Analyst Summary
- B. Riley Securities Holdings, LLC converted into a Delaware corporation named B. Riley Securities Holdings, Inc. (BRS Holdings) and merged with Cascadia Investments, Inc., resulting in certain Cascadia investors becoming minority stockholders in BRS Holdings.
- BRS Holdings granted restricted stock awards (RSAs) to management and employees, representing 10% of BRS Holdings’ common stock, subject to time-vesting requirements.
- A pool of shares representing approximately 9.2% of BRS Holdings’ common stock was created for future equity-based awards to BRS management and employees.
- BRS Holdings entered into a stockholders agreement, establishing a five-member board of directors with four members appointed by BR Financial Holdings LLC (BRFH), including two independent directors, and one director appointed by the BRS executive committee.
- Andrew Moore and James Baker were appointed as Co-Chief Executive Officers of BRS Holdings.
- B. Riley Financial owns 89.4% of the outstanding shares of common stock of BRS Holdings.
- BRS will independently report financial results, providing enhanced transparency and the ability to independently value a pure-play investment bank focused on the small cap and middle markets.
- BRS is well-capitalized and debt-free, positioning it to capitalize on an expected recovery in M&A and Capital Markets activity.
Potential Implications
Stock Price
- The carve-out transaction could positively impact B. Riley Financial’s stock price as BRS is expected to return to and eventually exceed historical levels of growth and profitability.
- Enhanced transparency and independent valuation of BRS may lead to a more accurate reflection of its value in B. Riley Financial’s overall stock price.