partners would gain on sale.
3) It will take that time to pull together firms who may be scarcely known to one another, it takes time for the parties to see if they like one another, see if their cultures fit and see if there is the right geographical spread. Also the Lead firm selection is a key factor. The Lead firm has to be certain that it wants to move ahead and is prepared to bear the costs which accounts for a senior partner for about a year..
then finally
4) The process of going to AIM is not an easy route and it takes time- each of the core firms have to provide what seems like endless information. A prospectus has to be prepared, investors have to be lined up, advisers, auditors and brokers selected. This is a process that takes months so it needs carefull planning from the start.
So 2010 is the most likely date to do it
Julian Hamilton - Director Jobtel
Consolidator 2010 - why?
As one practice Broker (APMA) to another, why are you planning to raise a Consolidator in 2010?
Consolidators - correcting Mark Lee's tax comments
Mark Lee implies that the additional National Insurance payable by former partners when becomming employees after acquisition by a consolidator might be off-putting to the whole concept becomming part of a consolidator.
In practice when continuing with a consolidator after acquisition the now employee should get as follows:-
a) His earninhgs as employee of the consolidator
b) Cash from the sale of part of his equity - this he might invest and might earn him an income
c) Dividends from his shares in the consolidator given as part of the consideration
Whether this comes to more or less than his previous earnings depends largely on how hard he (and other similar previous partners) works after sale to yield the profits that the consolidator needs.
If it works he gets out his Capital as well which, as a partner in a firm, he might not be able to do at all!
Julian Hamilton - Director Jobtel
Consolidators
A dramatic change in Consolidators I suggested some months ago that there would be further Accounting Practice Consolidators. The recent announcement in the FT that Tenon is to take over RSM Bentley Jennison with some £80M of fees is a massive and ringing endorsement of the Consolidator Floatation model.. Its by far the biggest deal done to date by Tenon and indicates the confidence that RSM Bentley Jennison has both in the model and in Tenon's ability to leverage further profits from the fees. It illustrates the ability of an AIM listed company like Tenon to raise substantial funds for M & A work far larger than would be possible under traditional Bank Funding. The Deal is being financed partly in Cash and partly in shares locked in for 4 years. The FT comment suggested that a move to a full listing was on the Cards Jobtel is itself considering bring parties together to found a new consolidator in 2010 or 2011 and from Soundings taken Jobtel believes that there will be at least two more Consolidators by 2011. The picture of the "standard format for listed companies will then be established for good!. Maybe your readers might be interested in logging their comments? Regards Julian Hamilton
It's now nearly 3 years since the above article appeared
I appreciate the economy may be partly to blame but it seems my cynicism was justified.
There was no new consolidator in 2010, none in 2011 and given the recent news re RSM Tenon, I doubt there will be one in 2012 either.
Mark
Another year on
Still no new consolidators and now talk of RSM Tenon being acquired by Baker Tilly.
Is this the end for the consolidators?
Mark