U.S. brokerage firm B. Riley (NASDAQ: RILY) announced on Thursday its exploration of strategic options for several of its businesses, including the possibility of a sale. The revelation sent its shares tumbling 14% in extended trading.
The company disclosed its intent to seek alternatives for its appraisal and valuation services, as well as its retail, wholesale, and industrial solutions divisions. According to B. Riley, these segments are undervalued by the market and could potentially fetch higher returns under new ownership.
These businesses, collectively known as Great American Group and acquired by B. Riley in 2014, are currently being subjected to a strategic review. B. Riley noted that the retail and appraisal business alone is carried on its balance sheet at a book value of approximately $35 million.
In a separate statement regarding its preliminary unaudited results, the company acknowledged its inability to file its annual report for the year ended Dec. 31, 2023, due to delays in finalizing financial statements. The preliminary fourth-quarter loss widened to $2.32 per share compared to $2.08 per share a year earlier.
B. Riley has faced increased scrutiny from investors and media, particularly regarding its investment in Franchise Group, the owner of Vitamin Shoppe, when it was privatized by a management-led buyout in 2023. The company recently asserted in an internal review that it had no knowledge or involvement in alleged misconduct at Prophecy Asset Management.
During an analysts call, notable questions surfaced regarding the audit and the departure of an audit partner, prompting further concerns among shareholders. Shares plummeted after hours, with apprehensions persisting about the company’s future trajectory.
Despite reassurances during the earnings call, sentiment among investors remained mixed, with some questioning the transparency of the company’s communications.
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