B. Riley Financial
| Company type | Public |
|---|---|
| Industry | Financial services |
| Founded | January 1, 1997 in Los Angeles, California, United States |
| Founder | Bryant Riley |
| Headquarters | Los Angeles , United States |
Area served | United States |
Key people | Bryant Riley (Co-founder, largest shareholder) |
| Products | Investment banking, retail liquidation solutions, wealth management, financial consulting, communications, brands |
| Website | www |
B. Riley Financial, Inc. (commonly known as B. Riley) is a financial services firm based in Los Angeles, California, United States. The company primarily offers investment banking services tailored to small cap companies alongside retail liquidation solutions. Over recent years, B. Riley has grown substantially through a series of acquisitions.
1997–2000: Founding and Initial Phase
Established in 1997 by Bryant Riley under the name B. Riley & Co., the company began by providing stock selection and research services focused on small-cap firms for institutional investor clients. During its inaugural year, the firm was penalized $5,000 by the U.S. Securities and Exchange Commission (SEC) due to insufficient record maintenance.[1][2]
2001–2020: Expansion via Acquisitions
At first, Riley refrained from entering investment banking to avoid conflicts of interest. This stance changed in July 2003 when the firm acquired Friend & Co., a boutique investment bank where Bryant Riley had formerly been employed.
In 2012, B. Riley enhanced its sales and trading capabilities by acquiring Caris & Co., a stock research company, responding to an industry slowdown.
The merger with Great American Group, a provider of appraisal and liquidation services, occurred in June 2014, resulting in the formation of B. Riley Financial, which was initially listed on the OTC Bulletin Board under the ticker "RILY". By July 2015, the company had successfully uplisted to the Nasdaq exchange.
February 2017 marked a significant expansion with the $160 million acquisition of FBR & Co., aimed at scaling up its brokerage operations. Shortly after, in May 2017, B. Riley purchased Wunderlich Securities for $67 million to strengthen its wealth management division.
August 2018 brought the addition of GlassRatner Advisory & Capital Group, a restructuring advisory firm, broadening B. Riley’s advisory service offerings.
In November 2018, B. Riley acquired a 49% stake in broker-dealer National Holdings Corp from Fortress Biotech for $22.9 million and completed full ownership by January 2021. After regulatory sanctions, National Holdings' principal subsidiary, National Securities, was shuttered in July 2022 with its functions absorbed into B. Riley.
By April 2020, amidst the retail sector downturn accelerated by the COVID-19 pandemic, B. Riley leveraged opportunities within liquidation services as many physical retail locations closed.
June 2020 saw another acquisition with Alderney Advisors, a restructuring consultancy focused on the automotive sector.
2021 to Present: Challenges and Decline
On April 12, 2021, B. Riley was added to the S&P 600 index.[3] The company further expanded by acquiring investment firm 272 Capital in August 2021.[4] In January 2022, it completed the $175 million purchase of middle-market M&A advisor FocalPoint.[5]
On February 8, 2023, Wolfpack Research announced a short position targeting B. Riley, criticizing excessive leverage taken on during 2020–2021 and exposure to high-risk loans including $75 million owed by Exela Technologies and $110 million by Babcock and Wilcox. Wolfpack also reported that about 40% of portfolio companies were facing going concern warnings. Following this disclosure, B. Riley's share price dropped by approximately 11%.[6]
By May 2023, dividend yields reached near 11%, significantly above industry peers—a reflection of stock sell-offs amid a slowdown in investment banking activities and unrealized losses on investments. Since early 2022, shares had declined nearly 60%, with revenues decreasing by $474 million year-over-year.[7]
On November 13, 2023, shares tumbled by 35% after revealing unrealized losses and an S&P Global Ratings downgrade of Franchise Group—a $2.6 billion acquisition earlier that year which included lending $200 million to founder Brian Kahn who was later implicated in securities fraud allegations.[8] Subsequently in January 2024, the SEC initiated an investigation into B. Riley’s involvement related to this matter, prompting further share price declines and positioning the company among the most shorted within financial services.[9]
In March 2024, B. Riley reported increased quarterly losses alongside halving its dividend payments and postponing its annual report due to ongoing reviews of transactions involving Kahn; shares declined by about 15%.[10] The annual report submitted in April received approval from auditor Marcum LLP despite identifying material weaknesses and revising prior financial information. The report confirmed internal inquiries found no direct connections to the fraud case.[11]
In August 2024, co-founder Bryant Riley made an unsolicited proposal to take B. Riley private at $7 per share—a premium of roughly 39% over recent closing prices but substantially below previous trading highs.[12] At this time, dividends were suspended as part of efforts to reduce leverage.[13]
By September 9, 2024, B. Riley announced intentions to divest assets and restructure financing arrangements aimed at strengthening its balance sheet position. Negotiations began for selling a controlling interest in Great American Group while securing non-binding financing commitments for its B. Riley and bebe brands businesses. These initiatives are projected to generate around $410 million in gross cash proceeds targeted for debt reduction before year-end.[14]
Business model
As of 2022, B. Riley's operations are divided into six key divisions: capital markets, wealth management, auction and liquidation, financial consulting, communications, and brands. Among these, capital markets is the primary revenue driver, followed by communications and wealth management in terms of income generation.
By 2023, Riley continued to hold the largest ownership position in the company, maintaining a 23% equity stake.
Portfolio companies
B. Riley’s acquisition strategy highlights its focused approach to business expansion. In May 2016, the firm purchased United Online for $170 million. Later, in November 2017, it secured MagicJack by outbidding Carnegie Technologies with an offer of $143 million. Diversifying into the apparel sector, B. Riley invested $116.5 million in November 2019 to obtain majority control over six fashion brands, including Catherine Malandrino, Joan Vass, Limited Too, and Nanette Lepore. Most recently, in May 2023, the company acquired a stake in Scotch & Soda to further broaden its brand portfolio.
Gary Wunderlich
In January 2015, Wunderlich Securities completed the acquisition of Dominick & Dickerman for $8.3 million. Subsequent legal actions accused Wunderlich Securities of misrepresenting its financial status at the time of purchase. In April 2020, FINRA ruled against Wunderlich Securities, imposing a liability close to $11 million which B. Riley ultimately resolved.
By June 2020, Wunderlich requested indemnification and reimbursement for legal expenses from B. Riley; however, by June 2023, B. Riley declined this request. In January 2022, B. Riley initiated litigation against Wunderlich alleging attempts to avoid responsibility related to the settlement, whereas Wunderlich’s legal representatives asserted that indemnification had been agreed upon during the acquisition in 2017.
External links
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