B. Riley Financial, Inc. recently announced that it has retained Moelis & Co. LLC as an independent financial advisor to assist in its review of strategic alternatives for the company’s appraisal and valuation services and retail, wholesale and industrial solutions businesses, formerly known as “Great American Group”), which could include a potential sale or other transaction, according to a press release.
B. Riley acquired Great American Group through a strategic combination in 2014. Since that time, B. Riley has substantially grown Great American’s appraisal and retail liquidation business, which together generated approximately $153 million in revenue detailing approximately $35 million in operating income for fiscal year 2023 and a year-over-year increase of 35 percent and 69 percent, respectively. This business is currently carried on the company’s balance sheet at a book value of approximately $35 million.
“Great American is a tremendous business with a strong management team that has successfully executed on a number of organic growth initiatives over the last 10 years,” B. Riley Financial Chairman and co-CEO Bryant Riley said in the release. “Our appraisal unit has delivered strong and steady recurring EBITDA year after year, and we believe this business is poised for meaningful growth. Strategic and financial buyers are looking to acquire specialized financial services that deliver robust free cash flow at attractive margins.
“As we’ve stated since the beginning, we use our balance sheet to acquire quality businesses that we can build over the long term,” Riley added. “This is one example of many such businesses where significantly increased valuation is not reflected on our balance sheet, and we have the ability to unlock this value when it best serves our shareholders.”
Proceeds from a potential transaction, if one were to be consummated, may be used in a variety of ways including de-levering B. Riley Financial’s balance sheet, repurchasing shares and bonds in the open market, and investing in the platform and in particular, B. Riley Securities, the cornerstone of the company’s diversified platform.
Michael Marchlik, co-chief executive officer of B. Riley Advisory Services, and Scott Carpenter, chief executive officer of B. Riley Retail, Wholesale & Industrial Solutions, also commented on this move.
“Since joining Great American Group in the late 1990s and becoming part of B. Riley in 2014, we have built an industry-leading set of offerings across asset appraisal, valuation, and disposition services,” Marchlik said. “We’re incredibly proud of the work we do on behalf of our clients and we believe there's no firm today that offers the combination of experience and expertise that we do.”
“Our business has the ability to expand into several new verticals and will continue to be a proprietary sourcing mechanism for high quality lending and investment opportunities,” Carpenter added. “We remain committed to delivering for our clients and continuing to provide the high-quality service they have come to expect from us."