All right. Well, thank you everyone for being here. Welcome. See a lot of familiar faces, a lot of investors, friends from being in this business for so long, partners up front and to the side. And it's a, I guess it's ironic that this - that we moved our, our, our investor day up, but it's exciting to us because we really want to share with you the, this business. And I think it's a lot broader than people understand. I think you'll be excited when you hear from the business leaders. I have been typically the face of, of the firm in the investment community, and, and this is gonna be a little less today.
I'm obviously here to talk about some of the dynamics around the business today and Q&A and all of those things, but I'm really excited for you to hear from our business leaders. So before I start that, just upfront here, and I'd ask this group to jump in if I miss anything, because there's a lot to cover. But Tom Kelleher, Co-CEO. Tom and I effectively started the firm. I think Tom came six months after we started. Our first CFO is in the back, my wife, Carly Riley. If you maybe don't realize this, this was a two-person operation that started with everything we could put together and focused on research and trading for six years, didn't do any banking.
You know, one of the things that I always question is, it's named B. Riley and Financial, 'cause we didn't really think of it as ever getting this big or a different name. So here we are, and we've got this amount of interest and the size of the business, and we're really proud of it. But the heritage of this firm goes back a long way with a lot of people in this room that have helped to build it. Phil Ahn is our CFO. Phil joined when we effectively went public through the merger of Great American Group and has been an important leader and part of this firm for the last 10 years.
And then Dan Shribman, our Chief Investment Officer, who joined about five or six years ago, very involved in the principal investing side and will be helpful in describing and thinking through for investors and others, how we look at everything. So next slide, please. So I mentioned this, 27-year track record of doing right for our investors and clients. We are a nontraditional firm. Again, for the first seven years, we did no investment banking. We actually took, I remember for a long time you would have people come on TV and analysts and say, "You know, do you own any of the stocks that you recommend?" And the answer would be no. They want you to say no because they didn't want a conflict.
We would always buy our stocks 48 hours after we recommended them, and we would sell them 48 hours after we downgraded them. We wanted to own our names, and that's been a critical piece of philosophy, and really what's created this merchant bank over the course of the last, you know, 27 years. So, haven't changed from that. Businesses have changed, opportunities have changed. That core value of wanting to invest with our clients and in these companies is, maintains itself today. I don't think the diversity of this business is appreciated. It's appreciated by me. I think it's appreciated by everybody else in this room. Hopefully, you'll get a better appreciation for how this business was built, partly opportunistically, partly strategically, and we feel like we're in a really good spot now, where we've got, just a great cumulative asset.
Some bring steady EBITDA, some bring episodic EBITDA. But at the end of the day, I think we've got. We feel really good about our position. And, you know, when we talk about a proprietary approach to investing across the middle market, we will backstop deals. We will utilize our balance sheet to get something done. We will facilitate a $150 million transaction through three different legs of the stool, baby bonds, ABL, equity. Like, we do those things. We get paid for those things. We think those things enhance, the investment opportunity for everybody by doing that and not having three different groups, you know, bid on those three different segments. And we can really be, I think, helpful in those types of transactions. Next page. Just next page. Thanks.
So, we were talking about our favorite slide, and everyone's gonna have one, I guarantee you, because I've seen the rehearsals. But this is my favorite slide, and the reason it's my favorite slide is it speaks to how this business was built. We could never have built this business without core leaders that had the opportunity to build their businesses, lead their businesses, and we act as a partner in helping them build those businesses. And so if you look through this group, you will see the average tenure on here. I tried to do it, but some like, you know, at B. Riley, some 10 years, but even going before that, at their own businesses, 25 years, 20 years.
And this is a, this is a team of leaders that really, I think, are second to none, and I have total, I have total confidence in. I think investors should have total confidence in, and the people that work within these groups have total confidence in. And there's so many more behind the scenes here that are not on this page, and it's the core of what B. Riley is. And I think it's a testimony to just continuing to kind of try and do the right thing, try and find, you know, proprietary opportunities and really investing in this team that I can't wait for you to hear from. Next page. If you've been around this business, you've seen this slide. We—when we started the firm, we were a broker-dealer. It was a volatile business.
You were either generating commissions or you, or you weren't. And so early on in that, in our career, we decided to look at other opportunities that would provide steady EBITDA, that would create an ability for us to grow when the episodic businesses were slow, and then to grow the steady businesses when the episodic businesses were busy. And so we break those into kind of a more fee-based business, which is our appraisal and valuation, consulting, wealth management, communications, consumer brands. And just to put those in perspective, you know, you're talking around $200 million of operating EBITDA amongst those segments. And then the episodic businesses, which are really episodic. I mean, we did $200+ million in EBITDA in 2021. It was obviously a much different market.
But even in 2022, our trailing 12 months, we've done $80 million of operating EBITDA. So we make sure that we are running the business tight. We make sure that we're always profitable.
Just to clarify, that's at the broker-dealer.
At the broker-dealer. I apologize. And we make sure that we're ready to go when those markets open up. I think it's really interesting, and Scott will talk about this: the retail asset disposition for two years had been pretty slow. But we just maintained that group, which is an incredibly talented group, and in one quarter, in Q4, made $18 million of operating EBITDA. And that's how we position the episodic businesses, to make sure that we're ready for those when they turn, and we make sure that if they turn negatively, we have our steady businesses to offset that. And we speak a little bit about some countercyclical portion of our business. You know, I think Ian's group is seeing a lot of opportunity, appraisal, because loans are being evaluated more.
And we've got turnaround management in the Scott's group on the asset disposition. We utilize that cash flow to enhance our business, support our clients, make creative investments, and return capital to our shareholders. Next page. So there's really... You'll see two pages here that I think are important. One is: How are some of these groups put together? Was it randomly? Was it opportunistic? And I think there's a combination of that. So on this page, you know, one of our major goals is to have each of these groups thinking about the other group and how we can take advantage of creating revenue opportunities or investment opportunities, and they cross each other a ton. So just an example of that would be a B.
Riley Wealth manager referring a real estate deal to our real estate group, or a financial consulting group seeing a company that might need capital and referring it to B. Riley Securities. And to put that into perspective, we have a very formalized process for this, and in the last two-ish years, we've had over 1,200 referrals from one group to another. And that is, that's incremental margin, and we have a formalized process to make sure that the, you know, whoever is starting that process doesn't have to handhold it. We have others that handhold that for them, and then they find out periodically update. So my only point to that is, there's a lot more here that work together than I think you would think. And there's gonna be examples, I think, by the leaders of that business.
Next page. The other side is opportunistic. We never knew we would be in the brands business. We were an asset disposition business. We went to auctions and recognized quickly that the in my opinion, the best buyers or the buyers that made the most money were the buyers of the brands. They had a recurring EBITDA stream. They were able to take these assets from, you know, distressed auctions and really build on them. So we ended up partnering, and again, you'll hear more about this, with a group called Blues tar. It's been hugely successful. Communications companies that were trying to grow, shouldn't grow, but built a lot of cash flow. And you'll see when [Namath comes up, the returns we've had in the communication business.
These are opportunistic acquisitions we made, some often public, orphan public companies that have been, I think you'll see, very profitable for us. And then more often and more recently, Targus, which I'll let Mikel Williams talk about, during his opportunity. Next page. This is a flywheel. This is our opportunity. This is what we get to look at every day and think through, how are we gonna monetize this? Is it gonna be monetized through an investment idea? Is it gonna be monetized through cross referrals? Is it gonna be monetized by fees? I don't think anybody in our size, in the small to mid-cap space, have these opportunities. So we spend a lot of time making sure that we see these opportunities, whether it's to invest directly, whether it's in investment bank, whether it's to make introductions. Doesn't really matter.
This flywheel is really important, I think, a key part to our success. Next page. Before I go to B. Riley Securities, this is gonna, excuse me, this is gonna seem like a kind of a strange statement, but it's important because we're not naive to the short stories out there and part of the premise of our relationships. And I just wanted to address one of them because it's really important. So this might resonate with half of the people in the room, probably more on social media. So let me... Sorry, we don't – and we don't have a slide on this, so I wanted to just kind of read this statement here. Bear with me... Okay, here we go. So, you won't see Rent-A-Center on the deck.
Rent-A-Center was a transaction that we worked on in 2017 and 2018 that would have been a home run for us. We took it public. We made a deal to take it private at $15. The business got better. Ultimately, the stock went to $50 after the termination of the deal. The company had an opportunity to terminate the deal, and they, as the financer of the deal, they looked to us for a reverse break fee of $144 million, and they broke up the deal. I can't get into...
And we had raised a lot of money with our investors, and it was really a great event from us understanding that now we have FBR. If we do a good product, we can raise a lot of money, and we since have done that on a number of deals. But one of the things that has kind of been out there, and I'm not. I can't go into more details, but I just wanna end this, is that B. Riley did not pay a single dollar in connection with that settlement, nor did Brian Kahn, nor did Vintage or its affiliates. It's just a fact. So I can't answer anything more about this. It's a...
It feels like a strange time to mention it because I'm really excited to talk about all these businesses, but we just wanted to get it out there because it's gotten a lot of attention. With that, Andy Moore has been here for 16 years. He's an amazing leader. He's really taken the B. Riley Securities business by the horn. I think he started out in sales and you know, quickly worked his way up and is really the energy and passion of this side of the business when partnering with Jimmy Baker. And I'm so excited to have Andy walk you through B. Riley Securities. Thank you.
Thank you, Bryant, for that with those warm comments. It's an honor to follow you up to the podium. I mean that sincerely. You're an inspiration to me every day in the business, and I learn a ton from you and Tom collectively, and I couldn't be more appreciative, more grateful for the opportunity to work here. You sandbagged me a little bit. I have actually been with the firm for 18 years. I appreciate that. The first 13 years of that, largely in an institutional sales capacity, 5 years in my current role. Many in the audience here and online are familiar with B. Riley Securities, long known simply as B. Riley and Company. This is the platform on which the broader B. Riley Financial was built.
We're a 265-member team spread across the country, with key offices at our Los Angeles headquarters, here in New York City at 299 Park, in Arlington, Virginia, in Chicago and San Francisco. We've long maintained a value ethos that I think you'll observe permeates every part of this organization across the Finco B. Riley Securities as well. In the last 12 months, we generated $404 million of total operating revenue and $84 million of operating adjusted EBITDA within B. Riley Securities. Next slide, please. This is not by happenstance. We are purpose-built with respect to our capabilities. As a brokerage, we are first and foremost in the business of making introductions. This starts with our 60-member sales and trading team. These are traditional idea generators with a median 20 years of industry experience. They have deep institutional relationships.
They are not simple concierges or order takers by any means. We are a research-based platform. We have 26 publishing research analysts. These folks are the caretakers of our brand. They're critical to preserving our value, value-focused approach. Corporate access is a natural extension of our management relationships, headlined by our flagship institutional annual conference in Los Angeles at the end of May. We have multiple single-day thematic events over the course of the year. And of course, we have a consistent non-deal roadshow flow nationwide. The security lending side, not widely known. This is a spread-based business with contained risk. It's recurring revenue, and it benefits from access to our wealth platform. With capital market solution, here again, we leverage the strength and relationships of our sales and trading team.
On the equity side, this manifests itself in the form of IPOs, follow-on offerings, private raises, and once upon a time, PIPEs. At one point, that market may return. On the debt side, it's customized fixed income product, baby bonds , and structured solutions. Advisory has been and remains a key area of focus and investment for the firm. It's comprised of traditional sell-side and buy-side M&A. On the private markets advisory side goes hand-in-hand with private debt solutions. It leverages our relationships with conventional and non-conventional credit providers. Restructuring includes liabilities management. This is a practice that's unsurprisingly seeing a surge in in-court, out-of-court opportunities with rising-rate environment. What you won't see on this slide is merchant bank. BR touched on this a bit.
We're willing to lean in on our- with our balance sheet to every opportunity we consider. We eat our own cooking and operate on the view that if we are not willing to own and invest it, we can't ask the same of our partners. Next slide, please. So how'd we get here? It started in 1997 with Bryant, Tom, BR, and TK affectionately, sitting behind computers, scouring the street for stock ideas that were off the radar of conventional Wall Street. The idea was: pick good stocks that live far from Wall Street, deliver those ideas to an institutional community. It was really that simple. Do good work, do right by your clients, and you'll, and you'll continue to grow the firm.... 2006, this is our first underwritten transaction with Kratos Defense.
That year, my first with the firm, the brokerage generated $17 million of operating revenue. As I mentioned previously, by comparison, we generated $404 million on a trailing twelve-month basis. So you can see the compounding effect since 2006. 2016, 2017, this is the platform's inflection. In a span of a few months, we acquired FBR and Wunderlich Securities. Collectively, the two enhanced our origination and distribution and introduced the firm to our first formal retail presence at scale. 2020, we led the proliferation of the baby bond market. We went on to raise nearly $3 billion of $25 par paper in the ensuing year. Like the balance of our offerings, this product finds audience with both institutions and retail alike.
2021, we formed the financial sponsors group to better harvest previously untapped private equity community. Heretofore, it had been largely hedge funds, family offices, endowments. And we shortly thereafter introduced the now $100 million venture capital fund. 2022, we dramatically enhanced our M&A capabilities and accelerated our financial sponsor undertaking with the acquisition of FocalPoint, who for 20 years occupied the building directly adjacent to our Los Angeles headquarters and had long been familiar to us. With respect to the future, further fortify our verticals and grow market share. Year to date, we've grown our MD count meaningfully, adding talent in consumer, restaurants, internet, and defense, and we'll continue to opportunistically add. Next slide, please. So we have 400 companies under formal research coverage, representing eight key verticals. This is not the end of it. We maintain...
