B Riley buys Southern Cal. brokerage neighbor Caris & Co

Mon Dec 17, 2012 3:13pm EST

Dec 17 (Reuters) - B. Riley & Co. and Caris & Co., a pair of southern California-based institutional brokerage firms, said Monday they have combined in an effort to attract more trading and banking assignments in a very slow market.

"We're a lot deeper now in covering consumer and technology companies," said Bryant Riley, who founded B. Riley in 1997. "This business is so challenging right now that our game plan is to keep our head down, try to take market share and hope we get into a better environment."

Riley declined to discuss terms of the deal in which his firm purchased Caris, which he said generally works with larger firms than Riley's clientele. Both companies are privately held.

The combined company has about 95 employees, including about 25 from Caris. About 15 of the Caris crew works in sales and trading capacities and ten in research.

Riley said he and Caris founder Darren Caris discussed the possibility of combining for about five years but believed now was the "time to get together" because of rapidly falling trading commissions, weak equities volume and new regulations that have led to the demise of many small firms in recent years.

Riley, whose firm last year hired about ten institutional analysts and salespeople from San Francisco-based Merriman Holdings' Merriman Capital, said Caris is not weighed down by long-term employment or lease contracts that have made it unattractive to combine with many struggling institutional firms.

San Francisco-based Think Equity LLC, Rodman & Renshaw, WJB Capital Group and Ticonderoga Securities are among small firms that have shuttered this year.

Caris employees will move into Riley's Los Angeles headquarters and into its San Francisco office, and retain satellite locations in San Diego and Atlanta. In New York, Riley's analysts, traders and salespeople will move into Caris's larger space.

Darren Caris will assume the newly created position of director of capital markets, research sales and trading. Riley President John Ahn will continue to run corporate finance.

Raising capital for small companies has become Riley's primary revenue source despite its founding as a stock trading firm that depended on commissions from large investors. Revenue from advisory and capital markets businesses is up 30 percent this year from 2011, Riley said.

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