Efforts to break off B. Riley Financial Inc.’s investment banking group could give a boost to the outlook for the publicly traded financial conglomerate that has been in trouble for more than a year after the collapse of one of its biggest investments, Franchise Group Inc.
Bloomberg News, citing unnamed sources, reported on Friday that senior executives at the Los Angeles-based firm have told employees they’re looking at ways of splitting B. Riley’s operations, with the investment bank operating independently.
A senior industry executive with knowledge of B. Riley Financial confirmed to InvestmentNews on Monday that plans to split the investment bank, called B. Riley Securities, into a separate business were beig discussed internally at the firm.
Founder, co-CEO, and chairman Bryant Riley would seek new investors but retain majority ownership, according to the source.
“Bryant Riley’s strength is that he’s an amazing dealmaker and originator, but the way the company is structured right now raises questions about the investment bank,” the executive said. “Based on past successes, there could be a line of investors looking to put money to work into a recapitalized, separate investment bank. It was one deal, the Franchise Group, that blew up.”
According to Bloomberg, a spun-off investment bank would be led by Andrew Moore, the head of B. Riley Securities, and Jimmy Baker, the unit’s current president.
No transaction has been announced, the timing is uncertain, and there’s no guarantee the effort will lead to a deal, according to Bloomberg. A tentative offer last year by Bryant Riley to take the company private hasn’t led to a formal buyout bid.
A spokesperson for B. Riley Financial did not return a call by deadline on Monday to comment.
As it is currently built, B. Riley Financial may appear opaque to some investors and analysts, and spinning off its investment bank would be a move to simplify the franchise, the executive said. The firm’s other two major operations are a unit that invests in a variety of companies and wealth management, which currently has a few hundred independent contractor reps under its roof.
B. Riley Financial has been facing severe scrutiny for more than a year after it led a $2.8 billion buyout of the Franchise Group in August 2023.
The Franchise Group, the owner of brands including the Vitamin Shoppe and Pet Supplies Plus, filed for bankruptcy protection in November after months of losses and turmoil surrounding its founder and its backer B. Riley Financial, Bloomberg News reported.
The share price of B. Riley Financial stock – with the ticker RILY – has fallen 80 percent in the past 12 months and on Monday afternoon was trading at $4.52.
B. Riley has been losing key personnel, including financial advisors, in the midst of the firm’s problems, and has also been selling assets.
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