Our research analysts maintain active dialogue with some 1,100 additional private and public companies, making 1,500 relationships that feed the opportunity flywheel. Yes, in B. Riley Securities, of course, but across appraisals, asset dispositions, and B. Riley Wealth Management at all. It's an extraordinary top of the funnel. Sales and trading relationships across the institutional community, I mentioned, are key, not just for revenue and distribution purposes, but also for meaningful new idea sourcing. And here again, corporate access, headlined by our flagship Los Angeles conference, now 24 years running, consisting of 250 presenting companies, 1,500 total attendees over two days. Never mind the charitable event in partnership with Sugar Ray Leonard Foundation and our collective aim to solve for childhood diabetes. Next slide, please. All right. BR touched on this, and now my favorite slide. B. Riley, by the numbers.
Smooth this out of our trailing three-year timeframe to account for what was effectively a frothy 2021, I think we all can acknowledge now, and two challenging years in 2022 and 2023. But in the course of that time, we've raised $64 billion of capital. $7 billion of that has come in lead management form. Lead, lead capacity rather than lead left. Note, we are the number one non-bulge small cap underwriter, bar none. We've executed more than 300 unique ATMs and collectively raised more than $6 billion in debt capital between notes, preferred, and private debt. To be clear, no other non-bulge does more, and as a rule, we outcompete any bulge or any other shop who attempts to enter our market. Next slide, if you will.
So I'm always a little reticent to introduce a case study into a formal presentation, but I thought this was a spectacular example of how the platform capabilities come together and the integration of both B. Riley Securities with Principal Investments, a company called Global Ship Lease. GSL is the ticker on the NYSE. To this point in time, take yourself back to September 2019. Global shipping was under pressure. Not much capital had been raised in any form, any way. Significant debt loads were burdening a lot of these performers, and yet global channels and demand were increasing for products to move globally and across transatlantic, more particularly. Representatives from B. Riley Securities, B.
Riley Principal flew over to Greece, spent time on the ground with George and the team at GSL, long-held family business, but it floated publicly, obviously, as I mentioned, on the NYSE. They were struggling, one, under the burden of that debt load, and two, because they recognized that there was pretty meaningful opportunity before them to get out. If we could buy ships, if we could acquire more capacity, we're going to be able to leverage this into the next two years and compound our business. Went to market on it. Again, this has been a space that had not raised capital in nearly two years and maybe in excess of that. With the help of Principal Investments coming in as an anchor investor, marketed to our institutional investor bank, raised $55 million for them at a price of $7.25.
So pleased with that. Two months later, in November of that year, went to market with a baby bond, had a follow-on bond, ATM offering on that. A month subsequent, $75 million preferred offering. Accumulate that in the span of six months, we raised in excess of $200 million in capital for a Greek shipper. Never been done before. Two years later, or call it a year and a half later, January 2021, they came back to market again, included B. Riley. And I think probably most significantly, Kelso, the sponsor of this company in September 2021, had a residual stub position that had been representing to some degree, an overhang on the equity. Cleaned that up with a $57 million block transaction distributed amongst our balance sheet into our syndication of partners.
This recurring client feedback, they come back to us for a solve again and again. That's the most reassuring part of our business. As I mentioned, that initial stock offering in September 2019 took place at $7.25. Stock traded as high as $40 in the course of time. I think last trade somewhere on the order of $18, but I look at this as roundly a success for the entire organization and really just a testament to everything that we've done. With that, let me allow me to please turn this over to my longtime friend, partner, colleague, Jimmy Baker. He's the Head of Capital Markets, President of B. Riley Securities. He's gonna get a little bit more granular on how we got to this point in time and a lot of our successes. Jimmy.
Thank you, Andy. Good morning, everyone. As Andy mentioned, I'm President of B. Riley Securities. It's been my privilege to grow this business for the last 13 years alongside Andy, Bryant, and Tom. You know, it's not often that we've gotten together like this to share what we've built. So I'm really excited to tell you a little bit more about our team and what's made us driven to be the go-to platform for middle-market companies and those who invest in them. We recognize we don't have a bulge bracket name on the door here. We don't have an automatic ticket to the dance by way of revolver participation. We've had to earn this reputation and this position of market leadership by out-executing our competition, big and small.
This leading position in the middle market is really a testament to our people and our culture that always puts the interests of our clients and our teammates ahead of their own. It sounds simple, but it translates to better execution and higher close rates. You know, it's that tenacity in concert with the expanded capabilities you see on this slide. You can move to the next slide, please. When we first came public in 2015, it was our first full year as a public company, we had fairly limited ECM capabilities. You know, we had an effective but niche M&A footprint, largely concentrated on the West Coast. And as our core ethos of small-cap stock pickers, it afforded us a buyback desk and differentiated corporate access that served those sales and trading clients that Andy mentioned.
By way of that West Coast heritage, we skewed heavily towards TMT and consumer, but with a large generalist footprint. Fast forward to today, we now have more than 3x the number of senior producers we had when we first came public, and we now have domain expertise in virtually all Russell 2000 sectors. We now offer a full-service platform of capabilities, purpose-built to deliver solutions to what remains an underserved small-cap landscape. Importantly, we still maintain a significant generalist footprint, which allows us to service a number of companies that may not neatly fit in a sector bucket. We recognize many of our buy-side clients are generalists as well, and so while we will continue to deepen our sector expertise, we do not intend to eliminate this entrepreneurial, more opportunistic aspect of our platform that differentiates us from many larger peers. Next slide, please.
As many of you know, we've been investing meaningfully in M&A capabilities over the past several years. After acquiring FocalPoint nearly two years ago, we've beefed up sector leadership in multiple sectors across industrial and consumer. This service line within our investment bank is perhaps the most symbiotic with the balance of our platform. These transactions often generate referrals to other elements of the platform, and we often monetize assets that are referred in through other parts of the platform. We have a very high-touch, senior-led deal team approach that historically has resonated particularly well with entrepreneur-backed businesses. And by way of our public markets footprint, we also do well with corporate carve-outs and take-privates. We also handle distressed M&A through our dedicated restructuring team.
While private equity has long been a common buyer of the assets that we've taken to market, as Andy mentioned, we formed a dedicated financial sponsored coverage group a few years ago. We invested again meaningfully in that group last year, and we're continuing to see that bear fruit through more and more advances to take sponsor-backed assets to market. While we're coming out of a very tough transactional environment over the last 24 months, this group is beginning to see meaningful momentum. We feel very well positioned, both in the current quarter, in 2024, and the long term in this business line. Next slide, please. While we're often thought of as a largely public markets platform, we've been very active in private markets as well. We first entered the private placement business in a meaningful way back in 2017 through our acquisition of FBR.
This afforded us the opportunity to connect with companies earlier in the capital life cycle. We've since and subsequently expanded our private credit capabilities meaningfully over the last several years. It's a service line which is seeing considerable demand in the current rate environment. As I touched on in the previous slide, our dedicated restructuring team does very well with liability management as well as in-court processes, arranging DIP and exit financings. Next slide, please. This is a slide I'm particularly proud of. Bear with me, there's a lot going on here. This is all equity raised for small-cap companies on a rolling three-year basis. It excludes SPACs and healthcare, and while we certainly participate in those markets, those markets tend to have relatively distinct investor bases, so we think about them a bit differently.
On this slide, you can see after 22 years of building our brand and enhancing our capabilities, in 2019, we broke into the top 20 small-cap underwriters. We never set out to be a volume underwriter, and yet we've continued to amass market share, having ascended to become the leading small-cap underwriter outside of bulge bracket firms since 2021. We've remained a top 5 small-cap underwriter ever since... Like many other middle-market firms, we've developed good syndicate relationships with other banks that call on us as a differentiated partner. But unlike many other middle-market firms, we're really built to lead and now lead nearly half the transactions we underwrite. This speaks to both our sourcing funnel and what we believe to be a market-leading close rate.
We're particularly proud of maintaining this position in both that extremely frothy market of 2021 and historically challenging ECM environment like we've endured over the last 24 months. Next slide, please. The prior slide looked at all equity issuance, follow-ons, and IPOs. While we certainly participate in the IPO market and have led several over the last several years, our market leadership is strongest with existing public companies. There are many factors that might go into private company stakeholders' decisions when they consider choosing an underwriter lineup. But once a company becomes public, we've found that the investor relationships and execution capabilities tend to carry the day.
So we've established this position of market leadership in small-cap ECM for existing public companies, whether it's number one over the trailing 12 months in terms of total volume, number two, in terms of lead left volume or market leadership, as Andy mentioned, in ATMs, we're very well positioned in this segment of the market. It has us particularly well positioned for the tremendous amount of pent-up demand that's going to come from supply of large shareholders of largely the 2020 and 2021 vintage of IPOs. The shareholders of those public companies have not been able to execute the normal post-IPO playbook, largely, largely due to the challenging capital markets environment we've had over the last couple of years.
But as that normalizes, and as we look at the nearly—or excuse me—in excess of $400 billion of debt on the balance sheet of Russell 2000 companies that matures between now and 2026, I've never been more excited about the backdrop that we have to execute in from a capital market standpoint. We expect most of these maturities to be addressed before they become current. So we see this record level of leverage in our core market as something that ties very well into our core competencies. Whether these Russell 2000 companies choose to address these pending maturities by selling assets, refinancing, equitizing their balance sheet, either by swaps, by follow-ons, ATMs, we're very well positioned in this small cap niche. Next slide, please.
Here you can see financially what we were able to accomplish during the elevated levels of activity in 2021, but also note that we've continued to gain share and have accelerated our investment since then. So while issuance activity has continued to be very weak, our operating revenue and adjusted EBITDA is actually up LTM versus last year, despite this extended decline in our core market. On this slide, you can also see the long-term 10-year average for small-cap issuance is more than 3x higher than the trailing 12-month period. And a simple way to think about our sensitivity to that small-cap issuance activity is we have roughly $80-$85 million of uncorrelated revenue. That's our, commission business, it's our securities lending business, it's our restructuring business. Substantially, everything else that we do exudes significant correlation with small-cap issuance activity.
As we look at the macro tailwinds and the leading indicators that we track, whether that's submissions to our commitment committee, the bake-offs we've participated in, and other factors like that, both internal and external, that we track, we feel very well positioned for 2024 and beyond. We've demonstrated consistently that B. Riley Securities generates nearly 50% incremental EBITDA margin on the additional revenue that we pick up above that $80 million-$85 million base. Leaves us very optimistic about what the next couple of years will bring to bear for B. Riley Securities. With that, I'd like to turn it over to Ian Ratner, the Co-CEO of B. Riley Advisory Services, a tremendous partner for our investment bank and has a great growth story of his own. Ian?
Thank you. Thank you, Jimmy. That was terrific. First, I'm going to introduce myself. My name is Ian Ratner, and I've been part of the B. Riley family for about five years. I've co-founded a firm called GlassRatner in 2001 that was primarily in bankruptcy, restructure, turnaround management, and forensic accounting. And in 2018, we merged in with B. Riley, and there hasn't been one hour that I've regretted that decision since 2018. At that time, we thought about renaming B. Riley, but we had an arm wrestle, and Bryant won that arm wrestle. So here we are. I'm delighted to be here. We have an extremely exciting business. It may not be the largest business at B.
Riley, but it is certainly one of the most exciting, and it is a center of the plate, to use a restaurant kind of term, where we're participating in every aspect of the flywheel, from opportunities that are generated in the investment bank, opportunities that are generated in principal investing, in valuation, et cetera. So I'm going to take us through that a little bit, and you will see that we're in the early days of the practice. But we are building a continuum of professional services. And today we've filled it out a little bit from our early days, and we have eight service lines. Each one of those service lines has the opportunity to grow, both geographically and from within itself. So there's a lot of opportunity, and you're going to see that when we get into the details.
Today, the primary service lines that represent the majority of the revenue in the B. Riley Advisory Services consulting practice are the valuation practice. My partner, Michael Marchlik, is going to speak a little bit about that business, and that was one of the foundations of B. Riley Advisory Services. In the forensic accounting area, we are a leading provider, working with many of the Am Law 100 law firms on debtor, the company and big-ticket litigation. The only limitation in that practice is hiring and finding qualified professionals. It is a very difficult labor market, and we're always looking to add quality professionals. The third part of the practice, which is really the largest today, is the bankruptcy restructuring business, which, of course, is benefiting from higher interest rates and a little more of a difficult market.
We're going to talk a little bit about that practice. But what's more important than those three foundational practices is the opportunity to grow across this continuum of professional services that I'm going to talk a little bit about. Next slide, please. Of course, I would like to say that I could talk about my business and our business for days and days. Just ask anybody in my family, but I'm going to try to be focused and and try to cover it in a couple of minutes. This is a little bit of a detailed chart that gives you a window into the eight service lines that we are building out today. Each one of these service lines is growing and has tremendous opportunity.
On the top, on the top left, you can see the appraisal and valuation practice, which Michael Marchlik is going to speak about. Below that, you'll see the restructuring and turnaround management practice, which is a legacy GlassRatner practice, which was our most, you know, largest and dominant business. In the last cycle, 2008 through about 2014, 85%-90% of our revenue was driven by those service lines. Ron Glass used to like to say that we are active in every layer of the restructuring business except being a debtor and being a creditor. This is just some of the types of projects we're involved with, where we act as Chapter 11 trustee, Chapter 7 trustee, liquidating agent, receiver. We act as creditor, committee advisor, debtor advisor.
One of the service lines that's indicated in that group is the chief restructuring officer, which today is our most active area within the restructuring space. Sometimes a CRO as a fiduciary is brought in to help bring the company into bankruptcy or to act as responsible party in a restructure. If the lenders are less trusting of the management team or if the company is completely underwater and the equity is out of the money, the lenders may push for a CRO to come in and effect the restructure. That's a very large part of our practice. It is a nice practice because those matters, as we're going to look at later, those matters go on for some time.
