Baker Tilly set to take on the big players

The newly enlarged firm, which bought out its struggling mid-tier rival in August, will have a workforce of around 340 people.

Kevin O’Connor, managing partner for Yorkshire and the North East, told the Yorkshire Post that Baker Tilly’s headcount in Leeds should outnumber rivals BDO, Grant Thornton and possibly Ernst & Young.

He said the expanded firm will increase competition in the market, although there will be a smaller number of players. PKF merged into mid-tier rival BDO earlier this year.

Mr O’Connor, a former chairman of Leeds Financial Services Initiative, said: “The recession has been a challenge for us all in the accountancy world.

“We have all had to look at the way we do business and our business model over the last five years.

“We have all, to a greater or less extent, shrunk as a result of the recession.

“We have all had to ask if we are still fit for purpose in the areas we want to be.”

He said mid-tier firms decided that they needed more scale.

“It is not just about size, but how we are perceived in the market place... in terms of attracting clients or other people to your organisation,” he added.

Baker Tilly bought RSM Tenon in August after the latter was forced to appoint administra- tors.

Baker Tilly was in talks to buy its listed rival’s shares but these collapsed after lender Lloyds Banking Group said it would not grant a waiver on conditions for lending.

With no other financing sources available, RSM Tenon appointed administrators who agreed a sale of the group’s trading entities.

RSM Tenon has offices in Leeds and Hull, which will be merged over time with Baker Tilly offices.

The national firm will have revenues of around £350m and over 4,000 partners and staff working across more than 50 offices.

It will be the seventh largest in the UK, behind BDO and Grant Thornton and ahead of Mazars.

Neil Sevitt, office managing partner for RSM Tenon in Leeds, said the new firm will be the largest adviser to owner-managed SMEs in the Leeds market.

Typically, the pre-merger firms serviced companies with turnover between £5m and £50m.

Mr O’Connor said the core market will not change “although we are going to be much, much bigger”.

Mr Sevitt added that the firm will continue to serve its customers in the public sector.

“Baker Tilly will now be the leading provider into the public sector,” he added.

Mr Sevitt said the economic recovery is “very patchy” in Yorkshire, with most SMEs “thinking very carefully” before investing.

Mr O’Connor added: “There are early signs of recovery.

“There is more positivity. The over-riding word is still caution.” RSM Tenon once had a market capitalisation of around £150m and offices across York- shire.

Its predecessor Tenon grew as a consolidator by acquiring a number of provincial accountancy firms over the last decade, showing profit growth since 2003.

Tenon merged with RSM Bentley Jennison in 2009 to form the seventh largest accountancy firm in the UK.

But early last year the group revealed a £12.1m black hole in its accounts for 2010 and 2011, which it blamed on “significant errors and a change in accounting policy”.

Last summer, the Accountancy and Actuarial Discipline Board (AADB), part of the Financial Reporting Council, confirmed it had launched an investigation into the conduct of certain members of the Institute of Chartered Accountants in England and Wales, and of PwC as auditors of RSM Tenon.

It said the scope of the investigation covers the preparation, approval and audit of the 2010 and 2011 financial statements of RSM Tenon and its subsidiary companies.

The regulator also said it was looking at RSM Tenon’s admission to the main market of the London Stock Exchange and the acquisition of RSM Bentley Jennison.

RSM Tenon said it will fully co-operate with AADB’s investigation.

A spokeswoman for the Financial Reporting Council said yesterday that the investigation is still ongoing and a date has not been set for its completion.

PwC has vowed to defend its work.