B. Riley Securities
(BRS) to Serve Distinct Needs of Companies Across Middle Market Segments
Well Capitalized
and Debt Free, BRS to Benefit from Separate Operating and Governance Structures
B. Riley Financial
to Retain ~89% Ownership Stake in BRS with Remaining Shares Exclusively Held by
Employees of BRS in Form of Restricted Stock Awards and Certain Existing
Shareholders of Cascadia
LOS ANGELES, March 11, 2025 - B. Riley
Financial, Inc. (NASDAQ: RILY) ("B. Riley," the "Company" or "BRF"), a
diversified financial services company, today announced that a formerly wholly-owned
subsidiary of the Company has merged with Cascadia
Investments, Inc. (OTC: CDIV) ("Cascadia"), a shell entity, as a result of
which certain investors in Cascadia became minority stockholders of BRF's
investment banking subsidiary, B. Riley Securities ("BRS").
As part of the tax-free transaction, BRS is
implementing its own operating and governance structure, and its common stock will
now be quoted on the OTC Pink market under the ticker symbol "BRLY." BRS will
independently report financial results, which will provide stakeholders with enhanced
transparency and the ability to independently value a pure-play investment bank
focused on the small cap and middle markets.
Since acquiring FBR in 2017, BRS has led
more than 250 capital markets transactions, raised in excess of $115 billion in
debt and equity for clients, and advised on M&A and restructuring transactions
totaling more than $33 billion in aggregate value. The firm, which will be led by
Andy Moore, Chairman and Co-Chief Executive Officer, and Jimmy Baker, Co-Chief
Executive Officer, will be debt free and leverage the same strong leadership
team that has guided the business for nearly two decades.
Bryant
Riley, Chairman and Co-Chief Executive Officer of BRF, commented: "BRS has been the foundation of
our firm's success ever since we started a smaller broker dealer focused on
small cap companies in 1997. Through this transaction, we are enabling the
leadership team of BRS to return to those roots, operate separately and execute
a distinct growth strategy. As we demonstrated at our 2023 Investor Day, BRS
has historically delivered steady EBITDA and strong cash flow, and we expect
that as a separate entity, the firm will be able to return to and eventually
exceed those levels of growth and profitability. Through BRF's 89% ownership
stake, BRF shareholders will retain important upside potential as BRS
capitalizes on an expected recovery in M&A and Capital Markets activity."
Mr. Moore and Mr. Baker added: "We are extremely enthusiastic
about how this transaction repositions our firm and what it means for our
ability to serve our clients. With a well-capitalized
balance sheet, no debt and an exceptional team, BRS is purpose-built to serve
the middle market with unmatched capabilities across Capital Markets, Research
and M&A Advisory. We will stay true to our heritage and relentlessly focus
on executing on behalf of our clients.
We look forward to embarking on this next chapter and delivering for all
stakeholders."
Transaction Details
BRS are
quoted on the OTC Pink market under the ticker symbol "BRLY." The BRS Board of Directors
consists of five members, with four appointed by BRF including, no later than
30 days from the date of the transaction, two directors independent of BRF and
BRS. BRF will continue to consolidate
the financial results for BRS in its financial results.
Advisors
Sullivan & Cromwell served as legal
counsel to BRF, and O'Melveny & Meyers served as legal counsel to BRS in
conjunction with the announcement.
About B. Riley Financial
B. Riley Financial (BRF) is a financial
services company that delivers tailored solutions to meet the strategic,
operational, and capital needs of its clients and partners. BRF leverages
cross-platform expertise to provide clients with full service, collaborative
solutions at every stage of the business life cycle. Through its affiliated
subsidiaries, BRF provides end-to-end financial services across investment
banking, institutional brokerage, private wealth and investment management,
financial consulting, corporate restructuring, operations management, risk and
compliance, due diligence, forensic accounting, litigation support, appraisal
and valuation, auction, and liquidation services. BRF opportunistically invests
to benefit its shareholders, and certain affiliates originate and underwrite
senior secured loans for asset-rich companies. B. Riley or BRF refers to B.
Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. For
more information, please visit www.brileyfin.com.
About BRS
BRS provides a full suite of investment
banking and capital markets services to corporations, financial sponsors, and
institutional investors across all industry verticals. Investment banking
services include initial, secondary, and follow-on offerings, institutional
private placements, merger and acquisition (M&A) advisory, SPACs, corporate
restructuring and liability management. Widely recognized for its thematic
proprietary equity research, clients benefit from BRS' extensive network,
industry expertise, and proven execution capabilities of our end-to-end
financial services platform. For more information, visit www.brileysecurities.com.
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Forward-Looking Statements
Statements made in this press release
that are not descriptions of historical facts are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
are based on management's current expectations and assumptions and are subject
to risks and uncertainties. If such risks or uncertainties materialize or such
assumptions prove incorrect, including the ability of BRS to successfully
execute under its own operating and governance structure, our business,
operating results, financial condition, and stock price could be materially
negatively affected. You should not place undue reliance on such
forward-looking statements, which are based on the information currently
available to us and speak only as of today's date. All statements other than
statements of historical fact are forward-looking statements. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the Company's or BRS's performance or
achievements to be materially different from any expected future results,
performance, or achievements. Forward-looking statements speak only as of the
date they are made and neither the Company nor BRS assumes any duty to update
forward-looking statements, except as required by law. Actual future results,
performance or achievements may differ materially from historical results or
those anticipated depending on a variety of factors, some of which are beyond
the control of the Company and the BRS, including, but not limited to, the
risks described from time to time in the Company's periodic filings with the
SEC, including, without limitation, the risks described in the Company's 2023
Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2024 under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" (as applicable). These factors should
be considered carefully, and readers are cautioned not to place undue reliance
on such forward-looking statements. All information is current as of the date
this press release is issued, and neither the Company nor BRS undertakes any duty
to update this information.
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