One of the things that makes us unique is that we're building out an operations management practice, which is the plant floor restructure. So unlike some of our competitors, we're able to go into a company and both act in the financial restructuring side and bring in the plant floor people that are able to restructure the operations and the plants and the logistics and the entire actual operations. Those two businesses are working together to create tremendous synergies. For example, right now we're really dominating in the automotive space, where we're working for many suppliers that are struggling. As we move through this continuum of services, on the top middle, you'll see compliance, risk, and resilience.
This is a practice that we pulled out a couple of fellows from Ankura, another consulting firm, and what we're doing here is cyber readiness, disaster recovery, enterprise risk management. This is a tremendous practice that creates beautiful recurring revenue and is really the channel. I love thinking about the channel for these businesses. The channel for the compliance risk practice is actually the insurance market. If companies are trying to get cyber policies or disaster recovery policies, many of the insurance underwriters require a study. So we go in and perform that study as part of the insurance underwriting process. That's a relatively new practice that is really showing some great energy.
Of course, the forensic accounting practice is one of the foundations of the business, and in that area, we're active in both live investigations, where we're retained on what you may be familiar with, something called an internal investigation, where we're retained either by a company or a lender or somebody to be involved in investigation. So those are live cases. And then, of course, the second part of the practice is expert witness litigation support. We're involved in, you know, theft of trade secrets, patent infringement cases, franchise disputes, earn-out disputes. We probably have 10 post-transaction post-transaction working capital dispute cases going on right now. You can see how all of these service lines benefit from the broader B. Riley home.
I'm going to talk about the transactional support area, which is really my favorite service line, and built it up when I was with Kroll and then on our own practice. We have a booming due diligence, quality of earnings practice, and this is a practice that's the single largest beneficiary of our merger with B. Riley and our relationship with all these wonderful partners that we have in the firm. There's not a week that doesn't go by that I don't get a call from Jon Merriman or one of the investment bankers about a company that may not be ready for a transaction yet. They're going through a refinancing, and there's an opportunity to do quality of earnings study for a lender. We're doing both buy-side due diligence and sell-side due diligence.
This practice, of course, in 2021, was extremely active, and at one time, I think we had 20 QE projects going at the same time. It's a little bit less active today because the M&A market is down. But that's fine because we have eight different service lines, and they're all moving in tandem. And then, of course, my partner, Michael Jerbich, is going to speak about our real estate brokerage, real estate transaction practice. And then in the bottom corner here, I'm going to speak a little bit about our executive search practice, another example of a practice that will feed off of the B. Riley platform. The executive search practice came to us through our recent acquisition merger with a group in Canada called Farber, which was a firm that we've been working with for over 15 years.
And in fact, Allan Nackan is here from Toronto, if you want to raise your hand. So Farber is a dynamite firm out of Toronto that really had two primary service lines, bankruptcy restructure, and we worked with them hand in hand over the years. And the second practice they had, one of the main practices they have was executive search. Very exciting practice in Canada, and we have now brought that practice to the U.S. We've hired a practice leader in L.A., and we're already staffing around that group. So why is that an opportunity for us? Well, it was obvious to me, and it's proving out the business model. We cover 400 different companies. We have relationships with all kind of different mid-market, small cap companies.
When the CFO is being replaced, or God forbid, the CEO is ill, or there's another change in senior management, that's an opportunity for us to get retained on a retained search basis. We've already seen opportunities coming out of the B. Riley platform, generated by our own people, just generated internally for that executive search function. We're very excited about it, and it offers great opportunity, tremendous margin, and great fees. That's all retained search. We're not doing contingent search, we're doing retained search, just like the majors, like Korn Ferry and Heidrick & Struggles, et cetera. That's a relatively new practice, but again, it's part of the continuum of professional services that we're building because we want to be able to serve companies at all the different life cycles, different life cycles that they're involved with.
Let's go to the next slide. So how did we get here? And this gives you a little bit of a timeline of how we got here. So as we heard a little bit about, I think either Jimmy or Andy mentioned the 2014 going public transaction between B. Riley and Great American Group. Great American Group had more than one division. The appraisal division of Great American is the foundation for B. Riley Advisory Services. And Scott Carpenter is going to speak later about retail business and liquidations. But within Great American, there was a beautiful practice called appraisal, and Michael Marchlik is going to speak about that practice. 2018, we joined B. Riley, actually, right after the FBR deal that Jimmy spoke about. And that starts to...
We start to come together in building out a consulting platform. And, again, we were leaders in bankruptcy restructure, turnaround management, and forensic accounting. Between 2020 and 2022, we've done a couple of small tuck-ins, like Alderney Advisors, which was an automotive restructuring group in Detroit. We've added an office in Mexico that's doing terrific, and in fact, our Mexico office is working on automotive restructuring cases where our automotive team needs people in Mexico as well. We then pulled out this small group from Ankara and got into the risk compliance business. So it's been a very exciting time. 2023, we then, in late February, beginning of March, we closed on the Farber transaction, where more recent, there was a lot of news around that.
We added an office in Charlotte, with a firm that we knew well. And of course, in July of 2023, we added a forensic accounting office in Detroit through a terrific little tuck-in with Crawford & Winiarski . And the future, of course, looks amazing, because as long as we could find people that share our culture, our collaborative nature, and want to work hard and have a good time, we will be able to continue to grow this business, and that's where we're headed. We continue to look at opportunities, both geographically and within these service lines. So this allows us to look for a forensic accounting group in Houston or a restructuring group in San Francisco. So there's so many different opportunities that where we could grow this business and add qualified professionals.
So let's just go to the next slide. By the way, I'm having an unbelievable time right now, and I don't know if you are, but this is a lot of fun. So, we're gonna drill in a little bit into three of our practices. As I mentioned, the restructure practice, the appraisal practice, and this younger real estate practice that has a lot of legs to it. So this is just a quick snapshot of the type of deals that we've been in over the last 18 months or so, and it's really all over the middle market. Some of these names may be familiar to you. Kalera was a public company, a vertical grow business. We've been involved in countless small healthcare businesses, 425-bed Long Island CCRC.
We've been involved in all kind of behavioral science businesses, nursing homes, small hospitals. GlassRatner had an expertise in what's called critical care community hospitals, which are small hospitals in underserved communities. We continue to get those cases. It's really all over the mid-market. You see a lot of restaurant activity. We're working on, we just finished a case, 93 Burger Kings. We have 100 Dairy Queens. We have 80 Wendy's. I mean, wherever you want to be in the- wherever you want to be in the restaurant space, we can take you there. So this is just a snapshot of the type of cases that we're involved with. It's very middle market, and it is very prolific. A case that I was involved in was Aearo Technologies. This was the sub of 3M.
That was a case that we bid against all the majors. 3M is, of course, a huge multinational. Aearo Technologies was one of the subs that was facing massive liability, tort liability, from faulty respirators, and it was—that was a bankruptcy case where we represented the respirator claimant committee. So in some of these cases, there's more than just a creditor committee. There's different committees, and we have the opportunity to work for different players in a case. So that's just, like, a little bit of a window. The restructuring practice clearly is very busy now. We've seen interest rates really really, you know, ratchet up over the last, as everybody knows, over the last period, and that's really causing some challenges.
I mean, we have clients that were, that were borrowing in the 4s and 5s and then now are at 12. That, that affects your, your, your business pretty quickly. So let's go to the next slide. So everybody has a favorite. This is my favorite slide, and I'll tell you why it's my favorite slide, because we're gonna talk a little bit about it, but it gives you a window into two of our operating metrics, which demonstrate why this business has grown and will continue to grow. In 2001, we started our practice with two professionals, Ron Glass, who's really amazing, myself, and then we built the group over time. And this just has a little bit of data. Our – this since 2020, we're clearing almost 80 conflict checks every single month.
That's 80 opportunities. Some of those opportunities we're bidding against other people. Some of those opportunities go away because they decide not to pursue the transaction. We're opening about 43, 44 cases every single month right now. Of course, that trend goes up. There's busier months, but over time, that trend is moving up. On a cumulative basis, the chart on the right gives you the cumulative basis for that activity. Now, why is that important? That's important because most of the cases that we're involved with have a certain life to them. These cases may go on for a year, two years, three years. So as long as we're opening new matters, the business is growing on itself, without regard to all the other things happening around our business. I'm gonna give you an example.
I have a trial starting in February 2024, with Mayer Brown and Foley & Lardner on a bankruptcy litigation matter where the underlying business went bankrupt in 2006. Now, of course, not all cases have a life like that, but there are many cases that go on for two years, three years, four years. So that allows us to continue to grow the business and add projects to the, to the, to the business. When I met with Bryant, one of the metrics that we talked about in the early days was how many matters we issued invoices on every month. I remember looking at that statistic with Bryant at that time. Every single month, we were issuing invoices on more open matters. So there's a lot of good, there's a lot of good, exciting things happening around, B.
B. Riley Advisory Services, which is our business consulting practice. And I just want to mention one other thing, that it's fully integrated into the platform. Every day, there's a lead coming out of the platform. Yesterday, I'm in the Uber coming to the meeting we had at 299 Park Avenue, and we get an email from somebody in the forensic practice who has a friend at Paul Hastings, and they have a deal where they need an appraisal of some energy assets. So of course, the first thing we do is get them in touch with Bill Soncini in Chicago, and it happens to be a type of energy asset that we've appraised before from in the machinery and equipment business bank.
Or we're doing a quality of earnings study for one of our lender clients, and we're doing the Q of E side on the operating business, and they're like: Ian, do you guys do machinery and equipment appraisal? I'm like, "Yeah, we're one of the largest machinery and equipment appraisers in the country." So we aim, we're able to serve that lender client in one matter, both doing the due diligence, the Q of E, the more traditional Q of E work, and bring in the appraisal group to appraise the assets. We're getting leads, and we're giving leads. We've sent a lot of leads over to B. Riley Securities, where we partner on assets.
It's very exciting, and I think that our business, collectively, the consultants, I don't love the word consultant, but the consultants are gonna continue to grow the practice within the business. I think I'm gonna turn it over now to my partner, Michael Marchlik, who's gonna talk about appraisal.
Thanks, Ian. Good morning. My name is Michael Marchlik, and I co-lead Advisory Services. I've been in the industry for 30 years, and I joined Great American Group in 1996, prior to the merger with B. Riley in 2014. My day-to-day focus is the appraisal division within the advisory services product continuum. Annually, we complete more than 1,600 assignments and engage with over 1,100 companies. For the 12 months ended September of this year, we appraised over $120 billion in assets. Two-thirds of the work we complete is for existing clients, which makes our business very predictable and has helped manage consistent growth since we started this practice over 20 years ago. On the right side of the slide, which is my favorite part, we've got favorites. You'll see our largest clients who make up most of the market activity.
These institutions rely upon B. Riley's experts to understand the borrower's collateral, so the loan structures can be underwritten and, in most cases, syndicated to larger bank groups. We're the first choice for every money center bank and financing institution. There's no competitive firm today that exists with our decades of experience, and this cannot be replicated. We are the market leader. For those of you not familiar with the appraisal division and what we do, let me provide you with a bit of context. It's a process where we value assets such as inventory, machinery and equipment, intellectual property, or real estate when they're used as collateral for the revolving line of credit or term loan, and it's very specialized. The valuation model assumes everything is sold within a defined period of time, and we also identify collateral risks and how to mitigate them.
The process requires company financial and merchandise data, on-site inspection of store and warehouse locations, as well as physical facilities. During this appraisal process, we spend hours or even days with company management, so we have a clear understanding of their business and how they operate. Next slide, please. The appraisal division differentiates itself a few different ways. We leverage our extensive platform to bundle services, making us a true one-stop-shop, unlike any other firm that we compete with. Competitors can offer a few services together, but nothing like what this group is capable of. If you take our common offerings coupled with any of the following products, such as financial restructuring, operational improvement, liquidation, or even executive search, we're positioned to create exclusive client solutions. I'll give you an example. Last week, we signed a large six-figure engagement. It's our largest in the history of the firm.
We're able to get there and sign this work by bundling four of our services together. We're able to double the prior record that we had. In our business, we refer to this as confidence. The frequency of bundling assignments is more common today, and it's really accelerating our revenue growth to new record highs. Our clients and the borrower also prefer that we deal with just, that they deal with just one organization rather than multiple service providers. In the appraisal division, we're constantly referring work throughout the platform, often daily. However, a system-wide referral engine or the flywheel, it wasn't easy to build. Since 2014 and the merger between B. Riley and Great American, the division leaders focused on communicating and collaborating to unlock synergies between all of our operating groups to serve our clients and ultimately our shareholders.
We don't still work in our business. We had to step back from our day and actually work on it as well. This collective effort is now a tremendous advantage and has helped us achieve consistent growth, making this another reason why we are first in class. Let's talk about our people and how this supports specialization. The team we've assembled is, without question, the industry's finest. It's a result of talent we have and how long we've all worked together, and I could not be more proud of the appraisal division and everything that we've built. The average years of service per associate is six, and it's greater than 10 years for the members of our senior leadership team. So we've got plenty of continuity and talent. The depth and tenure of our professionals support our ability to specialize in key industry verticals.
With specialization, we really understand the industry and its challenges, and we keep the appraisal process simple for our clients. We live by one simple rule: We don't take assignments when we don't understand the assets or the industry. Industry specialization and expertise also help us avoid competing on price, which is very important to our part, to the part of our financial success. I'd also like to point out that our business is not cyclical. When there's distress in the market, we're actively helping companies with rated credits, and traditional cash flow borrowers move to an asset-based solution. In times of economic growth and healthy M&A markets, sponsors are more aggressive with leverage, and lenders again, rely on our industry expertise for values and ways to mitigate credit risk. Today, our clients and their borrowers are operating in an environment of uncertainty.
