THE wee small hours of Friday morning spelled the end of an era for Rutherford Manson Dowds, the accountancy, investment advisory and corporate finance practice.
The firm, a stellar player in the Scottish business scene, crashed to earth when, after protracted negotiations, its partners accepted an agreed takeover from global accountancy firm Deloitte & Touche. The amount paid was undisclosed, although the Sunday Herald understands it was in the region of £4 million to £5 million.
Paradoxically, RMD’s three founder partners — Colin Rutherford, Graeme Manson and Cahal Dowds — have for many years stressed how different their firm is from the “dinosaurs” — the “big five” accountancy firms. Both Rutherford and Dowds worked for Touche Ross before leaving as so-called “young turks” to set up RMD in 1986.
Fuelled by ambition and a refreshing “high five” culture, they had managed to build the firm into a serious mid-sized player, with group fee income of £13 million and nearly 200 employees. They have an impressive head office at 25 Melville Street, Edinburgh, an A-listed building designed by the architect Robert Brown, built in the early part of the nineteen century as part of the Walker Estate development.
But Rutherford, perceived to be the figurehead and main new business winner of the RMD group, now admits that as a mid-sized player they were effectively “in no man’s land”. It was becoming increasingly apparent that the firm was struggling to find sufficient funds to invest in people, technology and infrastructure.
Rutherford, 39, has chosen not to make the transition to Deloitte alongside his erstwhile colleagues, and is regarded as anyway having lost interest in the niceties of audit and tax. Instead, along with Gordon Neilly and Robin Archibald, he will try to carve out a niche in the more competitive, but higher margin, world of corporate finance. Rutherford said: “The small investment bank model is probably where my heart lies and certainly where my head lies.”
The change in direction was perhaps precipitated by the arrival at RMD of Gordon Neilly, a highly-regarded expert in investment trusts, in December 1996. Neilly said that the new investment advisory and corporate finance business, which has yet to be named, is likely to be predominantly based in London, where the majority of investment trusts and plcs are headquartered.
The deal comes at a good time for Deloitte & Touche, which suffered a loss of reputation following errors during the Miller/Cala takeover battle. “This is a very good catch for Deloitte and a good name for them to acquire,” said a corporate lawyer. “Because of the nature of this business it is the reputation and the name rather than the clients that matter.”
Nonetheless the RMD brand name will be consigned to the history books when the two firms officially merge on 1 July.
Many of RMD’s audit and tax clients are owner-managed businesses which chose the ‘young Turks’ as a refreshing alternative to the more bureaucratic and sometimes conflicted approach of “big five firms” — Andersen, Ernst & Young, Deloitte & Touche, KPMG and PricewaterhouseCoopers (PwC) .
To suddenly find themselves clients of the sort of firm they had deliberately sought to avoid may, for some clients, may prove an unattractive prospect. But the deal will bring benefits for RMD employees. Being part of a global accountancy firm will mean considerably enhanced career opportunities.
This article was published in the Sunday Herald on 27 June 1999