Cavendish has scrapped its co-chief executive structure and cancelled its interim dividend after the Aim-listed City investment bank swung to a pre-tax loss of nearly £500,000 in the six months to September, reversing a £1m profit in the same period last year.

The loss marks the sharpest evidence yet of the pressure on London's junior-market dealmakers. Revenue fell 20 per cent to £22.9m, while deal fees dropped to £12.4m. Private market transactions fell 44 per cent and public market transactions 25 per cent.

Julian Morse, appointed joint chief executive in 2023, becomes the firm's sole top boss. His former co-chief executive, John Farrugia, steps down from both the role and the board. The move to a single-leader model opens an operations overhaul designed to restore profitability.

Where will the savings come from?

Cavendish plans to cut annual costs by £3m over the next six months through restructuring and IT efficiencies. Around £2m of that total — two-thirds — is expected to come from employee changes.

The bank also scrapped its interim dividend to preserve capital, ending a payout that stood at 0.3p per share in the same period last year.

Morse framed the half-year as a slow start rather than a structural setback. "Despite the slow start to the year with pressure on all businesses resulting from significant geopolitical and economic headwinds, we are increasingly seeing good prospects being generated from several areas of targeted investment in the prior periods," he said.

He pointed to a "healthy pipeline" of public and private transactions, including "potential IPOs", over the next 12 months.

What held back the business?

Cavendish, which specialises in deals on London's junior stock market Aim, said UK public markets had been "subdued" for the first six months of its financial year.

"Aim continued to experience low levels of new issuance and relatively weak secondary-market liquidity, reflecting persistent economic uncertainty constraining institutional demand," the bank's half-year report said.

The report added that UK equities remained "dominated" by the US-Iran conflict and supply disruption triggered by the Strait of Hormuz, factors outside the bank's control that weighed on investor appetite for smaller companies.

Monetary policy has compounded the squeeze. The Bank of England raised interest rates for the first time since 2023 last week, responding to new inflationary pressures that followed the conflict.

"The prospective monetary tightening and its likely impact on growth have weighed particularly on UK small and mid-caps," Cavendish said.

Why the co-CEO model failed

The dual leadership structure, in place since Morse's appointment as joint chief in 2023, did not survive its first sustained downturn. A near £500k loss, a 20 per cent revenue decline and a 44 per cent fall in private market transaction volume left the board with little room to preserve a two-headed executive team.

The arithmetic of the turnaround is straightforward. A £3m annual cost reduction against a £500k half-year loss implies the cuts alone, if delivered in full within the stated six-month window, would more than cover the shortfall at current revenue levels.

But the savings depend heavily on headcount. With £2m of the £3m tied to employee changes, execution carries execution risk precisely in a business whose product is people and relationships.

The dividend decision signals where priorities now sit. Cancelling the 0.3p interim payout preserves capital at a bank that reported roughly £1.5m of swing between the two half-year periods — from a £1m profit to a near £500k loss.

Morse's pipeline claim offers the counterweight. If Aim issuance recovers and the flagged IPO candidates reach the market within 12 months, fee income could rebuild quickly from the £12.4m base.

For now, the market backdrop argues patience: low issuance, weak secondary liquidity and a rate rise that landed only last week.

One chief executive, £3m of cuts and a cancelled dividend: Cavendish is betting discipline can bridge a market it cannot control.