Outstanding loan balances continue to climb, and many companies need more leverage as they move to asset-based lending and direct loan structures. This trend is not new, and we expect it to continue as it has for the past few decades. In addition to growing our mature inventory, machinery, equipment, service lines, we're focused on expanding our client base and capabilities for business valuation, financial reporting, intellectual, intangible assets, and real estate. We've also achieved great success following the first full year of providing field exams for our existing customers. The performance of this new group has exceeded our expectations, and they've proven themselves to be excellent collaborators across the B. Riley platform. So now I'm going to turn it over to Michael Jerbich, who leads B. Riley Real Estate. Thank you.
Hey, thanks, Michael. And again, my name is Michael Jerbich. I've been in the real estate industry for about 25 years. We started a group here organically a couple of years ago with two of us. We've since grown to nine full-time professionals now with diverse real estate backgrounds, most of which have decades of transactional experience. We service a broad range of external clients and provide the firm platform with internal real estate services across a range of sectors, some of which include retail, office, multifamily, manufacturing, industrial distribution, and land sales. And then within each of those sectors, we provide the following services: sales and dispositions, where we provide traditional sales, sale-leaseback transactions, portfolio sales and auctions in real estate, I mean, sorry, in a bankruptcy setting. Real estate restructuring for healthy and distressed clients, where we do rent reductions, lease terminations, lease renewals, and value extraction.
And then advisory services, where we perform portfolio strategy reviews, property valuations, and market analyses. And then capital markets, where we secure debt placement for construction financing and acquisition financing. One of the aspects that I think is, like, most exciting about the group being on this platform as an advisory brokerage service is our ability to have access to the firm's balance sheet. That's somewhat unique in a brokerage environment. And so with that, that allows us to provide debt financing in a bankruptcy, which allows us to effectively buy our way into a deal we otherwise might not have access to, and also allows us to be opportunistic with acquisitions. In our early stages, we've acquired two properties so far. Both happen to be vacant Kmart's that we're redeveloping right now with national retailers.
We plan to sell both next year and expect strong returns despite a difficult rate environment. Then in addition to the uniqueness of having access to a balance sheet within the firm, I think, you know, the theme that you're going to hear this morning, and for me, what's most unique and what drew me to the platform is essentially the firm's ability to feed itself. I mean, you think about each group is so intimately integrated within one another. The self-generating possibilities, although it's hyperbolic to say they're endless, I'd say they're very plentiful. If you look at the firm and the platform through a real estate lens, you heard from banking earlier with Jimmy and Andy. We provide banking clients with sale-leaseback services, dispositions, valuation, and then lease restructuring services.
Soon you're going to hear from our wealth management practice, Michael Mullen, where often clients there have multifamily sales, 1031 work, where we do advisory work, whether we represent a buyer on the buy side and the sell side of a transaction. Within that practice alone, they manage assets somewhere in the neighborhood of over 100,000 clients. And so for us, that's unique to have direct access to a base of potential deals within that platform. Next, we're going to hear from Scott Carpenter and Tim Shilling on our retail solutions division, our asset disposition services. We work hand in glove with them. When they work with retailers to dispose of the inventory, we can restructure the real estate portfolio on behalf of that retailer.
Then Ian talked to you quite a bit about our advisory services, where they've got a strong real estate focus since they started in the early 2000s. Within that focus, there are many of these advisors act as a receivership, and in a receivership engagement, there's often real estate assets that need to be sold, so they bring us in to sell those assets, or with the Chief Restructuring Officer engagements. There was a slide a couple of slides ago. Ian said they're very active in the automotive industry. They were the Chief Restructuring Officer for C.A.J. Automotive. Case was converted to a Chapter 7, and they were able to bring us in to dispose of the industrial facilities.
Although the real estate group here within the platform is a little less mature than some of the other platforms, we're at a stage now where we're really seeing almost an inbound a week from one of our platform partners, and so we're really excited about the growth potential within the platform. Ian?
Great. I'm just, I'm going to key off from saying that Michael said just two examples. Not to get too granular, but, right now, on a real estate lead that Michael had, we have a team that just got appointed receiver in an RV park in Florida from the real estate platform. And then we have another deal for a lender where we're in an expert witness on bankruptcy feasibility, and at the same time, Michael's going to be the broker on the... Ultimately, the lender is going to end up foreclosing and get access to the property, and they're going to sell the assets. So there's a lot of opportunity for cross-pollination and working together. So I'm just gonna kind of wrap it up.
Even though I would stay here all day, I'm gonna wrap it up a little bit and give you a window into our numbers. The largest parts of our business today, as you've heard, are, of course, the appraisal, restructure, and forensic accounting, but as all of these different 8 service lines grow, the opportunities are significant. We're proud of the business, we're very committed to it, and you can see that we've grown the business steadily, and we've had obviously a very good year since 2019, which was the first year that we looked at it as a business together. You can see that we've grown nicely, providing stable margins and impressive margins in a competitive business.
We're committed to the highest level of client service, to the most collaborative and inclusive environment, to stable and profitable growth, and in fact, we're funding our own, own growth through our own profits. This is after search firms and expenses to grow our businesses. We're absolutely committed to B. Riley and to helping do everything that we can for B. Riley Financial to become a leader in this space. Before I wrap up, this is not a forward-looking statement, but this will be a $300 million business before you get there. Thank you. I'm going to introduce Scott Carpenter on the... I'm going to introduce Scott Carpenter, who runs the retail liquidation, wholesale liquidation business. Thank you.
Thank you, Ian. I'm exhausted. But thank you. I'm Scott Carpenter. I'm the CEO of the Retail, Wholesale, and Industrial Solutions business at B. Riley. Tim Shilling is over here, EVP of the group. Together, we run this part of the business. Quick, background on me, actually... Yeah, quick, quick background on me. I started with Great American Group in 1997. In 2009, we went public with the help of B. Riley, and Bryant Riley joined our board. And in 2014, as has been mentioned, we merged with B. Riley, and here I am today.
... So our group has two distinct silos. One is the Retail Solutions Group, and the other is the Wholesale and Industrial Solutions Group. On the retail side, we have two types of distinct clients. One is a distressed client, the other is a healthy retail client. On the distressed side, it's usually a bankruptcy, a going-out-of-business type of situation. With a healthy client, it's a lease expiration. They might have a few unprofitable stores they need to get out of, or they just want to move to the new mall down the street. All of our inventory is sold on-site through a progressive discounting scheme. On the backs of our U.S. business, we opened up business in Europe and in Australia. We also offer our services in Canada.
In 2010, we opened in Europe, and originally we were in London, but then we moved our offices to Munich because Germany is the largest economy in Europe. We opened our office in Sydney in 2015, and in 2016, we did the largest liquidation ever in Australian history when we did the Masters Home Improvement chain. That was AUD 996 million worth of retail inventory across 63 stores throughout the continent of Australia. Our slides are a little out of sequence here. Can we back up to the one slide back? No, I'm sorry, one slide forward. There we go. So the retail liquidations segment of our business is the bulk of our business.
Over the last three years, we did 4,300 stores, $5.5 billion worth of retail inventory. Since our inception, we've liquidated $47 billion worth of retail inventory. We've also collected a ton of data throughout that entire process, which is key to the way we bid projects as we go forward. Most of you know us through our large bankruptcy liquidations, like Bon-Ton, Gymboree, Bed Bath & Beyond being one of the most recent. Okay, next slide. The retail liquidation process is a very unique and specialized business and has significant barriers to entry. The first thing you have to do is be able to predict the outcome of any liquidation event. That's where our key...
Historical database is key to that process, as well as our executive team and our field staff. So where do our projects come from? They come from bankruptcy attorneys, they come from restructuring professionals, they come from a network of retailers that we know, and they come from our appraisal division that also refers us a lot of work. When the economy is bad, we have a large amount of liquidations on the bankruptcy side. But when the economy is good, we have a fair amount of liquidations that occur due to mergers and acquisitions, like when Office Depot merged with OfficeMax, and they closed all of the overlapping locations. We go through a dual process of evaluating these projects. We have a financial team that does the analysis on the financial side.
They gather information on the inventory, the sales history, the cost, the retail, the expenses to operate the closing locations, and we send our field team out to actually look at these locations and the inventory. The reason we do that is because you can't see in the data if you're in a mall that's 50% vacant or the parking lot's under construction. So we send our field people out to actually evaluate these situations. You might also see a retailer that has a lot of clearance or maybe their vendors have cut them off, and they're at 50% capacity, it's very important to look at exactly what we're about to liquidate. We sync up this information on the financial side and the field visits to formulate a final model and then a bid proposal for these liquidations.
All of this happens in about a week to 10 days. So just think about all that, that work in a week to 10 days, we pull all that together and make a bid, and we get ready to do the liquidation. And we, we win, those, those, opportunities 30%-40% of the time. So now the liquidation begins. We sell everything in place, right where it sits, through a progressive discounting scheme. We deploy all of our field consultants to, the stores they've been assigned to implement our liquidation strategy. We initiate our marketing and advertising programs, and we collapse the weaker stores and maintain the stronger-selling stores so that we keep, an efficient mix between sales and expenses.
All of this takes place in about 8-12 weeks, when we sell every item of merchandise, and the store is left in broom-clean condition for the landlord. Next slide, please. We've established ourselves as a market leader. We've got over 50 years of experience, thanks to our legacy group, Great American Group, and its founder, who was a pioneer in the development of the methods we use today in liquidations. We've done thousands of liquidations and auctions across every category of product that you can think of... And our proprietary database allows us to predict the liquidation outcome that is likely to occur. All of this allows us to maintain our growth and leadership, and our international business has allowed us to have consistent earnings across the last several years because that business has matured.
Next slide, please. This will give you a feel for our current engagements. Obviously, Bed Bath & Beyond was the big one this year. We also did Sears Hometown. We're just finishing up Z Gallerie. We did Nordstrom Canada. We had a few healthy retail assignments, just a few Macy's stores where the leases were expiring. We did some Banana Republic stores. We did some Office Depot stores, some J.C. Penney stores. I want to mention Hylete. It was our first complete online liquidation. They had no brick-and-mortar stores, and we sold 97% of the inventory in those locations, online through the whole online process.
Normally, what we do, every project we have has an e-commerce component, which we operate for a while, and then we push that merchandise into the brick-and-mortar stores, so we can sell it for the last piece. In Germany, or Europe, we had a very robust year. We had a big project in Germany with Reno and Salamander, 85 locations in Germany, locations in Austria, Hungary, and the Czech Republic. GameStop, we did a project in the beginning of the year where we closed their stores in Ireland, and at the end of the year here, we did 55 stores in Germany. Last year for them, we did all their stores in Sweden, Denmark, and Finland.
We finished the year in Europe with a project called Hallhuber , a ladies apparel chain of 183 stores, and we did a project called Depot with 230 stores, which is home goods. On the industrial side, we just signed a big project, had our first auction yesterday, Ames True Temper. Went very well. We did a project for Hello Landing. They had several distribution centers with product in it that we were liquidating for them. We're in the middle of doing F&M Tool & Plastics. Rio Tinto is a longtime client of ours that is upgrading plant and equipment in some of their facilities, and they rely on us to auction off the equipment they're replacing.
Through our Canadian affiliate, Farber, we just got Torx Connect, also. Okay, next slide, please. This is my favorite slide. So, over the last 10 years, we actually averaged about $40 million in EBITDA over that period of time. The last three years, we've done a little bit better than that. What I'd like to point out here is, a bad year for me was in 2021. We only made $9 million. Jimmy Baker, thankfully, carried the heavy water there and had a fantastic year that year, which is part of the whole B. Riley's countercyclical formula that we're trying to do here.
But you can see in the last 12 months, on the far right there, I'm the one who's smiling because we had a really great, really great year, and we're gonna be above average there. Okay, next slide, please. I want to finish with just saying, the synergies of our platform is really, really important. We get referrals, like others have said, through securities, through appraisal, in particular, through real estate, as Michael Jerbich said, the restructuring group, the principal investments group. We got a lot of inbound coming, and we try and reciprocate as well. In particular, the appraisal group, because they rely on our liquidation values, and we rely on their client base of banks and retailers that often need our services.
All these benefits flow both to the US and to our international group, and I just want to emphasize that we really do try and help each other, regardless of who has the financial benefit of whatever the activity is. It's, we support each other, and, it's the right thing to do, and we all do it. So with that, I'll turn it over to Mike Mullen, who will talk about wealth, and then I believe there's a break after that. So take it away.
Thank you, Scott. Look, we're about 1 hour and 20 minutes in. We're running a little bit behind schedule. As you know, Ian Ratner said he could talk on and on and on. So, after I present wealth, we'll have a short break, and we'll try to get back on schedule. So, as Scott said, my name is Michael Mullen. I am the Chief Executive Officer of B. Riley Wealth. I lead the wealth team alongside my partner, Chuck Hastings, our chairman, who's in the audience today. Let's go to the first slide, please. As you can see on the slide, our firm is coast to coast. We operate in 125 locations across 28 states and the District of Columbia. We're a full-service, traditional wealth management and financial services firm.
We operate a flexible, advisor-centric platform, partnered with industry-leading technology providers and custodial partners, and we're built to provide holistic financial advice and services to high-net-worth clients. We have over 600 affiliated professionals, of which a little more than 400 are registered financial advisors. Of that group, about 60% are 1099 or independent contractors, and the balance are W-2 employees. We manage in excess of $24 billion of client assets and servicing approximately 100,000 client accounts. Our clients' assets are custody to National Financial Services and Wells Fargo First Clearing, two premier custodial partners. Moving on. As a full-service wealth enterprise, our business is really simple and straightforward. Our revenue is reported in the 5 main categories shown in the slide above. Advisory revenue.
