I'm a little bemused by the reaction to the collapse of Farepak.   This is clearly a tragedy for those who have lost their savings, and with them the hope of the material aspects of Christmas cheer.   Not only that but those who were Agents  will now have "lost" money on behalf of their family and friends - not a comfortable position to be in .

What I find curious is the degree of disapproval, or even condemnation heaped on Bank of Scotland, the company's bankers.  Banks are of course an easy target,  especially for those Members of Parliament who have a limited supply of commercial awareness and a plentiful supply of constituents who have lost money.   But the bank's motive in all this is nakedly clear - to make money for its shareholders,  perhaps with a nod in the direction of good conduct to the community.   

So what is really really surprising is that the finger has not been pointed more firmly at the directors.    The demise of the Company,  and the failure to protect deposits must be their responsibility.   No doubt the Administrators will be looking closely at their conduct.   I once had a role advising a turnaround company, which sadly proved not to be capable of turning, but the directors ensured that customer deposits were sacrosanct.  Accordingly when it failed, it was with cash in the bank to meet customer deposits, and the directors conduct was beyond scrutiny.   Why was it otherwise at Farepak?  I accept that we don't know all the facts, but are the right questions being asked at this stage? 

This is becoming an apologia for the banking community, which was not my intention, but one other fact leaps out.   The shareholders repeatedly  declined to invest in turnaround proposals - so why should the bank have been prepared to take an equity risk?  The margin on secured lending does not compensate for capital losses unless you do a lot of lending and make few losses - such is the economics of banking. 

Still I can see why the press loved the story with the Scrooge connotations at this time of year, and - with the Pantomime season fast approaching - some cliched villains in the form of the "bank", and a "knight of the realm fat cat businessman at the helm".

I was reading a survey of Scottish accountancy firms in this months CA Magazine.  What caught my eye was the structure of the market.  As you would expect the big four - E&Y, PWC, KPMG and Deloitte - are at the top in terms of scale and at the smaller end there are lots of small single site operators.  What interested me is the middle market where we operate - mostly comprised of multi site businesses, and often in the process of expanding by acquisition.    I suspect this pattern is replicated south of the border.

This is in marked contrast to the PEM model,  where unusually for a firm of our size we have one location;  Cambridge.   The benefit of this is that one can gather lots of specialists together to give a range of quality advice.   I have never worked for a firm in the other camp; but imagine that each local office must have more of a sub-post office flavour with specialists, if they exist at all, at a distance.  In contrast when issues arise during client meetings and I can call in VAT,  Tax , HR, IT and other specialists immidiately.    I guess on the plus side having a local office might help in marketing to a location.   But in my experience decent businesses of any scale are happy to travel for advice,  or more likely we will go to them.    This is beginning to sound like a commercial, which was not my intention.  Rather it just shows that even in as prosaic a trade as accounting there are some quite different business models.   

The big firms take specialist much much further, with folk specialising by industry, and within much deeper subsets of their specialisms.  In Corporate Finance they might specialise further in MBOs, due diligence, or M&A:  this leads to the pursuit of ever larger deals.  It is a model that works for them - and happily opens up the mid market for more generalist corporate finance advisers such as us.    Don't get me wrong we are specialists.    Just not to such a degree.   Its about balance, and I believe we can bring better all round advice for example by being involved in both buying and selling businesses.   And also the funding and strategy aspects of these deals.