Fortress Biotech selling its majority stake in National Holdings

National Holdings Corp., home to about 700 independent registered reps and advisers, said Monday that B. Riley Financial is buying a 49% stake in the broker-dealer. B. Riley Financial, which owns a variety of financial services businesses, bought 24% of National Holdings' shares from Fortress Biotech Inc. on Friday. Fortress bought a 56% stake in the brokerage in 2016. After approval by the Financial Industry Regulatory Authority Inc., B. Riley will purchase another 25% of stock from Fortress Biotech and eventually have a 49% interest in the company, executives said. Other investors are lined up to buy the remaining 7% stake from Fortress Biotech, company executives said. Roughly seven million shares of National Holdings stock are to change hands at a price of $3.25 per share, for an aggregate purchase price of $22.9 million, according to the companies. National Holdings has been culling its ranks of brokers with a history of problems, said chairman and CEO Michael Mullen, himself a former financial adviser. "I'm excited. Riley got a great deal," Mr. Mullen said in an interview Monday morning. "In 2016, National had about $170 million in revenue and was losing money," Mr. Mullen said. "The firm cut over 300 advisers ... we felt did not fit in with the culture of the new National." For the nine months ended June 30, National Holdings posted $166.7 million in total revenues, 15.4% higher than the $144.5 million it reported in the same period a year ago, according to the company's most recent quarterly report. It also posted a net loss of close to $9.5 million for the most recent nine-month period. "We've grown revenues and are hopeful that having a true strategic shareholder like B. Riley helps us unlock value," he said. B. Riley Financial has about 180 advisers managing $9.8 billion in client assets across different businesses. "Every investment we do starts with the entry price," said Bryant Riley, chairman and co-CEO of B. Riley Financial. "We look at the enterprise value, meaning the market value minus cash, and the company is not being valued at very much. It's a small-cap stock that doesn't trade a lot, and we thought its value was compelling. "And we also like Mike Mullen and the management team," he said. "We think they've done a really good job in changing the culture at National."