These are the fees that we earn for providing holistic wealth management and financial planning advice to our clients. The fees are based on the client's assets under management. This is a very consistent business for us and a source of stable recurring revenue. Next up is brokerage revenue. We facilitate trading, trading in equity and debt securities, in options, mutual funds, ETFs, alternative products, and we do it for a brokerage commission. Tax and accounting revenue. We have a dedicated tax and accounting team. They provide tax planning and preparation, bookkeeping, and many other accounting services. As an example, this group prepares and files over 25,000 tax returns each and every year for our clients. Insurance revenue. We offer variable and fixed insurance products as part of a holistic financial plan for our clients. And lastly, other revenue.
This is where we record our rebate and interest sharing revenue and the other miscellaneous service fees that we earn from our platform. Moving on. B. Riley has been involved to a degree in wealth, retail wealth management, really since the inception of the firm in the late 1990s. The focus increased significantly a little more than six years ago with the acquisition of Wunderlich in July 2017. The team at that time took an unprofitable business, and in two short years, really turned it around. That successful plan was the framework for what we did when we really increased the size of wealth with the National acquisition in 2021, which I'm going to cover in a moment. Today, the new B.
Riley Wealth is a balanced mix of employee and independent financial advisors, along with what I think is an incredible, dedicated, and talented support team. What truly differentiates us, and you're starting to hear it in the earlier presentations so far today, and this really sets us apart from our competition, is the access that Wealth has to all of the proprietary services inside greater B. Riley. If you think about it, a top quality wealth platform simply is a platform that offers high-quality, valued solutions for clients. When you look at all the other companies that make up greater B. Riley, they all provide high-quality, valued solutions for high-net-worth clients and business owners. And we have 100,000 of those potential relationships today inside of Wealth. I think this really sets us apart. I'll share with you two recent examples.
We have an advisor, as a client, that owns a large Class A multifamily development in a large metropolitan area. It's 160 units. It's 160,000 sq ft, including 6,000 sq ft of retail space. It's on almost 4 acres. It's valued in excess of $60 million. We introduced Michael Jerbich and his team to our client. They quickly engaged, and Michael delivered a proposal to sell the property. Another very recent example, one of our top advisors in Houston, has a client that has a family-owned business. It's a very large business. It's valued at nearly $50 million. He was looking to sell. We reached out to Andy and Jimmy, who very quickly connected our client with one of their top M&A advisors. Our client signed an engagement letter for the sale.
It's not closed yet, but it's in process, and when it does, it'll be a significant fee for B. Riley Securities, but more importantly, it was a valued solution that we at Wealth was able to deliver for our client. I can go on with numerous other examples, but suffice it to say, this facet that you're going to continually hear about, I think, is what's really special. We have been averaging over 30 inbound referrals of our clients a quarter to our affiliated partners, and we anticipate this engagement will only grow over time. The proprietary access is also symbiotic, as our partners also reach out to Wealth for us to provide services to their clients, which in turn helps our business grow. Next slide, please. This tells a story, this slide, of the integration of National into B. Riley Wealth.
In the last 2+ years, it's actually almost three years now of our hard work. You can see from the slide in 2020, Wealth was a great business of B. Riley. 280 people, $70+ million in revenue, and almost $6 million of adjusted EBITDA. Quiet, consistent, and reliable. Then came the National acquisition in 2021. A much larger, a far more complex business with a whole lot more people. Wealth now combined, had over 1,200 people. I think at this time, we effectively doubled the overall headcount of B. Riley. Combined, close to $400 million in revenue and $22 million of adjusted EBITDA. But remember from the B.
Riley Securities slides that Jimmy went over, 2021 was a very strong capital market year, and Legacy National relied upon this episodic revenue to create any earnings. The mandate that Bryant and Tom gave to me and Chuck was to rethink the business and to do it in a way where we can make money on our steady streams of revenue and have upside with the episodic revenue. We collectively believed by doing this, we would significantly increase the value of the Wealth franchise overall. This was a great challenge, and it made the integration very difficult. But having a supportive parent and a combined vision of enhancing the value of the business, to me and the team, it was also very exciting. As a team, we deconstructed and then rebuilt the business from the ground up.
We challenged every process and procedure as well as every employee. We executed a robust synergy plan that eliminated duplicative vendors and positions. We deliberately cut our headcount almost in half. We outweighed the recurring revenue side of the business, and we discounted and shrunk our further reliance on episodic revenue. This process also strategically included us exiting a large number of financial advisors that no longer fit the vision of our business. This work positioned us to realize significant annualized savings versus our our prior fixed cost base, and all the while, we've also added efficiencies and improved service and support this time for our clients. Also, and as importantly, we believe we have significantly de-risked our business by closing out almost all of the legacy National matters.
We also closed National Securities in 2022, and by eliminating our reliance upon the episodic revenue going forward, enhanced the value of our business. The synergy savings to date have exceeded $30 million. With our new lower cost base, over 70% of our monthly breakeven is now covered by just our recurring revenue. 60% of our overall revenue fiscal year to date comes from our recurring lines of business. We will continue to grow and improve these percentages as high-quality financial advisors continue to join our platform. I'm also happy to report, as you can see on this slide, wealth returned to profitability in 2023. We have produced $148.9 million in revenue and $6.2 million of adjusted EBITDA through the first nine months of this year, despite the volatile markets.
We're grateful for the hard work from our team to help get us here, but I'll underscore they all share our enthusiasm for what we are building. What you see today is only the foundation of the new B. Riley Wealth. High-touch, client-centric relationships have established our financial professionals as our clients' trusted advisor. These qualities not only drive consistent recurring revenue, but they also provide deep insight into our clients' overarching financial needs beyond investments, creating numerous opportunities for us to tap our firm's extensive platform to meet a wider scope of our clients' needs. We're committed to growing responsibly. We are committed to the investment in and the improvement of our platform to best serve and retain our highly valued professionals, but also to continue to attract and recruit other like-minded professionals to join us. Our culture now drives our growth.
We are confident with our current AUM base, we will reach our initial goal of a 10% EBITDA margin business with upside as capital markets improve. We expect our business to grow consistently, net of markets, as we continue to recruit and further engage our existing advisor population on the scope and capabilities of our firm, a quiet, consistent, reliable contributor to B. Riley Financial. In closing, I cannot say enough how happy and excited I and my team are to be here at B. Riley, to be given the opportunity and the support to build something we think is special, to be able to work every day with dedicated professionals inside wealth and throughout greater B. Riley, all with a single focus of delivering high-quality solutions and value to our clients. Thank you. At this time, we're going to take a very short break.
For those of you who are on the webcast, please stay tuned. It'll be approximately 10 minutes, and when we come back, we'll introduce our Chief Operating Officer, Ananth Veluppillai, our principal investment team, who will update us all on the firm's investment in the communication assets. Thank you.
Ladies and gentlemen, thank you for your patience. The conference will begin just a few moments. Hi, everyone. We're going to get started. All right. All right, welcome back. My name is Ananth Veluppillai, and I'm the Chief Operating Officer of B. Riley Principal Investments and President of our communications portfolio companies. I have been with, with B. Riley since 2016, and previously held various executive operations roles within the telecommunications industry for over 30 years. Within B. Riley, with Principal Investments, our communications portfolio began with the acquisition of United Online in mid-2016. With the thesis of buying late-stage companies with predictable revenues and gross margins and the potential for high cash flows. Since then, we have acquired four other companies, and together, through our operational oversight and integration capabilities, have generated just under $70 million EBITDA over the last 12 months.
The first slide shows some intriguing data points. Between United Online, magicJack, and Marconi, we have generated over $600 million in revenue and approximately $3 million in EBITDA. This is just. This is a significant achievement, considering the combined total enterprise value at acquisition was just under $160 million. Since inception, we have and continue to provide steady cash flows to B. Riley. Lingo and BullsEye, our most recent acquisitions, that again, will leverage our operational platform. We are currently undergoing full integration. This is clearly my favorite slide, as you can see from the results, and even though it's $300 million, EBITDA is really all, just, really grows as cash flows. Let's go to the next slide. This slide shows the timeline of our acquisitions.
The communication portfolio started with contributing $32 million in 2016 and has grown to about $344 million today. This reflects both our selective approach to identifying acquisition opportunities and leveraging the strength of our operational capabilities. Our strategy is to time acquisitions such that we carefully integrate each into our platform with a goal of maximizing each company's operating efficiencies to drive improvement in net margins and cash flows. Let's go to the next slide. I want to highlight how we view the five acquisitions in our portfolio. United Online, magicJack, and Marconi are mature B2C telecom companies providing consumers with paid email, internet, VoIP, and mobile communication services. Each have predictable revenues that decline over time.
Our unique operating platform has been developed to extend the lifespan of these assets and maximize cash flows from declining revenues over a longer period. We continue to look for companies with similar characteristics that can add and leverage the operational capabilities of this group. Lingo and BullsEye are B2B telecom businesses in the unified communication space, reselling voice, VoIP, broadband, security, and collaboration tools like Microsoft Teams under a single billing solution across all locations of our small to medium and enterprise business customers across the United States. Unlike B2C companies we own, this group is stable and slowly growing. With over $200 million in annual revenues, this platform has a size and scale that is ideal for rolling up similar assets with significant synergies that can be realized. We are very excited about this diversification for the long haul. Thank you.
Now I will invite my colleague, Michael Williams, to discuss Targus.
Great. Thank you. Okay, let me start off by first introducing myself. Asked to do that. I hate talking about myself typically, but I think it would be helpful as it provides some background and, and, you know, what the drivers of why they, they bought Targus. So I first met Bryant, went into a company called DDi Corp., and as CEO in 2005, having come back from Europe, with a cleanup and sell of a European telecom, where the principal shareholder or investor was a firm, KKR and others. So Bryant shows up. He sends up his analysts actually, to start off. They come down and start looking at the company as a small-cap, publicly traded company. And then eventually, Bryant wants to talk to me, and next thing I know, he starts buying shares.
He keeps buying shares and calls one day and says, "Would you mind, as a shareholder, I get on the board?" I said, "I love working for owners, so come on." He helped encourage the board and myself, frankly. We started paying our shareholders dividends, increasing the dividend rate, and eventually had one of our strategic competitors that was larger come offer us a very attractive price. So we exited that in 2012, and I thank you for your leadership back then. It was very helpful for the business and all of our shareholders. So that's how I got to know Bryant.
I went on after that, at the kind of suggestion of another shareholder, to run a company called JPS Industries, an American textile manufacturer, still weaving in the U.S., but electronics, fiberglass fabric for the electronics and aerospace industry, as well as Kevlar for the military defense and ballistics space. We got that turned around, cleaned up, and sold in two years. I think we about doubled the value, and everybody was happy with that. And then I was asked by, actually, at the original suggestion of another smaller shareholder of DDI back in the early days, to take a look at Targus, and I went to Targus in February 2016. So that's how I got to where I am now.
At that point, we had no controlling shareholders, but the Guggenheim Funds was one of our larger shareholders, Prospect Capital, Mudrick Capital, and a bunch of others. So... and it was a turnaround. You know, one thing I have is a theme of going into turnarounds and focusing on driving value and talk about that here as we end. I also currently sit on two other boards. I've served on other boards, but I'm on two boards as we stand here. One is a private company, Summit Interconnect, which is a printed circuit board and electronics manufacturer, focused on defense aerospace market. The lead investor there is Lindsay Goldberg, and I was happy to join that just several months back.
I was also asked by the creditors' committee of a company called USEC, US Enrichment Corporation, which was our nation's enrichment, uranium enrichment capabilities, spun out of the government in the nineties, mid-nineties, by the Clinton administration. So I went in there, at the encouragement of the creditors' committee, to help see it through a recap. We emerged, I think it was in 2014, as a company called Centrus Energy, trades under LEU, and I've been fortunate to have served as the board chair since. Anyway, so then I'm at Targus. Let's turn to Targus with the first slide here. I'll talk about that. So it was acquired by B. Riley in October 2022. We were having a very good year, if you remember those times.
Targus is one of the world's largest non-OEM providers of laptop carrying cases and PC accessories. In fact, we were the first, and we really brought the whole PC carrying case category to market 40+ years ago. So our focus is on the professional workforce, both in the office, at home, and everywhere in between. We have two brands, Targus, obviously, and in May of 2021, we bought a company called Hyper to extend our reach into the Mac and Apple community of users. It's a different community. We're just talking, one of my peers up here says, "I'm a Mac user." And you do have those folks, and the Hyper brand resonates very well with that community of users out in the marketplace. We are the worldwide market leader in laptop carrying cases and non-OEM docking stations.
That's our flagship tech product in the tech category. Our docks are different. They're differentiated by their compatibility and interoperability with all of the devices in the marketplace. If you think about it, we don't make PCs, we don't make tablets, and our devices have to be a connectivity source that works with all of them. And increasingly, in today's market, with large enterprises, which is our sweet spot market that we play into, as multiple estates or multiple devices in their large estate, they have to have connectivity products that just simply work, okay? And that's a very important differentiator. We're truly a global company, headquartered in Anaheim, California, but offices in the U.K., regional office in U.K., just outside of Heathrow, Sydney, Australia, Hong Kong, Singapore, and smaller offices around the world where we need to be.
So I tell our employees all the time, we have just over 400. We're as small of a company as a company can be, and yet still truly be a global organization. So, so we sell into the global distribution network, players here in the U.S., like, Ingram Micro, Tech Data, Synnex, D&H, which is a, a really good company as well, and then resellers, like CDW, Insight, and others in all of our major markets worldwide. Our core, our core market is the B2B space. So if you look at the data, 90% of the Fortune 1000 have our products in their, in their employee backpacks, so that's great. We also sell through retail worldwide. You'll see us in the U.S. in all the big box stores, you know, Best Buy, Target, Walmart, Staples, others.
