B. Riley Financial Inc. (Nasdaq: RILY) has reached a deal to acquire FBR & Co. (Nasdaq: FBRC), an investment banking and brokerage firm, for approximately $160.1 million. The merger agreement results in a newly combined firm with an increased capital base and “meaningful revenue and expense synergies,” according to B. Riley CEO Bryant Riley. FBR, headquartered in Arlington, Virginia, is an independent investment bank which spun out from the firm’s parent company in 2007. The original business was launched as a research and securities trading company specializing in the financial services industry in 1989. The newly combined company creates a small cap investment bank and brokerage with capital raising capabilities, such as: direct lending, recapitalizations, formation capital and growth capital, and public market offerings. B. Riley, founded in 1997, is a publicly traded broker dealer and financial services firm providing capital raising and financial advisory needs. The FBR acquisition isn’t the first of its kind for the buyer. In 2015, B. Riley purchased MK Capital Advisors to establish a wealth management group. Over recent years, many banks divested various assets due to tighter restrictions put in place after the financial crisis. However, traditional and investment banks may get back in the M&A game now that the financial services sector may experience deregulation through executive orders. Recent acquisitions in the sector include: Genstar Capital-backed Mercer Advisors Inc. acquiring investment advisory firm Duckworth Wealth Advisors Inc.; Lucia Capital Group’s investment in West Coast Asset Management; Aon Risk Solutions’, the risk management arm of brokerage firm Aon Plc (NYSE: AON), purchasing Stroz Friedberg Inc. for an undisclosed amount; and Bain Capital Credit’s forming Bain Capital Specialty Finance Inc. as a business development company to make direct loans.
Financial services industry