UK Parent Bonhill PLC tersely announced Stilwell’s departure “with immediate effect” and blocked its latest earnings report, sending shares plummeting.
Note from Brooke: I still think InvestmentNews is positioned to be the WalMart of advised retail investing news, but its owners still seem bent on doing too much of too far – namely the value of an Atlantic Ocean of remote. Perhaps the new CEO should be a full-time New Yorker willing to rethink the focus on events, which is really not compatible with journalism.
Simon Stilwell, the tireless CEO with big plans for InvestmentNews, saw the COVID-19 pandemic stall his prized acquisition in 2018 and spark a headlong rush that led to his abrupt resignation today (April 7), amid of a multitude of details.
InvestmentNews parent company Bonhill Group Plc announced the management change in a terse statement, saying Stilwell was leaving “with immediate effect to pursue other business opportunities”.
He entrusted IN to Patrick Ponsford, the managing director of the British company, while an executive search is underway.
Stilwell’s departure was “long overdue,” said a former staffer familiar with the publication and the former CEO.
InvestmentNews is struggling to revive its event activity, which became the core business following the takeover of Bonhill. But COVID restrictions nearly killed its main moneymaker, live events, in 2020.
More than 100 financial industry events were erased from the RIA calendar as COVID lockdowns and other restrictions took hold in early 2020.
As a result, 2021 earnings fell further than expected, leaving IN roughly in balance, despite an injection of $2.4 million in federal COVID relief funds. See: InvestmentNews’ UK parent company secured a $2.4 million bailout from federal taxpayers to deal with the pandemic crash and was freed to repay the money under an aid package covid
Meanwhile, his stock (BONH.L), which trades on the London Stock Exchange, fell dramatically today to a new 52-week low of GBP 5.30, or US$6.93, in intraday trading. It even closed at £6, down 11.1%. That’s about 66% off its 52-week high of GBP£18.50, or US$24.19.
Stilwell, 53, made his first foray into the US financial media industry with the acquisition of InvestmentNews. See: How InvestmentNews can become the core of a US-based roll-up if a UK investment banker manages to ‘swim wildly’ across the Atlantic to buy it
He was previously an investment banker after serving as a Charge Officer in the British Army’s prestigious Gloucestershire Regiment. He served in Northern Ireland, Bosnia, Kuwait and other hotspots, before going into business.
He enjoys a particular British pastime known as “wild swimming”. It involves diving in “random lakes and tarns” according to British media.
Its plunge into the U.S. market came at a time when InvestmentNews saw an erosion of its revenue and earnings over the past three years, according to the first-ever revelation of financial figures released as part of the deal.
Revenue fell to $16.75 million in fiscal 2017, which ended December 31, from $19.13 million in fiscal 2015, a decrease of 12.5%.
To shore up its ledger, Bonhill announced plans to raise estimated working capital of £1.1 million through the issue of new ordinary shares of the company at 5.5 pence per share.
The company’s myriad challenges include filling two key leadership positions: publisher and editor.
John French, a well-known industry consultant and turnaround specialist, joined InvestmentNews last October as chairman of the board, shortly after the resignations of publisher Christine Shaw and editor George Moriarity.
The Frenchman, who is also known for positioning businesses for sale, did not respond to an email seeking comment. He has already said that a sale was not an option. See: InvestmentNews editor Christine Shaw steps on the heels of editor-in-chief, leaving turnaround ace John French to pick up the pieces, but selling is off the table, he says
On the contrary, French said replacing Moriarty was a top priority, but warned it could “take some time”.
“It’s a weird environment. I don’t know how long it’s going to last, but it’s a priority… Content position is absolutely crucial.”
It was 20 weeks ago.
The lack of senior managers can weigh on its performance. The company reported a slight 5% increase in live event bookings this year compared to last year.
Earnings Report Delayed
Bonhill said it expects its 2021 earnings before interest, tax, depreciation and amortization (Ebitda) to break even, down from previous expectations of 200,000 GBP or 217,000 USD in profit.
The company’s forecast in January a year ago predicted that expected 2021 Ebitda revenue would slightly beat market expectations after the explosion of the coronavirus variant Omicron. He had forecast Ebitda revenue of GB£800,000 (US$1.08 million).
During the pandemic, Bonhill has bolstered its balance sheet with a loan from the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP).
The company borrowed $1.1 million in 2020 and the loan has since been forgiven. The company also borrowed $1.3 million in March 2021 and has publicly stated that it expects that loan to be forgiven as well.
The company’s cash balance at June 30, 2021 was £1.3 million (US$1.8 million) compared to a year earlier when it was £3.4 million (4. US$6 million), according to a financial statement.
Bonhill was due to release its results on March 24, but delayed the report until April 21.
The company’s US subsidiary, with InvestmentNews as its sole asset, lost £1.3 million ($1.8 million) before tax in the first six months of 2021, compared with a loss of £1.9 million. pounds ($2.6 million) in the first six months of 2020, he reports.
In addition to its “forgivable” SBA loans, the company also said it negotiated six months of free rent for its New York office, saving $200,000.
For the full year 2020, Bonhill reported revenue of £17.8 million (US$24.1 million) and a loss (Lbitda) of £1.6 million ( US$2.2 million).
The company reported gross profit of £14.3m in 2020 (US$19.4m), but an adjusted operating loss of £8.3m and a statutory operating loss of £10.6 million (US$14.4 million).
Bonhill created a separate US company when it bought InvestmentNews from Chicago’s Crain Communication in 2018 for $27.1 million.
Bonhill blamed his broader struggles on broader political and economic concerns like “a shift in market messaging by customers following President Biden’s election.”
He also said U.S. financial advisory firms cut advertising budgets to restore profitability, “while there were disruptions related to mergers and acquisitions activity.”
The COVID-19 pandemic continued to force cancellations of in-person events, Bonhill’s main source of revenue. Digital sales also slowed, according to its earnings report.
The company said 2020 was the toughest year in its history and 2021 was not far behind.
Bonhill cited last-minute margin cuts in the UK and US and reduced bookings from a year earlier.
The company is also being hit by unexpected order cancellations and customer spending cuts, he said.
“The U.S. in-person events market continues to be impacted by COVID-19 and the rise of the delta variant in the country,” Stilwell said in the latest earnings report.
“This backdrop has necessitated some changes of recent events moving from in-person to virtual return and we are constantly assessing the situation state by state.”
“InvestmentNews experienced a weaker first half where digital sales were slower than during the comparable period in 2020,” Stilwell added in the report.
Top Poached Customer
Bonhill also suffered a setback when former InvestmentNews digital and events guru Mark Bruno allegedly lured a high-profile client away from the firm.
Informa Connect, where Bruno now works as Managing Director of Wealth Management, announced the launch of Retirement Plan Advisor (RPA) Edge, through its site, Wealthmanagement.com.
The event, dubbed the “omnichannel initiative”, targets the financial advice industry to educate advisers on “defined contribution pension plans and their participants”.
Significantly, Fred Barstein, founder and CEO of Retirement Advisor University, cut ties with InvestmentNews after a five-year partnership hosting a similar event. See: Mark Bruno, the ‘glue’ behind InvestmentNews, and sales strategist Julie Parten wipe the slate clean, ending the Crain era with their departures
A source told RIABiz that the program has brought in more than $1 million in annual revenue for InvestmentNews.
Editor’s note: Principal Brooke Southall, editor Keith Girard and journalist Lisa Shidler have all worked at InvestmentNews at various times in their careers.