Company: RILYN
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001464790-25-000023
Chunk: 262

Company: B. Riley Financial, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part I, Item 8
Chunk 262
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 Securities Holdings, Inc. ("BRSH"), which is primarily comprised of the broker dealer operations within the Capital Markets segment, merged with a shell corporation and issued 0.6% of the equity in BRSH to certain investors in the shell corporation. Upon completion of the transaction, the investors in the shell corporation became minority stockholders of BRSH. The Company also issued restricted stock awards as more fully described in Note 17(c) - BRSH Stock Incentive Plan and assuming the full issuance of the restricted stock awards are vested, the Company continues to own 89.4% majority-interest in BRSH. The shell corporation that merged with BRSH on March 10, 2025 did not meet the definition of a business, since it did not have any assets, liabilities, or operations. The consideration paid in connection with the merger consisted of $1,575 of common stock of BRSH, which represented the fair value of the 0.6% of outstanding common stock of BRSH. The Company recognized a loss of $1,575 which represented the fair value of the noncontrolling interest in BRSH that was issued to the investors in the shell corporation on March 10, 2025.The table below summarizes the significant unobservable inputs in determining the fair value measurement on a nonrecurring basis of the noncontrolling interest issued on March 10, 2025 as described above. In determining the fair value below the valuation utilized a weighting of 75% for the discounted cash flow method and 25% for the market approach.Fair Value at Measurement DateValuation TechniqueUnobservable InputRangeWeighted AverageNonrecurring Noncontrolling interest$1,575 Discounted cash flow and market approachMarket interest rate and multiple of EBITDiscount rate 21% and multiple of EBIT 5.75x-10.00xDiscount rate 21% and multiple of EBIT 7.3x(1)(1) Unobservable inputs were weighted by the relative equity value of BRSH.BRC Partners Opportunity Trust (the "BRC Trust")BRC Trust was formed on January 6, 2025, and is a variable interest entity, as more fully described in Note 2(o) - Variable Interest Entities. The noncontrolling interest of BRC Trust that is not owned by the Company includes 86.6% of the equity interests in the BRC Trust. Of the 86.6% equity interests not owned by the Company, 58.2% is owned