O’Melveny provides counsel on carve out deal between B. Riley Securities and B. Riley Financial

O’Melveny recently provided guidance to B. Riley Securities, the investment banking arm of B. Riley Financial, Inc., regarding a carve-out transaction that resulted in a formerly fully-owned subsidiary of B. Riley Financial, Inc. merging with Cascadia Investments, Inc., a shell entity. This led to a situation where certain investors in Cascadia became minority stockholders of B. Riley Securities. This tax-free transaction, announced on March 11, saw B. Riley Securities establish its own operational and governance structure. Its common stock is now listed on the OTC Pink market under the ticker symbol “BRLY.”

Following the transaction, B. Riley Financial, Inc. now owns around 89% of the outstanding shares of B. Riley Securities, while the remaining shares are exclusively held by employees of B. Riley Securities through restricted stock awards and some existing shareholders of Cascadia. B. Riley Securities offers a comprehensive range of investment banking and capital markets services to corporations, financial sponsors, and institutional investors across various industries.

The group from O’Melveny that advised B. Riley Securities was led by partner and Capital Markets Practice head Jeeho Lee, along with partners Viq Shariff and counsel Nimat Lawal. The team also included partners Jonathan Rosenberg, James Harrigan, Robert Wann, Jr., Jeff Walbridge, Robert Fisher, and Matthew Syrkin.

B. Riley Financial, Inc. recently announced a carve-out transaction with B. Riley Securities, the investment banking arm. This move is aimed at catering to the specific needs of companies within the middle market segments. Debt-free and well-capitalized, B. Riley Securities stands to benefit from having its own operational and governance structures. B. Riley Financial will maintain an approximate 89% ownership stake in B. Riley Securities, with the remaining shares held exclusively by employees of B. Riley Securities and certain existing shareholders of Cascadia.

Through this transaction, B. Riley Securities is charting its path as an independent entity. Its common stock is now quoted on the OTC Pink market under the ticker symbol “BRLY.” The firm will autonomously report financial results, providing stakeholders with increased transparency and the ability to accurately assess a standalone investment bank with a focus on small cap and middle markets.

Having overseen more than 250 capital markets transactions and raising over $115 billion in debt and equity for clients since acquiring FBR in 2017, B. Riley Securities is poised for continued success. Led by Andy Moore, Chairman and Co-Chief Executive Officer, and Jimmy Baker, Co-Chief Executive Officer, the firm will operate with a strong leadership team that has guided the business for close to two decades.

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, expressed his confidence in B. Riley Securities, highlighting its historical stability. The leadership team at B. Riley Securities is determined to drive growth and profitability as a separate entity. The firm is expected to build on its EBITDA and cash flow levels, offering important upside potential for B. Riley Financial shareholders while capitalizing on projected recoveries in M&A and Capital Markets activities.

Mr. Moore and Mr. Baker are optimistic about the transformation this transaction brings. With a robust balance sheet free of debt and a talented team, B. Riley Securities is well-equipped to serve the middle market segment with unmatched expertise in Capital Markets, Research, and M&A Advisory. The firm remains dedicated to serving its clients and looks forward to the opportunities that lie ahead.

In conclusion, the carve-out transaction between B. Riley Financial, Inc. and B. Riley Securities marks a strategic move aimed at enhancing the operational structure and independence of B. Riley Securities. This initiative positions the firm to better serve clients in the middle market segment while providing stakeholders with transparent and reliable financial reporting.