Over the years I have written a number of articles about Tenon (later re-branded to RSM Tenon following its ill-fated merger with RSM Bentley Jennison). It has always attracted considerable interest from both within the profession and outside due to its bold acquisition strategy and listed, corporate structure, which differentiated it from most other accountancy firms.
My first encounter with Tenon was shortly after I joined Accountancy magazine in 2006. At that time, its chief executive Andy Raynor had helped to set the firm on a steady path after its rocky first few years in existence. Between then and its £76m merger with Bentley Jennison at the start of 2010, it seemed to go from strength to strength. The firm made profits, undertook some sensible (small) acquisitions and had a generally positive aura about it that was encapsulated in its advertising slogan: “Tenon is flying high”. It based its strong brand identity on meeting the needs of its entrepreneurial client base and its confidence and boldness made a refreshing change in a profession that tends to be cautious and conservative. It impressed me, and I think, many others.
But, as we all know, the Bentley Jennison merger changed everything. Financially, it stretched Tenon to the limit and costs were not stripped out of the enlarged business fast enough. The cultures of the two firms were different, people were not absorbed in the way they should have been and Tenon started to lose its entrepreneurial identity. The firm plunged to a full-year loss of £88.7m for the year ending 30 June 2012, up from a marginal profit the previous year. Raynor resigned in January 2012 after the extent of Tenon’s financial problems became public and was later replaced by Chris Merry, who has never seemed anything other than caretaker chief executive.
From the moment Raynor left, the writing has been on the wall for the beleaguered firm. The question has not been so much IF the firm would be sold but WHEN it would be sold (provided that someone was minded to buy it, a consideration that could by no means be taken for granted.) The firm has haemorrhaged people (which is a disaster in professional services) and, with them, clients. For a while now, its banker Lloyds has essentially been calling the shots.
The tragedy for me is that the demise of Tenon means that the profession has lost a firm that dared to do things differently and challenge the status quo. It was a listed company when other firms are partnerships. It undertook an ambitious merger virtually at the height of the financial crisis. It had quirky and innovative branding. It saw itself as a business rather than a professional services firm. It had vision and ambition. And in Raynor, it had a chief executive with a great passion for what he did.
But the problem was that the vision got lost in the ambition and the execution. Ultimately, the firm relied too much on buying other practices and too little on organic growth. And Bentley Jennison was just one big step too far. It doesn’t hurt to remember that there is lot to be said for organic growth in business, no matter how unsexy it seems. It is usually a sign that you are doing the basics well.
I hope that other firms can take something positive from Tenon despite the fact the firm has been pushed into administration and Baker Tilly is snapping up its trading businesses in a pre-packaged deal. Not everything about Tenon was flawed – far from it, in fact – and it is my belief that its spirit will live on in some of the smaller and more innovative accountancy firms that are active in the market place today.
Tenon may soon be gone, but it will not be forgotten.