B. Riley Financial's (NASDAQ:RILY) stock surged nearly 27.6% after announcing a $386 million deal to sell its Great American unit to Oaktree Capital, reflecting strong investor confidence in the transaction's potential to reshape the company's future. B. Riley will receive $203 million in cash and $183 million in preferred units, while retaining a 47% equity stake in the newly created holding company, Great American NewCo, providing a clear path for continued growth and value creation.

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This strategic partnership with Oaktree, a global asset manager overseeing $193 billion, comes at a critical time for B. Riley. Faced with recent turbulence linked to its exposure to Franchise Group, the company has taken significant steps to strengthen its balance sheet and reinvest in its core financial services. CEO Bryant Riley emphasized that the deal not only addresses their immediate financial pressures but also ensures long-term equity upside through Oaktree's capital and expertise, which is expected to drive growth in Great American's valuation and real estate advisory businesses.

With Oaktree acquiring a 53% stake and providing operational support, the partnership sets the stage for B. Riley to expand Great American's platform and capitalize on its leading position in asset disposition services. The deal, expected to close in Q4 2024, represents a significant turning point for B. Riley, positioning the company for sustainable growth and enhanced financial stability.

This article first appeared on GuruFocus.