If there's one topic of conversation among mid-tier firms this week its the future prospects of troubled Birmingham firm Wenham Major.

It's now a little over a week since the firm was forced to put out a statement that 'financial irregularities' had been unearthed in the Wenham Major Private Client practice and that legal proceedings were being planned against executive chairman John Joyce, understood to be recovering in hospital from a bout of illness.

At the moment all thoughts on the future of Wenham Major amount only to speculation, though some of it will be better informed than others.

What is clear though is that the firm and its bank, HBOS, have been talking to outside advisers about what to do, including corporate restructuring specialists at Vantis. It's probable that conversations have been held with other potential advisers too.

What these discussions will produce is unclear. Corporate restructuring people have an armoury of things they can do. But much of it will have to do with the scale of the 'irregularities', as yet not published, and the level of damage perceived to have been wrought on the reputation of the firm, if any.

And that will be a crucial factor in the next stages of the Wenham Major recovery.

During the Enron collapse damage to the reputation of Andersen was thought to be so severe, the firm could not continue as it was and partners in member firms around the world quickly started merger/takeover deals. Here in the UK, you'll remember, much of what was Andersen became part of Deloitte, seen as something of a coup among the other Big 4 firms at the time.

However, KPMG in the US survived its own brush with notoriety when the authorities pursued the firm over various tax schemes. Key individuals acted quickly, damage was limited, and the crisis subdued. Few outside the profession, as important as its view is, remember that particular debacle.

These are poor comparisons in the sense that these firms were of an entirely different magnitude to Wenham Major but KPMG, at least, illustrates that reputational damage can be headed off and the crisis contained.

Wenham Major, it is understood, is keen to point out that the 'accounting practice is profitable, growing and meeting its operational and financial targets'. The message has also come out that a 'business as usual' approach is being taken with staff and clients. And if we know anything about what to do when accountancy firms hit troubled times, it is that clients need a lot of attention. In fact, it could be argued that it is clients and their approach to difficulties that can represent the difference between rescue and an increasingly uncertain future.

But Wenham Major is interesting for another aspect of its problem. From the outside it could be argued that there is a uniquely 'personal' flavour to the difficult.

When Wenham Major Global Capital Partners first made its irregularities statement it said that Ammar Azam, joint owner of the firm, had uncovered the problem. And, of course, Azam jointly owns the business with John Joyce.

With threats of legal action kicking around that's a business relationship that appears to have reached an abrupt end. Of course, it must be said, that Joyce has passed no comment in public so we are yet to hear his side of the story. And his account may prove crucial to what happens next at the firm.

 

May 10, 2008 | Permalink | Comments (0) | TrackBack (0)