B. Riley Financial and Oaktree: A Strategic Collaboration
B. Riley Financial, Inc. (NASDAQ: RILY) is thrilled to announce a new partnership with Oaktree Capital Management, L.P. to strengthen its Great American Group businesses.
Definitive Agreement Signed
The companies have finalized a definitive agreement enabling a collaboration through a newly formed holding company called Great American Holdings, LLC, also known as Great American NewCo. This partnership will fundamentally reshape B. Riley's approach to asset disposition, financial advisory, and real estate services.
Internal Reorganization Prior to Closing
Before finalizing this partnership, B. Riley will conduct a thorough internal reorganization, transferring its interests in the Appraisal and Valuation Services, Retail, Wholesale & Industrial Solutions, and Real Estate Advisory businesses into Great American NewCo. This step will streamline the integration process and set a solid foundation for future growth.
Transaction Details and Value
Upon completion of the transaction, B. Riley is set to receive a total consideration amounting to approximately $203 million in cash, alongside Class B Preferred Units and Class A Common Units representing nearly 47% of the total. Conversely, Oaktree will acquire Class A Preferred Units and Class A Common Units that represent approximately 53% of the issued and outstanding Class A Common Units, all for a cash consideration of around $203 million. This arrangement values the overall enterprise of Great American NewCo at an impressive $386 million.
Leadership Insights
Bryant Riley, Chairman and Co-CEO of B. Riley, praised the partnership, stating, "Joining forces with Oaktree, known for its exceptional reputation in alternative investments, will drastically enhance our capabilities to serve clients more effectively. Our combined strengths will foster financial products and services that meet diverse client needs."
Mr. Riley also noted that this partnership aligns perfectly with B. Riley's strategic aim of reducing debt while reinvesting in its core financial services. This new venture opens avenues for significant financial improvements and maximizes growth potential.
Oaktree's Enthusiasm for the Partnership
Oaktree's representatives echoed enthusiasm regarding their involvement with Great American. Nick Basso, Managing Director at Oaktree, emphasized the investment potential, stating, "Great American represents an outstanding opportunity for us as we provide essential capital and operational expertise to facilitate its growth. We believe this partnership is crucial for leveraging Great American's leading position in the industry.”
Thomas Casarella, another Managing Director at Oaktree, expressed excitement about collaborating with B. Riley's experienced leadership team. He stated, "Our goal is to utilize our resources and relationships to bolster Great American's trajectory as an independent entity, focused on sustaining long-term success.”
Advisors Behind the Deal
The transaction has attracted notable advisors, with Moelis & Company LLC acting as the exclusive financial consultant for B. Riley. Additionally, Sullivan & Cromwell LLP has provided legal counsel to B. Riley, while Wachtell, Lipton, Rosen & Katz has advised Oaktree.
About B. Riley Financial
B. Riley Financial operates as a multifaceted financial services provider, dedicated to delivering customized solutions to cater to clients' strategic and operational needs. Through its extensive subsidiaries, B. Riley offers solutions ranging from investment banking to comprehensive financial consulting and auction services.
About Oaktree Capital Management
Oaktree is recognized as a premier global investment management firm specializing in alternative investments, boasting approximately $193 billion in assets under management. The firm seeks to achieve value-oriented investment outcomes across various sectors, emphasizing a risk-controlled methodology.
Frequently Asked Questions
What is the primary goal of the partnership between B. Riley and Oaktree?
The partnership aims to enhance B. Riley's financial services, focusing on asset disposition and advisory services while supporting growth through Oaktree's expertise and capital.
What benefits will B. Riley experience from this transaction?
B. Riley expects meaningful debt reduction while maintaining equity upside, enabling reinvestment into core financial service sectors.
How will the internal reorganization impact B. Riley?
This reorganization will streamline B. Riley's operations, ensuring a smoother integration of services within the newly formed holding company.
Who were the key advisors for the partnership?
Moelis & Company LLC served as the financial advisor, while Sullivan & Cromwell LLP and Wachtell, Lipton, Rosen & Katz provided legal advice to B. Riley and Oaktree, respectively.
What does this partnership mean for future growth?
The synergy between B. Riley's services and Oaktree's capital will create new opportunities for innovation and expansion, significantly enhancing client service capabilities.
