Troubled accountancy firm RSM Tenon has today (22 August) entered administration, after sole lender Lloyds Bank withdrew its support.
Upon the appointment of administrators, rival firm Baker Tilly has immediately acquired trading subsidiaries of RSM Tenon, after announcing to the London Stock Exchange today it would not be making a formal offer for RSM’s share capital.
Matt Smith, Nick Edwards and Clare Boardman of Deloitte have been appointed as administrators to RSM Tenon Group plc.
Smith said: “RSM Tenon is a well-known accounting and advisory business serving a wide variety of businesses.
“Immediately following our appointment, a sale of RSM Tenon Group plc’s trading subsidiaries to Baker Tilly was agreed and is expected to complete within two weeks, following regulatory and internal approval at Baker Tilly, which we are advised is a formality.
“We believe the proposed sale to Baker Tilly represents the best outcome for the RSM Tenon group. The management of the group have stabilised the business, returning it to profitability over the past 18 months and making this transaction possible to secure its future.
“In the meantime we are working closely with the directors of the trading entities and their management and staff to continue to support the business until the sale is completed. We appreciate the cooperation and support from the staff, customers, suppliers and landlords during this period.”
Lloyds this morning informed RSM Tenon that should it, as expected, be in breach of its banking covenants, it would not be willing to grant a covenant waiver.
In a statement to the London Stock Exchange, RSM Tenon said: “In the absence of any other available facilities, the company does not expect to continue to be able to meet its liabilities as they fall due.
“The trading entities of the company have not entered into insolvency proceedings and will continue to trade as normal. As a result no employees, clients or suppliers (other than Lloyds) are expected to be materially affected.”
RSM Tenon employs approximately 2,300 staff across its 35 offices.
Laurence Longe, Baker Tilly’s national managing partner, said: “As a people business, the key asset of RSM Tenon has always been its highly skilled and professional workforce of partners and staff.
“Baker Tilly and RSM Tenon are businesses of a comparable scale operating in similar markets across the UK and internationally, and so combining our strengths and skills will provide us with new opportunities for growth, as well as further strengthening and expanding our offering to the market.”
The sale of RSM Tenon’s assets to Baker Tilly is expected to be completed within two weeks, following regulatory and shareholder approval, and includes RSM Tenon, RSM Tenon Investment Solutions, RSM Tenon Financial Management, RSM Corporate Transactions and RSM Tenon Corporate Finance.
Earlier today, Baker Tilly confirmed that it would not be making a formal offer for the entire issued share capital of RSM Tenon, after announcing its interest last month.
However, RSM Tenon announced that due to its level of debt, investors would likely only receive “minimal value” in the event of the deal going through.