Chaos at Open Money as founder pulls plug, new owners seek to settle staff

Manchester-based financial advice platform Open Money is to restructure with job cuts to the 70 strong workforce, following a sale to new owners this week.

However, after initially telling staff at the Quay Street offices on Thursday (27 April) that April salaries will not be paid, the new owners have moved quickly to insist they will be, blaming a ‘miscommunication’ following the sale of the business to Will Mallard and Patrick Leahy from financial wellness company, Elva.

A fintech business, Open Money was set up by Anthony Morrow in 2017 with the backing of former MoneySuperMarket founder Duncan Cameron. Morrow has been seeking a buyer for the loss making business after Cameron pulled all funding at the end of March.

According to the last set of filed accounts the shareholders capital stands at £28m, indicating how much investment Cameron and Morrow have sunk into the business which lost £9.3m in 2021 on turnover of just £593k.

A wealthy man, Cameron sold his 47% stake in the Chester-based price comparison site to co-founder Simon Nixon in June 2007 for £162m, but clearly calculated he was unlikely to make that fortune again. 

Morrow stepped back from running the business in 2021 but re-joined to provide “ongoing strategic advice and counsel” as a non-executive director in January 2023 and has been scrambling to find new funding.

Initially he informed staff on Thursday (27 April) that the business has been looking to secure alternative funding, and that he had been in discussion with strategic corporate investors and private equity funds but hadn’t succeeded.

“We find ourselves in a seriously challenging investment world especially in technology space. This has been compounded with the fact that we operate a huge cost base for a business our size financially alongside a flat revenue line.”

He confirmed that Cameron had pulled the plug, stating: “At the end of March we were informed by our funding shareholder that all future funding would cease immediately which introduced serious urgency into the funding discussions. I’m pleased to say that we have today agreed terms with new investors to take the business forward. This is subject to FCA (Financial Conduct Authority) approval which is currently being discussed at the moment.”

He continued: “It’s been a challenging six months looking to secure an option for OpenMoney for the future in a very challenging environment. It’s perhaps not the way I envisaged things going 8 years ago and I had hoped my second stint at OM would have been a more enjoyable one.”

In a statement the company said:  “The restructuring proposals, once agreed, will likely involve a number of operational redundancies after consultation. This is deemed necessary in order to ensure the successful and sustainable future of the business and its client facing operations – OpenMoney Adviser Services and WorkLife by OpenMoney.

“Sadly, as a result of the seriousness of the situation, payment of salaries for a number of members of staff across the business has been delayed pending legal and professional advice.”

Referring to Leahy and Mallard, the statement continued: “The pair bought the business with the express intention to grow it. The proposed restructure, while difficult because of the impact on those members of staff whose roles will be made redundant, is essential if the business is to fulfil its potential for stellar growth.”

Cameron and Morrow will continue to retain minority holdings in the business.

TheBusinessDesk.com has seen the internal message which told staff the brutal truth on Thursday evening that following a sale to new investors on Tuesday the new owners have placed the business’s holding company, or ‘top co’, into a Company Voluntary Arrangement (CVA).

In a follow-up message, director Symeon Breen said by email later to all staff saying some salaries wouldn’t be paid.

“Following on from Anthony’s email announcement, the new owners of the business (Patrick & Will) have now shared their high-level plan for the business over the next few week.

“It’s fair to say that the speed and abruptness of Duncan’s decision not to provide any more funding at all (which we received at 4pm the day before last pay day) has left the business in a very difficult position, and one which the new owners now have to try and remedy.

“I won’t and can’t dress this up. Patrick and Wills (sic) plans are as follows

“The topco (OML) will be placed into a CVA (Company Volantary (sic) Administration) imminently – this process will buy some time to affect a turnaround and ensure that the business is viable at the end of that process. However, we can expect large scale restructuring of that business to be needed.  The process will in effect mean that salaries for April due tomorrow will not be paid.

“The subsidiary businesses (OMAS & OMB) will not be part of the CVA process. Plans for those businesses are still being formulated.  April salaries will be paid to staff in those businesses tomorrow as planned.

“We deeply regret the position we are all in due to circumstances beyond our control but we are seeking professional and legal advice to protect the position of the company and the staff as much as possible.

“We will keep you informed as information comes to hand over the coming days.”

Reflecting the fast moving situation Morrow told TheBusinessDesk.com: “I have literally have no idea why that has happened. The two subsidiaries are not being put into administration and the staff in there have apparently been paid today.”