We sell online, our own dotcom, as well as Amazon and other platforms around the world. Very importantly, we sell through our OEM partnerships. I'll speak to that here in a second. When I got to the company, I divided everything really between two primary product categories. Our what I call our cases, which is the traditional way back when, just the cut and sew and all the tablet, the hard cases, the protective cases, and then all the tech products. Again, our docking stations are the lead product in that category. We also supply all the other things, mice, keyboards, cables, audio, locks, all sorts of other products. By the way, if anybody's going to CES, come by our booth.
We're announcing a lot of really new, cool products as well, and we're getting a few more product awards from the convention, so I'm excited. Can't announce them yet, but we will when that happens in early January. So we design our own branded products, design and source our own branded products, but importantly, we design for products and white label with the largest OEMs in the world, you know, the Dell, Lenovo, HP, Samsung. And not only just designing and providing the products, we actually help them sell the products in the markets around the world, which is a very important differentiator between what they can source from with us versus others, with our distribution platform.
In fact, just last month, I think it was announced in the last couple of weeks, Samsung, for the second year in a row, awarded us with a Global Sales Excellence Award for the B2B enterprise space. So we're always pleased when we get recognized with a global brand like that. I believe we're winning share at the core OEM accounts, new projects, and I'm excited about continuing to be a trusted partner to them as we go forward. More and more, the OEMs are focused on their core products, the devices, you know, the servers in the data centers, things like that, the cloud services and everything else.
The PC accessories, they're looking more and more for a trusted partner, and I'm hoping and, and we're gonna work like that, to be the one they can continue to count on as they go forward. So we also have world-class sourcing and product development. I've got product teams made up of people from all around the world, so we take in what the requirements are worldwide. We also have a sourcing team all across Southeast Asia. We are factory-light. We don't own a factory, so we select our partners to source from very carefully, and we have been exiting China for quite some time. We're never gonna get totally out of China.
We, we don't just sell into the U.S., we sell worldwide, including throughout Southeast Asia, of course, so we're gonna go where it makes sense to manufacture, but we have really de-risked from China, more so than I think, than a lot of our other competitors have. We're now in Vietnam, Cambodia, India, Thailand, a bunch of other countries across Southeast Asia, and we actually help build up that supply base in these other countries, right? You got to invest in your supply chain as well. We are a trusted supplier to our customers because of how we source. We source ethically. We don't source from, you know, slave labor factories. We make sure that the material components in our products are according to the standards of our markets that we sell into in terms of chemical composition and all those kinds of things.
So when they buy a product from Targus, they take comfort in that, and we stand behind our products as well. So high-quality products, fairly priced. Turning to the financial slide. Okay. Targus saw very strong demand in 2021 and 2022. The whole work-from-home movement drove a lot of demand into the marketplace, and so I was really pleased with that. 2022 was particularly strong for us. We were able to source our products. If you remember, you know, the back end of the supply chain, the component constraints, people couldn't get chips, everything else. I mean, some of our lead times went out to a year or so.
We were able to source product because we were on top of the factories, on top of the supply chain, working with the component manufacturers, and we were able to do that when our peers couldn't, and some of the OEMs couldn't as well. So we had a very strong year where the OEMs were coming to us for product. I was pleased with that. What happened, though, and if you look at 2020, you know, the LTM through September 2023, is at the end of 2022, calendar year 2022, and going into that first quarter, you know, the PCs, worldwide PC sales hit the cliff and fell over. It went down 30%, I think it was in that first quarter, and it's been down year-over-year, every quarter since. We're starting to see sequential growth, right?
From one quarter to the next sequentially, which is a good sign, but year over year, we're still not back there yet. So this year has been a very difficult and tough year. In addition to the demand decline, right, since our core sweet spot in the market is the B2B space, what we had was a lot of channel inventory out with the distributors and the resellers and whatnot, and so we had to work through that throughout 2023. I'm happy to say, as I stand here today, I feel that worldwide channel inventory levels are back to reasonable levels. In fact, I would argue in some cases they're lower than they should be, and we've had some of our customers, you know, move them back up because otherwise they're missing sales.
Our business is not one where the customers wanna wait six months for product, so we have to have the right inventory in the channel at the right time. So it was really an unprecedented swing from the days where you couldn't get product, supply was constrained, demand was there, to then the supply chains opened up and the demand fell off. Okay, so very taxing year for us in 2023. I don't see that going forward. I'll come to that in a second. But the... It was really driven in for our space, the large enterprises really put all of their deployments and refreshes on hold, okay?
Interestingly, our retail, worldwide retail business was essentially flat from 2022, on a comparable 12-month basis, and our OEM business was off low single digits, which is very good given the size of the market downward trends on the OEM's actual PC sales themselves. So that's, again, winning share, taking on new projects, being a trusted supplier. And so I was pleased with the year, really. When I look at this chart, I guess I hear everybody else pick a favorite slide, and if I can do that on the fly, I would say this is it. Not because of 2023, although I'm very proud with how the team, you know, persevered through really the toughest year in a long time for the PC industry. But if you look at 2022, and you see that's what the company's capable of.
And we did 2022, and Bryant reminds me of this all the time, when we were also, in terms of EBITDA, when we were also paying, I think it was around $15 million extra in freight costs because the freight rates were through the roof, and those have now stabilized back to the levels they were before. So the company's got the ability to repeat 2022 once these headwinds start coming. Why do I think these headwinds will come? Or tailwinds, we'll finally start to get a little bit of a tailwind.
I think that we're gonna have, if you look at the data out there, the Consumer Technology Association in July reported out, at least for the U.S. market, the U.S. market, you get a lot of good data around the world, it gets thinner, but that the average age of the devices in the market, you know, desktop, laptop, and tablets, was about 80, mid-80% of their expected useful life. And we're six months down the road from that. So, you know, people have to start. You can stretch these out so far, but you have to start refreshing your devices. Why? Because Windows 11 is out, not widely penetrated yet. We're expecting that they will stop supporting Windows 10 in October 2025. So your large enterprises, again, our sweet spot, have to start spending to refresh their estates.
Also, the trend towards AI. Does anybody here use it? I know a lot of people are starting to use artificial intelligence platforms. Microsoft's got Copilot there, in their Windows 11, things like that. You're gonna need the newer devices to be able to utilize the software and the benefits that are available in the market. So I'm pretty confident, really confident that this refresh cycle is gonna come. I would like it to come earlier. We'll see. But, you know, when, when it comes, we're gonna be well prepared. We're gonna take market share. I think we've, we've gained the positions, even improved on our positions with our OEM and our retail and our distributor customers, when other smaller competitors have struggled to stay relevant during this downturn. So I'm excited about it. I think the revenue will come back.
On the drive for EBITDA, you know, we're always looking for operational efficiencies. We're well into a worldwide implementation of a ERP platform, Microsoft D365. Once that's installed everywhere, I, I'm gonna take another run at seeing other efficiencies where we can drive, you know, centers of competency and things like that. In fact, you guys have probably ninety percent of your employees in India, in tech centers, you know, doing all the work for really the business that runs all over the world, or at least heavily in the U.S., right? So we've had people overlooking at how you, how you operate and lessons learned and share real estate and things like that. So I'm excited about Targus. I know this year's been particularly tough. I share, along with the management team here, Bryant-
... Bryant's and TK's goal of driving bottom line cash flow for the benefit of our shareholders, investors, and that's the theme I've had my whole career, and hopefully we're gonna continue to do that. So thank you. Oh, I'd like to introduce Nick Capuano. I've been practicing this for a month. He's the Principal Investment Officer of,
Thank you. Thank you, Mikel. Appreciate that. My name is Nick Capuano, and I'm the Chief-- My name is Nick Capuano, and I'm the Chief Investment Officer of B. Riley Principal Investments. I've been with the firm since 2009, and was part of the group that created Principal Investments in 2016 with our acquisition of United Online. Prior to joining B. Riley, I had spent the bulk of my career at TCW Group as a small and mid-cap equity portfolio manager. It is gratifying to work with the team and the company that we've built here, and I look, I look forward to providing an overview of our brand licensing properties. So if you could change the slide, that would be great.
I will start with the fact that the brand licensing business model is a great fit for our strategy to acquire assets that provide stable free cash flow. Revenue has a high degree of visibility, given licensees usually have 2-3-year contracts with escalating levels of guaranteed minimum royalties. Free cash flow characteristics are attractive, with minimal working capital requirements and high margins. Actually, generally, over 80% of royalty income flows to EBITDA, and nearly all EBITDA flows to distributions. This high level of cash conversion is a distinguishing characteristic that speaks to the quality of these assets. The brands are a material and successful part of our investment portfolio, with a stable stream of annual cash flow in excess of $40 million on just $15 million of invested capital.
All of our brand investments have been in partnership with Blue Star Alliance, an extremely capable owner and operator of brands with a 17+ year track record of success. Looking to the timeline on this slide, in 2019, we purchased an 80% interest in six mature brands from Blue Star, who continue to hold 20%. Excuse me. The six brands deal established our partnership with Blue Star and has led to a string of highly successful additional transactions. Unlike Six Brands, which was already a pure licensing entity at the time of our purchase, we invested in the other brands before their conversion from traditional retailers into brand licensors. Strong execution on Blue Star's part during the conversion has led to early returns of capital and solid continuing free cash flow.
In 2019, we purchased a 43% interest in Hurley, a leading surf lifestyle brand that was divested by Nike. Blue Star has done a tremendous job expanding Hurley's addressable markets and has now repaid substantially all of our invested capital. In 2020, Justice was purchased as an asset sale from the Ascena Retail Group's bankruptcy. Justice had generated over $1 billion of annual revenue prior to its filing, and since late 2020, Justice has returned 2/3 of our invested capital. Our 10% interest in Scotch & Soda was purchased this March through a bankruptcy process in the Netherlands. This brand is a luxury retailer with strong market presence. As of September, in less than 6 months, Scotch & Soda had returned over 1/4 of our invested capital. So please turn to the brand financial slide.
You can see that about 60% of our brand investments have been returned via distributions as of this September, and we continue to receive steady cash flows with $47.5 million in the trailing twelve months. Hurley and Justice have been particularly successful. The ratio of the initial investment to our trailing twelve-month dividend is about 3x for both of them. And if you net distributions against the initial investment and divide that by the trailing distributions of all our brands, our portfolio is now owned at a 1.8x multiple. We look forward to continuing to explore additional brand opportunities. And, that concludes our brand overview, and I'd now like to turn the presentation back to Bryant.
Just a note on that, those exclude the dividends from bebe. So we own Brookstone and the bebe brand through a different vehicle, which is on top of that.
All right. Thanks, Nick. So I'm gonna handle the principal investing. Dan, if you see something I missed, please jump in. I think the one thing that I noticed... There were two things I wanted to comment on before I started. Many of these businesses you are seeing after years of operating, and they weren't always so easy. I think National, as Mike talked about, wasn't so easy. I remember Scott with Great American, we started, and we had 15 people in Europe, and we had to make tough decisions and make them more profitable. And it goes across, it goes across all segments. And I think one thing I'd like you to take away from this is that we are operators, and we are operators that operate for free cash flow. All of these businesses are very CapEx light.
And so as I speak to the principal investing, I'll speak to some of the loans we have, how we, you know, helped, you know, get those loans right. And then we'll speak to Franchise Group, where I think a lot of people are interested in, with the consumer, where it is, how are we gonna make our money, and, and what does that look like? So but I just wanted to preface that a little bit. So let's turn to the next page.... So this principal investment strategies is taking all of the dynamic elements that I explained to you and heard here, and creating value off of our balance sheet.
And it's not just to create value off of our balance sheet for ourselves, it's to create value off of our balance sheet for our investors and for our shareholders, and create fee opportunities. It can change. It can change rapidly. If you would have looked at this investment portfolio two years ago, you would have seen a lot more equity. You would have seen less private equity. If you would have looked at it a year ago, you would have seen a lot more receivables. You would have seen less private equity. We morphed this portfolio to where we find the opportunities are. If you may not remember, because I know a lot of people are new to this, we put $400 million into a receivable basket in early 2023, and with no leverage.
We sold equities to do that. That return on that investment was over 20. I think it's currently 27% on an unlevered basis, and the equities we sold, I think in hindsight, were good sales. It doesn't mean we do everything right, but we moved this portfolio for the opportunities in front of us. Next page, please. First, we'll start out with our public equity investments. There's really four meaningful ones that matter. Alta was our first SPAC. Dan led that transaction. Stock trades at 5 times. We actually did a secondary offering four months ago at 16.5. Stock trades at 10.5, despite beating their numbers last quarter. It's a dynamic, I think, of some of these smaller, thinner names. BW, Kenny Young, the CEO, is here.
That was a transaction we put together about five years ago. Had a little stumble with the solar business, but the base business of supplying utilities with services and parts, and then, some technology associated with that, we think we will, you know, we will ultimately turn that around. It hit us a little bit this quarter, but feel good about Kenny, the management team, and what they're doing. DoubleDown's interesting. I think DoubleDown's worth mentioning only in that that was an IPO we did. We did not like the way the IPO traded, even though it trades, it traded at 2x. We tendered for all the shares that we did, we took public. We did that because we thought it was the right thing to do.
We, we tendered at a higher price, but the cash flows associated with DoubleDown are incredible, and we think that ultimately they'll be realized, so and in value. So that's DoubleDown. Bebe was a transaction that took place over seven years. We liquidated their stores with the help of Scott Carpenter. We helped finance them out of their stores and ultimately purchased a portion of the company. We own 75% of that company. We've owned it for seven years. The two brands in that business do $10 million in EBITDA. There's also a tax asset there that's meaningful that we don't talk a lot about, but there's a $240 million unimpaired NOL. The rest of what we do is mostly merchant banking.
