Negotiations to sell a majority interest in OnlyFans are currently being spearheaded by Morris & Company, the investment bank established by Ken Morris, a notable figure on Wall Street, as reported.
Morris’s banking team is working on a potential agreement that would allow Architect Capital, based in San Francisco, to acquire a 60% stake in a partnership valued at about $3.5 billion. This development comes after at least one other bank hesitated to take on the representation of OnlyFans, according to sources close to the situation.
Mr. Morris, whose founder was a protégé of the infamous junk bond investor Michael Milken, became involved with OnlyFans when the London-based adult content platform struggled to attract qualified buyers for nearly a year, based on insights from two individuals familiar with the negotiations.
Top-tier investment banks have, it seems, been hesitant to engage with the adult industry. This reluctance stems from the stigma surrounding pornography, as indicated by those in the know.
“The company has found it challenging to locate buyers, primarily due to the negative associations tied to porn, yet its financial standing is quite strong,” one person explained.
“Everyone has to weigh the business potential against the negative impressions. Mr. Maurice has been clear about his stance.”
Neither Morris nor OnlyFans offered any comments on the matter.
OnlyFans has faced its share of legal challenges over the years. In a notable case, a 2022 lawsuit in Florida involved allegations against two men accused of raping a woman, posting videos of the incident on OnlyFans, and charging a subscription fee for access. The plaintiffs argued that the platform violated human trafficking laws by facilitating the video’s release and profiting from it.
OnlyFans contested this claim, and in the end, a judge dismissed the case, citing the protection of Section 230 of the U.S. Communications Decency Act, which broadly shields platforms from liability concerning user-generated content.
This year, a whistleblower filed a complaint with the Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury Department, alleging that Mastercard and Visa had not done enough to prevent their networks from being used for financial misconduct related to child sexual abuse material and trafficking on OnlyFans.
A spokesperson for Mastercard asserted that the company maintains a zero-tolerance policy for illegal activities on its platform. Visa, however, did not respond to queries seeking comments.
A representative from FinCEN declined to provide details on the confidential whistleblower report but mentioned that the agency collaborates with financial institutions and law enforcement to curb illegal activities.
Mr. Maurice remains a pivotal figure in the ongoing discussions with Architect. The Wall Street Journal reported last month about these developments.
“It’s no shock that mainstream financial entities think they must navigate the impressive financials of these so-called unscrupulous firms,” remarked Catherine Dockery, founder and partner at Vice Ventures, a firm that invests in industries often overlooked, including alcohol, psychedelics, and adult products.
Dockery added that in the current venture market, investors are displaying more interest in businesses that historically faced stigma.
Leadership at Morris is currently under Navid Mahmoudzadegan, who stepped down as CEO last fall to take on the role of executive chairman.
Controversy is not foreign to high-level executives in this field. Founder and CEO James Sagan is a significant investor in Juul Labs, a company that has faced severe criticisms related to the youth vaping epidemic and has been ensnared in various legal issues.
OnlyFans reportedly generated an operating profit of $666 million on a revenue of $1.4 billion for the year ending November 30, 2024, based on UK corporate filings. Selling expenses were reported at $449 million, with administrative costs around $197 million. Notably, OnlyFans had only 46 employees, and roughly 64% of its income stems from the United States.
In 2018, OnlyFans owner Leo Rudvinsky acquired a majority stake from British founders Tim and Guy Stokely for an undisclosed sum and has since earned nearly $1 billion in dividends over the two years ending in November 2024, according to the filings.
The company takes a 20% commission from its nearly 4.6 million content creators. Additionally, since it is not listed on the App Store, it avoids revenue sharing with Apple or Google.
Still, research from payment processor Myntpay noted that merchants providing adult content often face higher transaction fees—typically 5-10% per transaction as opposed to the 2-3% that’s common in traditional e-commerce—potentially impacting pricing strategies.
Attempts to negotiate a sale last year at a valuation of $8 billion to a group led by Los Angeles investment firm Forest Road Company ultimately fell through.
