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The British parent of InvestmentNews got a $2.4 million federal taxpayer bailout to weather the pandemic crash and has been freed from paying back the money under a COVID relief program

Bonhill Group PLC called 2020 its most challenging year in its history and reported that 2021 won't be much better as COVID batters business strategy

Friday, February 11, 2022 – 3:46 AM by Lisa Shidler
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John French took off on a cruise as his company takes on the 'chaotic short-term problem' of no editor or publisher.

The UK owner of InvestmentNews borrowed $2.4 million from U.S. taxpayers to survive the pandemic at the same time it was reporting in its editorial pages that financial advisors were "gouging" the very same paycheck protection loan program.

London-based Bonhill Financial Services Plc has no plans to repay the money and has already been forgiven a $1.1 million loan it received in 2020. 

Simon Stillwell
Simon Stilwell: Impacts from COVID-19 still being felt. 

It received a second $1.3 million loan last March through the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). It expects that loan to be forgiven as well. 

The company claims it has no ready cashflow to allocate toward loan payments. 

The cash balance as of June 30, 2021 was GB £1.3 million (US $1.8 million) compared to a year earlier when it was at GB £3.4 million (US $4.6 million), according to a financial statement.

The loans were detailed in the company's earnings report filed last September. It paints an overall picture of Bonhill scrambling for cash amid steady COVID-19 driven losses.  

Before taxes, the company lost GB £2.5 million (US $3.17 million) in the first six months last year compared with GB £4.5 million (US $6.1 million) in losses in the first six months of 2020.

The company's U.S. subsidiary, with InvestmentNews as its sole asset, lost GB £1.3 million (US $1.8 million) before taxes in the first six months of 2021 compared with a GB £1.9 million (US $2.6 million) loss in the first six months of 2020, it reports.

On top of its "forgivable" SBA loans, the company also reported negotiating six-months of free rent for its New York City offices, saving $200,000.

PPP roulette

The Bonhill loans raise at least one red flag because program rules stipulate that companies with zero or less in net profit and gross income in 2020 were ineligible for a PPP loan.

Mark Bruno
Mark Bruno left Investment News and poached a top client. 

For the full year 2020, Bonhill reported GB £17.8 million (US  $24.1 million) in revenue, and a loss (Lbitda) of GB £1.6 million (US $2.2 million).

The company reported a 2020 gross profit of GB £14.3 million (US $19.4 million), but an adjusted operating loss of GB £8.3 million and a statutory operating loss of £10.6 million (US $14.4 million). 

A PPP loan can equal up to 2.5 times the applicant's average monthly payroll costs, according to SBA guidelines. In some cases, an applicant can get a second draw typically equal to the first.

The loan proceeds may be used to cover payroll costs, rent, interest and utilities. The loan may be partially or fully forgiven if the business keeps its employee counts and employee wages stable, according to the rules.  

But employment was anything but steady. Matt Ackermann, who oversaw IN events and pod cast, left in Oct. 2020 and the paper's two top executives, Publisher Christine Shaw and Top Editor George Moriarity, left in 2021 along with three other key staffers. See: InvestmentNews hires new CEO with no financial services background to replace long-time, departing publisher Suzanne Siracuse

The editor and publisher positions are still open. 

Coveted, Controversial

The $953 billion PPP program was set up under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law by President Donald Trump in mid-2020.

The program targeted companies that met the traditional definition of a small business, 500 employees or fewer. 

When the program went into effect in early 2020, foreign companies with U.S. subsidiaries were initially ruled ineligible for loans. 

But the SBA shifted guidelines at least twice and those companies were ruled eligible as long as they had 500 or fewer employees. Bonhill reports having 137 employees. 

The program ended last May. The UK had a simliar business relief programs, but the terms were more stringent. 

The London company got the SBA loans on both occasions in the name of the New York City-based trade publication, according to its regulatory filings. 

Separate books

For the year ended 2020, InvestmentNews reported GB £9 million (US $12.2 million) in revenue and ebitda of GB £1.9 million (US $2.6 million) but an adjusted operating loss of GB 2.1 million (US $2.85 million). 

Christine Shaw's tenure as IN Publisher was short. 

Bonhill set up a separate U.S-based company when it bought InvestmentNews from Crain Communication of Chicago in 2018 for $27.1 million. 

At the time, Bonhill CEO Simon Stilwell said the UK and US operations were "very separate." Stilwell did not respond to multiple emails this week, seeking comment. 

The PPP "loans" are both coveted and controversial because most companies typically don't need to repay them. 

Bonhill reported that the first loan was forgiven in full in January a year ago and it expected the second loan to be forgiven later in the same year. 

The UK company claims to be living up to the spirit of the loans by keeping staff in place and paid, according to its earnings report.

"We have not had any employees on furlough in 2021 and we only received a £2k furlough receipt relating to December 2020."

Furloughed in the UK is the equivalent of being laid off in the United States. 

Challenging market

Bonhill blamed its larger struggles on broader political and economic concerns like "a shift in market messaging by customers following the election of President Biden."

George Moriarity
Top Editor George Moriarity jumped ship in 2021.

It also said U.S financial advice firms reduced advertising budgets to rebuild profitability, "while there was some disruption from M&A activity."

The COVID-19 pandemic has continued to force cancellations of in-person events, Bonhill's chief source of revenue. Digital sales also slowed, according to its earnings report. 

The company said 2020 was the most challenging year in its history and 2021 was not far behind. 