It is a transaction to put together a secondary or a IPO, where we believe that there's value created for, for our shareholders and for our investors, and we will take the lead position. It has become a hard market to negotiate with one institution, if you are a seller of equity. We like to be able to say, "Look, we're gonna give you the price, we're gonna backstop that price, and we have a lot of confidence between our relationships, understanding of value, and our distribution, that, that we'll be able to do that." So you'll see a lot, a lot of those, and, and they move in and out. The goal, the goal, the overriding goal of our overall portfolio is to turn it over every three years, just as an FYI. Next page. Private equity investments.
There's a section on FRG that we'll talk about next. We talked about Hurley and we talked about Justice. I think that was a unique... Moving into the brand business, and I mentioned this before, was really a unique decision to say, "Why are we not participating in the best part of a liquidation?" And so we ended up having a partnership with Blue Star. We bought Hurley from Nike. We bought Justice out of bankruptcy and had a relationship with Walmart right away. They've been great returns. I think the most important thing that I would have you take away is that I do think we have an ability with our whole team, whether it's the appraisal team or whether it's GlassRatner, the former GlassRatner, or advisory team, to look at things in a different sort of way.
When we did our receivables deal, we had 10 people dive into that receivable portfolio, and be able to analyze it because we had an expertise in our advisory business in receivables. So this is not a shotgun approach. This is very much a team approach to create these values. During COVID, we bought a couple of oil and gas assets, one service, one pro, producing. We think we'll do quite well on those. They're not gigantic, but we mentioned them here. Synchronoss has been a, I will say frustrating, just because I think the results are a lot better than how the, how it trades. We got involved in Synchronoss through a full recap over $200 million of a preferred. We held a chunk of that preferred.
We did a baby bond, and we bought equity. We went on the board. I was personally involved in negotiating the Verizon contract with Synchronoss, which extended their term, that relationship by three years, and it's an orphan public company, but generates a lot of cash, and we feel very comfortable owning it. And then again, some smaller positions that probably aren't worth mentioning here. Next slide. Okay, so credit investments. I mentioned, we'll talk about Vantage. I mentioned about receivables. We have a chunk of high-yield bonds that we've owned for a number of years that trade at deep discounts to kind of where we think they should trade, and we'll add an incremental $25 million EBITDA.
Exela is a more controversial name just because the stock has been, you know, has not performed as well as this credit. We have worked with this company to securitize our debt through a number of ways. One was an ABL, last out piece of an ABL. We bought receivables. We own a revolver. That debt is about $60 million now. It's marked in, in the mid-80s, and I feel very confident it's money good. We've made about a 30% IRR there. Core Scientific is one of the challenges we have with the market, the marketing situation. We loaned Core Scientific money against an ELOC. They, Bitcoin went down quite a bit. They chose not to sell as much equity as, as we had hoped. We were left with a $42 million piece of sub debt.
That sub debt got marked down to $9 million at when Bitcoin was $16,000, we decided to take a proactive approach. We actually wrote publicly that we thought the company should not have gone bankrupt. We were unsuccessful there. We ended up doing the DIP loan because we thought the DIP loan would give us a lot more opportunity to be involved in the overall process. We made a 40+% return on the DIP loan so far, and we are expecting that company to emerge from bankruptcy in January. We will be equitized with freely tradable stock at the current market. It's around $66 million. Obviously, Bitcoin is volatile, so we'll see. We haven't marked it there. It's marked at $42 million. But we'll see.
But that's, I think, an example of this. We don't sit by the sidelines and wait for things to happen. We bring in our whole group, and we really try and catalyze valuation.
Yeah, just one clarification. So on the 1/3 of Exela that says it's marked at a 20% discount, basically, we own the bonds of Exela at $0.10, and they trade at—they are marked at $0.10, and they trade at $0.17. So that's the discount. The $0.85 is, for the purposes of this crowd, irrelevant. The haircut is irrelevant from a market perspective.
Since 2019, thanks, Dan. B. Riley has made 53 total loans, 70% have been paid back with a weighted average IRR of 12.7. 15 loans remain outstanding. I think that's, that number, that 12.7% number, has to be put into perspective. Those transactions, some of these transactions we've done, have resulted in... I can't quantify $hundreds of millions of fees as we've helped companies finance a transaction and had a banking opportunity or bought equity on with the transaction, utilizing our balance sheet. But the numbers on the loans, about 12.7 IRR so far. Next page. Franchise Group. Next page. This is... I appreciate what's happened with Franchise Group and Prophecy.
So let's put that out there right away in our relationship with Vantage. We had started a relationship with Vantage in the early twenties. Saw Vantage move on to 7 activist, successful activist events as a fundless sponsor. Had an opportunity to work with them on Rent-A-Center, which we talked about. Despite the end result of Rent-A-Center, with not getting that transaction done, it was a great experience from our sales team and from our side. We raised all the money to take Rent-A-Center private. Ultimately, didn't get done, but it kind of established our relationship more with Vantage and that team, as we recognized the value that was created after that deal got done and the stock going to 50, we wanted to continue to work with them.
We found an asset called Liberty Tax, which was an orphan public company. We actually, B. Riley, was actually the larger buyer of that transaction. We loaned slash invested in these, in Vantage and as a sponsor. We then took that asset, and that asset ultimately became Franchise Group. And as you can see through these slides, we were involved in every part of that. I was on the board for two years. We raised equity with our investors that made a lot of money on that equity. We acquired a number of companies. We sold a company. We financed the receivables. We were involved in this transaction every step of the way.
As we saw, two of their businesses, similar to Targus, two what we think were great businesses, suffered because of the pullback of COVID and the stock went from 50 down to 21. We thought there was an opportunity for B. Riley to buy the company. So we bid for the company, and we bid $30 a share based on the thought that a $2.8 billion enterprise value was cheap. Really based on the fact that there are two assets in that $2.8 billion enterprise value that are worth, combined, significantly more, in our opinion, than that valuation. So we bid. Ultimately, what ended up happening is that management wanted to participate. We allowed them to roll some of their debt, roll some of their equity. We raised equity with existing holders.
You can go to the next page and walk through it. It's basically a third, a third, a third between the management rollover, Riley and others. We the enterprise was created at $2.8 billion, and we own about 31%. Next page. This is how we underwrote it, and I'll acknowledge, there are some changes in the five months since we closed and since we underwrote it to how we would think about it now. But how we underwrote it was based on these multiples, on these businesses, based on these times. So the plan, our plan, and plans morph and change. Our plan was a lot of value in the first three assets, to monetize, de-risk.
You can see that, you know, Vitamin Shoppe, I will say, is lighter than we expected by about 10%, so you can do the math on that. Sylvan's in the market, and we'll see what happens there. I think the response has been really good. And the real jewels, in our opinion, is Pet Supplies Plus, where you see a $185 million EBITDA estimate in 2026. That sounds high, and I'm going to walk you through how we get there, and American Freight of $238 million. And again, we'll walk you through that. Next page. So Vitamin Shoppe is pretty simple. You know, they don't have a lot of franchises, mostly customer-owned stores. Seeing a little weakness in online.
The store base is down a couple, 3%, actually, not for the year, but more recently. I would underwrite that EBITDA down a little bit to closer to 120. But still, we think we can create a lot of value by and de-risking by selling Vitamin Shoppe. So we'll see. Obviously, this is a board decision, but Vitamin Shoppe is a cash cow that has had a fair number of inbounds because the space is actually growing in general, just that this health space. So that's Vitamin Shoppe. We'll go to the next one. Sylvan is in market. Education space has been under—has a lot of interest. We've got 50 groups interested, and it's—we think this is gonna be a robust process.
We'd like to get this done by kind of end of Q1, early Q2. Next. Buddy's, you can see, is facing some of the same issues that, American Freight and, Badcock has, has faced. Buddy's did $27 million in EBITDA in 2020. We think it bottomed in 2022. This will be a, ultimately, another source of funds, I think, in the next year or two. Next. So Badcock is unique. The numbers that you see in the EBITDA, reflect a financing, arrangement that the company had when it was independent. They don't have that financing arrangement right now, so, Franchise Group has had to finance their, receivables, and that's been a reason that their ABL is up, and then they sell them. We bought, obviously, some of those.
We are working through a solution on that. We are hopeful that we're close. But I wouldn't want you to walk away with that's a $101 million business. That's a $101 million business if you're able to finance all of the receivables on your own balance sheet. It's been around since 1904. We think it's an attractive asset. We're moving fast on trying to marry that with a partner that's got a better financing relationship, and I would just say stay tuned on that. Next one. So Pet Supplies Plus. Pet Supplies Plus is a unique pet care company. They make their money two ways. They make their money by getting royalty fees from... Excuse me, Franchise Group makes their money by royalty fees and then also distributing product to the stores.
So they make about $75 million from that distribution, and then they make the rest on royalty fees. They have 260 stores in backlog. Average stores should generate $250,000 to Franchise Group. You can see the math from 76.93-115. We think 2023 will be somewhere 125-130. As these stores open up, they've got 250 that are going to be opened up, and they have 80 that have been getting opened up. So there's a lot of backlog of EBITDA there. We think in 2026, if you sell that business, whether it's $160 million of EBITDA or it can pay for a lot of the transaction price that we paid for with...
Well, well, we paid $2.8 billion. If you, you know, if you sell this business for $1.8-$2 billion, that, that would create a lot of value for us. Next slide. So American Freight is a great economic store. They make, you know, $400,000 a store. It's a out-of-box and in-box retailer. They were doing great in 2020. They were doing great in 2021. Obviously, in 2022, freight costs tripled. Michael can attest to that. Inventories were challenged, and it's just been a tough 2022 and 2023, and this is the reason we were able to buy the business. The reversal of this business going from $100 million to losing money created a stock price that went from 50 to 21, and our bet is this business turns.
It's run by a man named Peter Corsa. He ran At Home, he sold At Home. His kicks in at around $150 million of EBITDA, which on this store count that they have now, is achievable. We think there's a lot of runway to open up stores, and, and we are through the hard part of the inventory. We have sold the vast majority of the old inventory with the old cost of goods that reflected the freight prices. And so as we move into 2023, we think it's gonna be a much better year. They also have a financing partnership that makes them, depending on revenue, $35 million-$45 million a year. So as long as all they have to do is be, you know, relatively profitable on, on their sales, and they're making those finance charges.
We think they should be doing, you know, closer to 30% kind of gross margins, which would result in those higher EBITDA numbers. So those are the businesses. All of these businesses are run by operators that we have a high regard for. So PSP, same operators that were there when it was bought. American Freight bought it, we think is a great operator. These are run by these are six different businesses run by six different managements that we expect to monetize over the course of the next three years at meaningfully higher levels than where we bought it. And again, we acknowledge that that's gonna that could be choppy, and we acknowledge that we bought them at a time where the consumer was challenged. But the consumer can change. I mean, you know, it's not always one way.
We do get a reversion to the mean. There has not been... You know, you're starting to see, mortgage refreshing, and you're seeing, home building, refreshing, and, you know, there's going to be buyers of these products at these stores eventually. We haven't seen it yet, but the inventory is right. And so as the inventory gets right, I feel confident that you'll see a meaningful turn. PSP has just continued to comp positively, despite what you're seeing with some of their competitors, because it's a bit of a different model. So that's Franchise Group. What's the next page? We'll have a Q&A. I think... Oh, one other final slide. I apologize. We've done a lot of take privates.
This is not our first take private, and we took private companies that were sometimes challenged, and we saw value in the fact that they were challenged. Great American Group, at the time that we bought it, had a higher cost structure that made sense to us. We made some really quick changes. We underwrote that transaction, this is not long ago. We underwrote the combination of those businesses to $16 million in EBITDA, and we did $31 million the first year. We timed. We were lucky with some liquidations, but FBR was a business that needed to do a 144A every quarter, which is a really big fee. We ended up cutting that business in half, and it was profitable from the second quarter we bought it.
United Online, magicJack, really just companies that were public, orphaned, too much expense, and we were able to, you know, change the model a little bit, and they've been nice and profitable. National, another one that had to make some changes that Michael mentioned, that we think have been really additive. So we get our hands dirty as a collective unit, and that's why when we saw the opportunity at FRG and saw the opportunity to buy effectively a private equity portfolio of six different assets and monetize them, we think that's gonna be highly valuable for us. So, that's the history of successful take privates. Next page. I think we've spoken to this. We obviously have a high insider ownership.
You know, we bought $16 million of stock in this quarter. We've been, I think, a group that has constantly, constantly been aligned with our shareholders. We have very little sales from our executive team. I think we all collectively see the value of this platform and are excited about the value of this platform. Next page. So in summary, this is our business. I guess what I would like to take away from this is that, you know, because the people in this room know B. Riley Securities, I think that becomes a focal point of everything we do.
There is a base of business, whether it's $35 million combined in our advisory business, whether it's $70 million in our telecom business, whether it's $50 million in our brand business, whether it's Targus turning back to $40 million, there, there's a collective of businesses here. Some work together really, really well, some are opportunistic, and that collective value creates a lot of free cash flow that enables us to take advantage of opportunities like the one that we saw on FRG. So that's all I have to add. Anybody on this side want to add anything? Yeah. So we are here as a group, on any of the, any of the divisions for Q&A.
Good afternoon, everyone. This is Mike Frank. I'll be managing the Q&A. Before we get to any online questions, I'll scan the audience for hands. Yes, sir?
Oh, I'm a longtime shareholder, Ken Ma jmudar, Ridgewood Investments. Can you talk about capital allocation broadly and specifically risk management in terms of... Obviously, it's a lot of moving parts, pretty complicated, and your balance sheet, how you manage risk with the amount of debt-
Sure.
And capital allocation, how it relates to that?
So, I mentioned in the beginning, our goal is to turn over our portfolio over three years. So it's one and we have a couple, $215 million cash, but $1.6 billion is, you know, $400-$500 million a year. We think our debt is staggered so that we're able to, in the next two years, it's pretty light. It's $280 million. As we get to 2026, I think that we'll think through, are there some non-core assets that we may want to monetize? We think, obviously, our portfolio has a lot of opportunity to be monetized. We don't expect ourselves to be in some of our larger assets for three or four years.
