B. Riley said to have agreed sale of business unit

B. Riley Financial may have reached agreement to sell one of its business units as the debt-laden firm looks to shore up its finances.

In September the firm, which has a diversified financial services business including investment banking, private wealth and investment management, financial consulting, and liquidation services, issued an update on its strategic and financing initiatives.

The update included negotiations to sell a 53% stake in its appraisal and valuations business Great American Group. The firm said this put the enterprise value of this business at approximately $380 million.

It appears that talks may have progressed to a sale of the unit to Oaktree Capital for close to $400 million, roughly half in cash and the rest in preferred equity interests in a new holding company and a minority share of common equity interests in the holding company.

The Wall Street Journal says that the deal is expected to close by the end of 2024.

There has been no comment from either firm and there is no further news on reported talks between B. Riley Financial and Stifel Financial regarding Riley’s $26 billion AUM wealth management unit. The uncertainty has prompted some advisors to jump ship.

B. Riley is grappling with debts of around $2 billion, write-offs from investments that have gone sour, and an SEC investigation into its business.

At the time of the strategy update, Bryant Riley, the firm’s chairman and co-chief executive, explained why the firm was looking at divestment of some units.

"We leveraged the diversity of our platform to acquire quality businesses like Great American Group and our portfolio of brands and are proud of the returns they have delivered under our ownership,” he said. “However, given the opportunities we have in our core middle market financial services businesses, we believe it is the right time to monetize these assets and leverage the proceeds to accelerate debt repayment. 

Bryant Riley submitted a proposal to take B. Riley Financial private in August and a special committee of independent directors is working with advisors to consider the matter which would pay a proposed $7 per common share for the business.