In company guidance issue in January, Bonhill said it expects 2021 revenue and earnings before interest, taxes, depreciation, and amortization (ebitda) to slightly miss market expectations after the Omicron coronavirus variant exploded. But 2022 had begun well, according to MarketWatch

It said it expected ebitda of GB £200,000 (US $217,000), below the GB £800,000 (US $1.08 million) it previously expected.

Bonhill cited last-minute margin reductions in both the United Kingdom and the United States and reduced bookings compared to the prior year.

The company also is taking a hit from unexpected order cancellations and reductions in customer spending, it stated. 

"The in-person event market in the US. continues to be impacted by COVID-19 and the rise of the delta variant in country," Stilwell said in the latest earnings report.

"This backdrop has necessitated some recent event changes from in-person back to virtual and we are constantly assessing the situation on a state-by-state basis."  

"InvestmentNews had a weaker first half where digital sales have been slower than in the comparable period in 2020," Stilwell added in the report.

Top Client Poached

Bonhill also suffered a setback when former InvestmentNews digital and event guru Mark Bruno reportedly lured a top client away from the company. 

Informa Connect, where Bruno now works as managing director of wealth management, announced late last month it was launching Retirement Plan Advisor (RPA) Edge, through its site, wealthmanagement.com. 

The event, called an "omnichannel initiative," targets the financial advice industry to bring advisors up to speed  on "defined contribution retirement plans and their participants."

Significally, Fred Barstein, founder and CEO of the Retirement Advisor University, cut ties to InvestmentNews after a five-year partnership hosting a similar event. See: Mark Bruno, the 'glue' behind InvestmentNews, and sales strategist Julie Parten make it a clean sweep, ending the Crain era with their departures

One source told RIABiz the program brought in more than $1 million in annual revenues for InvestmentNews.

Staff Scramble

Although PPP loans were targeted at preserving jobs, InvestmentNews stlll faced significant turnover in 2020 and 2021. 

The publication has been operating without a publisher or a top editor since the departures of Moriarty in October and Shaw a month later.

The COVID-19 pandemic appears to have been a big factor in Shaw's decision to leave, effective last December.  She took a job with The Farm Journal near her Vermont home. See InvestmentNews Publisher Christine Shaw departs on heels of top editor, leaving turn-around ace John French to pick up the pieces, but sale off the table, he says

Last October, Bonhill quickly brought in John French, a well known industry consultant and turn-around specialist, as Chairman of the Board of InvestmentNews. See: InvestmentNews brings in 'turn-around specialist,' and a 'chief revenue officer,' following pandemic battering; then top editor and two reporters jump ship

He said a the time his top priorities would be filling the two top jobs and carrying on with InvestmentNew's new digital strategy. He called the staff shortage a "chaotic short-term" problem. 

But when RIABiz tried to reach him for comment, he replied that he was on a vacation cruise and would be unavailable until his return. 

Bright spots

There are some bright signs for InvestmentNews including an end to recruitment freeze for the first quarter that saved GB £100,000 in staff costs.

Paul Curcio, who is listed as executive editor, posted on LinkedIn that IN is hiring a diversity and inclusion editor. The company listed an opening for a  fintech reporter. 

InvestmentNews made its final payment in August 2021 to Crain Communications under the vendor loan agreement.

"There continues to be uncertainty around the return of in person events in the U.S. and we are adjusting our schedule accordingly," said Jonathan Glasspool, chairman in the company's earnings statement. 

Omission of fact

InvestmentNews has written about PPP loans to the financial services industry. One report last August claimed advisors had "gouged" more than $36 million from the PPP loan program.  

The report was based on a study titled “Fraud and Abuse in the Paycheck Protection Program? Evidence from Investment Advisory Firms.”

Nearly a quarter of Securities and Exchange Commission RIAs eligible for PPP funds, or 2,999 firms out of 12,643, received loans in the first round of the program in the spring of 2020, totaling more than $590 million.

“Investment advisers abusing the program were significantly more likely to disclose a history of past fraud and other legal and/or regulatory misconduct,” according to the study by William C. Beggs of the University of San Diego and Thuong N. Harvison of the University of Arizona.

“Using a conservative approach, we estimate that more than 6% of the $590 million in PPP funds received by companies in the investment management industry consisted of statutory over-allocations to firms abusing the program,” the study noted. 

The story, however, did not disclose that its parent company was also a beneficiary of PPP loans. 

Editor's note: Principal Brooke Southall, Managing Editor Keith Girard and reporter Lisa Shidler all worked at InvestmentNews at various points in their careers. 

Related Moves

InvestmentNews Publisher Christine Shaw departs on heels of top editor, leaving turn-around ace John French to pick up the pieces, but sale off the table, he says

Media consultant says the publication is 'a little chaotic,' but vows to shore up the masthead and keep the New York City brand intact.

November 12, 2021 – 5:25 AM

Crain poaches Fred Gabriel, who anchored InvestmentNews' editorial while they owned it, making it a clean sweep for new owners Bonhill Financial

Seeking Alpha Editor George Moriarty will step into editor's shoes; Gabriel will stay through November, before becoming publisher and executive editor at Crain's New York

November 1, 2019 – 2:39 AM

Mark Bruno, the 'glue' behind InvestmentNews, and sales strategist Julie Parten make it a clean sweep, ending the Crain era with their departures

New publisher and CEO Christine Shaw has enlisted Bruno to stay for three months to learn the ropes and rebuild IN's entire sales force

August 21, 2019 – 4:30 AM

InvestmentNews hires new CEO with no financial services background to replace long-time, departing publisher Suzanne Siracuse

Known as a 'decider,' Christine Shaw mirrors her predecessor but at much greater scale and more 'digital' emphasis

August 6, 2019 – 10:55 PM

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