There's a distinct plan on things like Franchise Group and others. So, you know, we've got a lot of free cash flow. We use that free cash flow traditionally to the vast majority of that to return it to shareholders. Like I said, we bought $16 million of stock this quarter. We also see opportunities that we want to take advantage of. We saw Nogin, which, you know, was a public company that we were uniquely positioned to buy because of their client base being a tight relationship to us. So I would say, you know, we are acutely aware of our investment portfolio.
I think if you look at that one slide where you saw how quickly we went from equity, well, I explained how quickly we went from being a lot of equity, then to being a lot of receivables, then being a lot of private equity. We can move that portfolio, and it's staggered, and so, you know, it's a daily occurrence of determining what you want to do and how you want to think about each of those assets.
The only thing I'll add is that the operating businesses can support quite a bit of debt as well, and they generate a lot of cash.
We have a web follow-up to that. Can you comment on the dividend policy and how that relates to capital allocation?
So we have paid a dividend, I think, since, since 2015. It's really important to us, it's important to all of our employees, and it's important to our shareholders. I would say that as we look at the current environment, it's a really fair discussion among our board and among our shareholders, among everybody. What is the best thing to do with our free cash flow? Our bonds trade at a discount. I will say that the relationship with Vantage, and ultimately that relationship with Prophecy, has created a dynamic where I think, you know, we are—we are making sure we're very liquid because we don't, anytime there's questions around, a part of your business, you wanna make sure that you're, you're very liquid.
So I would say there's no change, but there is a change in the macro that I think as a board, we have to think through and make sure that what is the best use? Is the best use to buy, to front run some of that and buy a big chunk of stock? Is the best use to continue with our dividend? Is the best use to go buy some of our bonds? Is the best use to buy Nogin? And I think that's the reality of our business. We don't just sell widgets and collect free cash flow. Even though, from a historical basis, it looks that way.
So, and I mean this respectfully, but Charlie Munger just died, as you know, at age 99, and his one of his comments on EBITDA was, he called it bullshit earnings. And you guys have EBITDA all over your slides. How do you think about cash flow, free cash flow, true free cash flow versus EBITDA?
Well, first of all, Charlie Munger was amazing. It was, it was a sad, sad loss. So I can tell you the EBITDA conversion into free cash flow, roughly. And our... In general, our, the way that we've looked at it is about $335-$340 million of EBITDA converts to about $135 million of free cash flow. And, and, and the, and the ratio from there is, I don't, I don't know what the ratio from there would be. Probably 50%-60% at least, right? So, because with there's taxes and a lot of that other stuff. So we look at it as a free cash flow basis. We report on, on EBITDA because that's... I mean, we're not recreating the wheel, but every...
To every shareholder, every quarter, we do go through our free cash flow relative to what that free cash flow that we need to pay our dividend and the upsides to that and the downsides to that, and I'm happy to do that again with you.
Oh, you're good? Okay, thank you. So your bonds look very attractive, your baby bonds, and being expert in baby bonds, you can see that. And so being a bond investor and a client of B. Riley, you know, looking at adding to the or buying those bonds, they have beyond a triple C type yield. So congratulations on having this meeting and, and trying to get through that, because there's a disconnect really between, you know, the bonds and some of these terrific businesses that you have. So trying to drill down a little further, what's happening, private credit now is having a complete golden moment, as many of the bigger firms say, and you really are a smaller version of those big alternative asset managers that have a real opportunity here.
So maybe someone could walk us through how some of the opacity on the private credit side, how you look at a loan like Nogin or an investment like Nogin in terms of putting money into it and evaluating it. You have some terrific evaluation, you know, experience. How you evaluate those loans and how we get a comfort zone that, you know, they're getting, you know, they're getting marked in the right spot, because there's a real disconnect between the value that is implied and the, the, you know, the company and those yields.
I'll take Nogin quickly.
Okay, sure.
So we think we're creating Nogin to the extent we win the auction at about a $49 million enterprise value. We would expect the business to do maybe a year out, high teens of EBITDA. So we're creating it at a very attractive multiple. In a business like that, that's scaling, and if it hits the business plan that we think it can hit, we think can trade from 8-10x EBITDA. So the DIP that we have outstanding today, to the extent we get out there, that's a $20 million DIP. The headline price is $24-$25, but it's a $20 million DIP. To the extent we get out there, we make $4 million in the course of 3-4 months.
To the extent we win the auction, we think we're creating an asset that we could make four or 5x our money on.
Do you view the loan book as a core part of your, of your business going forward? Like, what's your 3-5-year view on that? I mean, you're, you're using it in your EBITDA calculation, so, like, is that an ongoing thing you see?
So I think the loan book is important to facilitate incremental transactions. We have a very unique view, I think, into other opportunities. But I also do think, to your point, any loan that we put on, we have to compare it to other assets and other opportunities. And clearly, to the extent that we can buy some of our own bonds at 20% yields, we're gonna have to think through offsetting that with help facilitating the business. I mean, it is a real true issue to say, should we buy back our bonds, or should we do something that creates a multiple on our business? And we have leaned towards investing in things that create a multiple on our business. But I acknowledge the economics of that.
You know, I would say it's gonna be opportunistic, and it's, we've always been that way. You know, the reality of our balance sheet is that we have a low cost of capital that creates an opportunity for us to, over the next four and a half years, I think, create a fair amount of value for our shareholders.
And if you think about the exposure we have today to Franchise Group and some of the other private assets that are, that are medium duration holds, that capital is gonna have to get recycled. Some of it will be used to pay back near-term maturities, but over a reasonable period of time, a lot of that capital is coming back in the system, and then it's a decision of do you multiply that capital bottom of the capital structure, or do you have really nice loans? The historical record of 13% IRRs in our loan portfolio exclude the fees that have been generated with it. So we think about that as kind of a mid-20s-ish IRR business over time on the loan side. So do you want to create yielding product for us, or do you want to own actual businesses?
That's the decision that we'll have to make over time. But right now, we do have a large private equity book that's not current income. When that comes back, that will become—that could become current income.
It should be noted, we, and I've said this before, our balance sheet was opportunistic because we thought that, you know, given the cost of those bonds, we could create a lot of value. There is no expectation we're going to refinance those bonds. We will gradually shrink our balance sheet over the course of the next five years. If we're sitting here in 2027, and we're doing EBITDA numbers that I, you know, would expect us to be doing, would we have a balance sheet that's got a couple tons of leverage on it? Probably. But this was a unique opportunity for us to lock in some rates that we felt like were attractive.
One more on the balance sheet capital structure. Can you comment on the Aearo sale and how you think the asset sales would transpire in general?
So, look, I think that hopefully everybody in this room has sometimes sold something for 80 cents to buy something for 50 cents. I mean, it's for us to sit there on something because of a mark and say, there's not a really opportunistic thing for us to do, and we're just gonna keep it because we don't like the bad look of a mark or the markdown, I think would be bad business. So we made a decision based on a number of things at that point in time, that that was a good sale. And I think we'll proven, we'll be proven right, that the money that that goes to will prove to be better than holding those bonds.
Can we also talk about how we think about valuation of goodwill and intangibles?
I'll take that.
Yeah.
I don't. We spend no time thinking about that.
... we spend no time thinking about the valuation of goodwill or intangibles.
All right, let's shifting gears to Ian Ratner's group. So you talked about this business becoming your business becoming materially bigger. So what are some of the comps we can use, both private and public, to help investors think about what you're looking at?
Yeah, I mean, there are other peer group. I mean, certainly most people in the room are familiar with FTI. That's one of the largest players in our space. Other competitors, Alvarez, Duff & Phelps, and Kroll just did a transaction. I mean, there is a lot of activity in the financial advisory space. And from our perspective, there's a lot of opportunity because FTI and Alvarez are larger than we are. AlixPartners, that gives us a... You know, we just have to kind of pick away at them, and that allows us to grow, relatively easily. Nothing's easy, but you got to get the team on board. But there are some public comps that you could look at.
We've seen a lot of these in 20, 30 people groups that don't want to go to an FTI, and want to be at a smaller kind of firm like ours that feel right for acquisition.
Yeah, I mean, that's really the opportunity for us, is to find smaller groups that are not interested in, quote-unquote, "a consolidator." So even though we're looking for things, we're not really a consolidator, we're looking for things to fill in. We're not big enough, and I think Dan Shribman used this word before, we're not big enough that we're competing against ourselves. In some of the bigger firms, when there's an opportunity, there's 10 different people in the firm that are gonna chase that opportunity, and they all have relationships at the same law firms or the same investment banks that form that deal. So we have a lot of room to grow until we start cannibalizing and start competing against ourselves.
I think that's what's attractive for a smaller group that would be less interested in joining an FTI, for example, because then they're competing against themselves. There's a certain size that we could get to before that we even get close to that problem, and that's kind of one of the goals.
Hi. Eliza Ronalds-Hannon from Bloomberg. Can I just clarify that you said that, Vitamin Shoppe, Sylvan Learning, and American Freight are all in the market for acquisitions next year, having inbound interest?
Sylvan is in the market currently. I'm speaking as a member of the board. Vitamin Shoppe is an asset that, in my opinion, would make sense to monetize. It doesn't have the same upside as American Freight and a PSP. And, you know, the real goal, from my perspective, is to let those two businesses really grow in the next three years and monetize them now, at that time.
Those three businesses, you said?
American Freight and PSP.
Okay, thank you.
Sure.
You have a tremendous amount of data, as different teams mentioned to mine, possibly even, you know, better data than the Federal Reserve sees for real-time analysis. So, what is the impact, or do you have an outlook on, interest rates or, you know, higher for longer, lower for longer, soft landing, whatever, in terms of your outlook for the different businesses? And I guess, number two, is there anything on a report basis or a timeline where we can-- whatever the negative things that are being talked about, can be just put to rest or anything restraining you on talking about those things that we could just, you know, get rid of?
Uh-
It's kind of data mining.
Yeah.
It looks to be very popular. Cloud-based AI, all that stuff, looks really lucrative. You know, so it must give you some insight into the future. Maybe you can share that a little bit.
So I would say that where we see probably some proprietary data would be in the appraisal section, and so I can ask Mike to comment on that. Our receivable book is held in there really well. Maybe not surprisingly well, but really well. I will say that consumer, Michael, from your side, is still slowish, still choppy. I have found especially as it relates to the receivable business, is gas prices matter. That's a big, big mover, so love to see gas prices lower. So you know, that's what we see directly. I don't know if anybody else in this group wants to add to that.
I would add, I'm encouraged by the M&A environment currently, and maybe this is colored by the fact that we realized our most significant advisory fee yesterday since the acquisition of FocalPoint nearly two years ago. What you're starting to see is the stabilization of rates and somewhat the backup. As those spreads start to contract, you're seeing more and more mandates. We're seeing it across the commitment committee. We're seeing our bankers tied up in opportunities, and they're starting to translate. You know, as I sit here today versus sitting here equivalently in 2023, I am more encouraged at the margin, and I feel like we're starting to realize several of those opportunities. I'm very bullish on 2024.
I don't know if that means Q1, Q2, we start to see the significant revenue ramp, but my money would be on a 2024 recovery.
Yeah, I just want to make sure I understand the total relationship with Franchise Group. You guys made a $280 million equity investment.
Right.
... I think I read that right. But you also have a $200 million loan out to Vantage-
Right.
- which is secured by his shares in FRG?
Yep, perfected and secured, as well as a personal guarantee, and shares in excess of that loan, but yes.
Okay. Did Vintage have cash flow? I mean, that's a PIK note, I understand. I think it matures in 2027, what the slide shows. Does Vintage have any cash flow, or what is their ability to ultimately pay that back?
Well, it's securitized by the equity. We were willing to own all of the equity, so that would be paid back by us owning more of the equity.
What would your effective ownership be then, if he cannot pay that back?
Below 55, something like that.
Okay. And you have about a third right now, is that right?
Something like... End of 31 plus-
Okay.
Yeah, in and around.
All right. Thank you.
You're welcome.
I've got one more for Scott Carpenter, if you want to talk about liquidation. Given the current economic backdrop, liquidations could see continued momentum. Are there any bandwidth limitations where you couldn't handle that increase?
No.
Great answer.
No, we've... In 27 years, we've never hit capacity. I've come close to killing our executive team during times where we've been really, really busy, and we've had to scramble to get qualified field people to implement our liquidation strategy, but we've never hit a time, ever, where we haven't been able to bid and win and operate a deal. So it's never happened.
All right. We are right at 1:00 P.M., and that's it for Q&A. Bryant?
Yeah. I'll just say one other thing that I think is relevant because it's what makes me nervous, and it's what gets me really excited. We have been in a cruddy capital markets environment. We have been in a pretty bad M&A environment, and we still did... Sorry, Charlie Munger, because I can get you the free cash flow number, $80 million in our broker-dealer. Like, that, to me, and where we rank, I just don't think that's appreciated. I think you can go walk around this room and add up the businesses and the free cash flow. The opportunity set that we have, based on doing this for 27 years, doing the same thing for 27 years, having the same relationships, and you can talk to our corporate clients, and I just think it's really unique. That can double.
I also sit there and go, like, "Let's go. Let's get some capital markets going." Like, I'm glad we got a-- the biggest fee we've had in a long time, and I know we've got another really large opportunity in fixed income that we're in the middle of, but that is, I really do think that's a, a unique situation we're in, where it, it could be-- we could be set for a real meaningful, explosion in M&A and capital markets. So anyway, thank you everyone for coming. We really appreciate it. We appreciate your interest. We're here for follow-ups, and, everybody will be outside if you want to talk to any of the business leaders. And, have a great holiday. Thank you.