LOS ANGELES – B. Riley Financial, Inc. (NASDAQ: RILY), a diversified financial services company, has agreed to sell a segment of its wealth management business to Stifel Financial Corp . (NYSE: NYSE:) for a cash consideration estimated between $27 million and $35 million. The deal, announced today, will see 40 to 50 wealth advisors and their client accounts, representing $3.5 billion to $4.5 billion in assets under management as of September 30th, 2024, transition to Stifel in early 2025.
The sale does not include B. Riley’s approximately 190 independent advisors and 90 tax professionals. The final sale amount will be determined based on the actual number of advisors who move to Stifel at the time of closing. The transaction is expected to close early in the second quarter of 2025, contingent upon regulatory approvals and other standard closing conditions.
Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, remarked on the transaction, stating that the past year has been challenging for their Wealth Management business due to competition. He expressed confidence that the advisors moving to Stifel would continue their roles without disruption and emphasized the company’s focus on its core financial services for the middle market.
The agreement has been ratified by B. Riley’s Board of Directors. This move is part of a strategic refocus for B. Riley, which aims to continue investing in its core financial services operations, serving clients in the small- and mid-cap markets. The company, through its subsidiaries, offers comprehensive financial services including investment banking, brokerage, investment management, financial consulting, and more.
This article is based on a press release statement and aims to provide a clear, unbiased report of the facts surrounding the transaction between B. Riley Financial, Inc. and Stifel Financial Corp.
In other recent news, B. Riley Financial has been navigating through a series of significant developments. The company reported an estimated net loss between $435 million to $475 million for the second quarter of 2024 due to non-cash impairment charges and write-downs, yet maintained an operating adjusted EBITDA between $50 million to $55 million. B. Riley also completed a transaction involving the sale of its brand assets, generating approximately $236 million in cash proceeds.
Additionally, the company has entered into a $386 million agreement with Oaktree Capital Management, forming a strategic partnership with its Great American Group businesses, which is expected to close in the fourth quarter of 2024. B. Riley has also pledged to pay cash dividends on two series of its Preferred Stock, demonstrating its commitment to shareholder returns.
In terms of leadership changes, B. Riley Securities, a subsidiary of B. Riley Financial, has appointed Brendon Philipps as Managing Director to lead their Capital Structure Advisory and Liability Management efforts. Furthermore, the company has reported that Chairman and Co-CEO, Bryant R. Riley, has pledged more shares as collateral for a loan than previously disclosed, prompting an internal investigation. These are the recent developments shaping the trajectory of B. Riley Financial, Inc.
InvestingPro Insights
As B. Riley Financial (NASDAQ: RILY) navigates this strategic shift in its business model, InvestingPro data offers additional context to the company’s financial situation. Despite the challenges mentioned by Chairman Bryant Riley, RILY has maintained dividend payments for 11 consecutive years, demonstrating a commitment to shareholder returns. This is particularly noteworthy given the company’s current financial metrics.
InvestingPro data shows that RILY’s revenue for the last twelve months as of Q1 2024 stood at $1.22 billion, with a revenue growth of 19.73% over the same period. However, the company’s profitability has been under pressure, as evidenced by its negative gross profit margin of -1.24% and operating income margin of -4.05%.
Two relevant InvestingPro Tips shed light on RILY’s current market position:
1. “Stock has taken a big hit over the last six months”
2. “Pays a significant dividend to shareholders”
These tips align with the company’s recent challenges and its continued focus on shareholder returns. The sale of a portion of its wealth management business to Stifel could be seen as a strategic move to streamline operations and potentially improve profitability.
It’s worth noting that RILY’s stock price has fallen significantly over the past year, with a one-year price total return of -82.38%. This context underscores the importance of the company’s strategic decisions, including the sale to Stifel, in potentially stabilizing its financial position and market perception.
For investors seeking a more comprehensive analysis, InvestingPro offers 9 additional tips for RILY, providing a deeper understanding of the company’s financial health and market position.
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