Management of RSM buys up shares of ex-partners

09 May 2022 2 min. read
More news on

The management of RSM has purchased the shares of former UK partners, in a move which allows retired shareholders to exit the firm. The move comes two years after an investor coup ousted the firm’s entire board.

The UK’s professional services market has been at the heart of a host of auditing scandals in recent years. The difference when it came to RSM’s in 2019, was that it related to the firm’s own accounts.

The seventh largest professional services firm by revenue in the UK, RSM manned panic stations in 2019 – following the discovery of almost £10 million in misstatements in the firm’s books. The Chief Executive and Chief Financial Officers left their roles amid the ensuing chaos, before a shareholder rebellion backed by about two-thirds of investors, triggering the resignation of the entire board.

RSM buys up shares of ex-partners

Now, as the firm’s new leadership looks to consolidate its position, and modernise the company’s structure, RSM has launched a share buyback. As reported by the Financial Times, the company claimed the move aims “to strengthen the firm’s ability to execute [its] long-term strategy and to facilitate an exit route for those retired partner shareholders wanting to realise their investment”.

Usually, the biggest professional services firms in the UK are structured as partnerships. This means the senior practitioners who run them own a portion of their stock. In the case of RSM, however, as an incorporated company its partners have historically retained shares in the business. This has historically seen them retain a say in the selection of management, and how the firm is run, beyond their tenure with the company.

The changes will see this influence of previous employees reduced. As part of the move, 215 former partners sold some or all of their shares for an undisclosed fee. Former partners previously held about 60% of shares, according to RSM, but the transaction sees 95% of shares now in the hands of current partners – either directly or via a ‘partner benefit trust’ arrangement.

The latest financial year for RSM’s global performance saw the professional service network enjoy rapid growth on all fronts. The firm also saw its headcount rise to 50,000 professionals.