“We’ve gotten to the size and critical mass to where the phone just rings — sometimes it’s a deal, sometimes it’s a group that wants to join us or some other opportunity. It’s an interesting time for the firm,” Tom Kelleher, co-founder and co-CEO of B. Riley Financial, says.
Each division at B. Riley has a group head called an “ambassador” who is responsible for ensuring team members from their group are communicating across the company and getting up to speed on the capabilities and activities of other groups. Such a system for bringing on new teams has made smaller acquisitions “pretty easy,” according to Kelleher, while providing a solid blueprint for larger transactions, such as B. Riley’s integration of National Holdings, which has doubled the headcount of the firm with the addition of hundreds of financial advisors.
Growth alone isn’t enough of a reason for B. Riley to launch a new division or make an acquisition. Take, for example, the firm’s financial sponsors coverage group, which launched in November 2020.
To head up this new group, B. Riley hired Dan Kraft and Tim Bottrell as co-directors of financial sponsors coverage. The division has been up and running for a year, focusing on developing and maintaining relationships with alternative capital managers, including private equity firms, family offices, sovereign wealth, credit funds and hedge funds. In many ways, this division is the result of B. Riley’s desire to be “more institutional” about its approach to the financial sponsor community.
“When we have a company we’re selling to, we’re not just relying on a banker independently working by themselves,” Riley says. “It’s put into the system so that we not only can provide the most value for the client, but we can also show product to financial sponsors and private equity.”
“Compliance and risk management are important for any company in any stage of its life cycle. When I think of that group, I think more of the cyber side of things, only because cyber is such a prevalent issue,” Kelleher says. “The sophistication of hackers and the velocity with which the landscape changes has risen to a level where it’s imperative that you have an arsenal of tools at your disposal to combat the threats. This group is here to help clients build their arsenal to navigate those threats. And, frankly, they not only assist clients, they have been instrumental in enhancing our internal cyber posture as well, which is the beauty of all these groups that we have.”
Launching new groups is just one of the ways B. Riley is adding to its “tool chest,” allowing it to be a one-stop shop for its clients. But just having a lot of instruments at your disposal isn’t useful if they aren’t working in harmony. That is Riley and Kelleher’s biggest challenge as leaders of the company but one they have successfully navigated by emphasizing the need for trust between all of B. Riley’s varied departments.
Riley and Kelleher have both been pleased with the value brought to the table by B. Riley’s newer divisions and offerings as well as its more long-standing capabilities. Such success is further fueling the firm’s expansion strategy. According to Riley, the company is currently looking to grow its M&A practice while adding strength in credit and fixed income. Kelleher adds that enhancing the company’s venture capital offering will be important while noting the firm may look into angel investing at some point. At the rate its currently going, any new initiative may be just around the corner.
