Does RSM Tenon have as much goodwill as that?

I recently wrote an article on RSM Tenon’s tribulations for Accounting & Business magazine. In February, the mid-tier firm announced a £70.6m loss for the six months to 31 December 2011, with around £60m of this being impairment of goodwill. RSM Tenon had previously had over £134m of goodwill sitting on its balance sheet following a string of mergers. It now has over £70m of goodwill on its balance sheet. Yet its market capitalisation is only £24.5m. I know its share price has taken a knocking in recent months and the firm’s market cap is not an adequate reflection of its true value. But, on the other hand, goodwill of £70m plus still seems a lot for a firm worth £24.5m. I know that there is bound to be a very good accounting explanation for this but to a lot of bystanders, including me, it does seem very odd. I would be interested to hear your views.

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