| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
| Dec. 31, 2018 |
| Accounting Policies [Abstract] | |
| Principles of Consolidation and Basis of Presentation | (a)
Principles of Consolidation and Basis of Presentation The
consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries.
The consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled
by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant
influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of
its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations.
All intercompany accounts and transactions have been eliminated upon consolidation. The
accounting guidance requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest
or interests give it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether
an enterprise is the primary beneficiary of a Variable Interest Entity (“VIE”); to eliminate the solely quantitative
approach previously required for determining the primary beneficiary of a VIE; to add an additional reconsideration event for
determining whether an entity is a VIE when any changes in facts and circumstances occur such that holders of the equity investment
at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the
entity that most significantly impact the entity’s economic performance; and to require enhanced disclosures that will provide
users of financial statements with more transparent information about an enterprise’s involvement in a VIE. |
| Use of Estimates | (b)
Use of Estimates The
preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United
States of American (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expense during
the reporting period. Estimates are used when accounting for certain items such as valuation of securities, reserves for accounts
receivable, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests,
fair value of share based arrangements, fair value of contingent consideration in business combination’s and accounting
for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management
believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. |
| Revenue Recognition | (c)
Revenue Recognition On
January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts
with Customers Revenues
are recognized when control of the promised goods or performance obligations for services is transferred to the Company’s
customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. Revenues
from contracts with customers in the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment,
and Principal Investments – United Online and magicJack segment are primarily comprised of the following: Capital
Markets Segment Fees
from wealth and asset management services consist primarily of investment management fees that are recognized over the period
the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment
management services and are generally based on the dollar amount of the assets being managed. Revenues
from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity
securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research. Revenues
from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities
lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate
customer orders, (iii) trading activities from the Company’s Principal Investments in equity and other securities for the
Company’s account, and (iv) other income. Interest
income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed
from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate
the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s
exposure to fluctuations in the market value or securities borrowed and securities loaned. Other
revenues include (i) net trading gains and losses from market making activities in the Company’s fixed income group, (ii)
carried interest from the Company’s asset management recognized as earnings from financial assets within the scope of ASC
323 - Investments - Equity Method and Joint Ventures Revenue
from Contracts with Customers Investments - Equity Method and Joint Ventures Auction
and Liquidation segment Revenues
earned from Auction and Liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold
at auction or liquidation are recognized over time when the performance obligation is satisfied. The Company generally uses the
cost-to-cost measure of progress for the Company’s contracts because it best depicts the transfer of services to the customer
which occurs as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress, the extent of progress
towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the
performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs
to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and
performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many
variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or
decrease the transaction price upon completion of the Company’s performance obligations under the contract. Estimated amounts
are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not
occur. The Company estimates of variable consideration and determination of whether or not to include estimated amounts in the
transaction price are based on an assessment of the Company’s anticipated performance under the contract taking into consideration
all historical, current and forecasted information that is reasonably available to the Company. Costs that directly relate to
the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in
the accompanying consolidated balance sheets. These costs are amortized as the services are transferred to the customer over the
contract period, which generally does not exceed six months, and the expense is recognized a component of direct cost of services.
If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation
under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation
is recognized in the period the loss is determined. Valuation
and Appraisal Segment Principal
Investments – United Online and magicJack Segment Service
revenues from fees charged to United Online pay accounts are recognized in the period in which fees are fixed or determinable
and the related services are provided to the customer. The Company’s pay accounts generally pay in advance for their services
by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Advance
payments from pay accounts are recorded in the consolidated balance sheets as deferred revenue. In circumstances where payment
is not received in advance, revenues are only recognized if collectability is probable. Revenues
from sales of the magicJack devices and access rights represent revenues recognized from sales of the magicJack devices to retailers,
wholesalers, or direct to customers, net of returns. The transaction price for magicJack devices is allocated between equipment
and service based on stand-alone selling prices. Revenues allocated to equipment are recognized when control transfers
to the customer, and service revenue is recognized ratably over the service term. The Company estimates the return of direct
sales as part of the transaction price using a six month rolling average of historical returns. Revenues for hardware and shipping
are recognized at the time of delivery and revenues for services are recognized ratably over the service. The Company recognizes
revenue for hardware based on delivery terms to the retailer and revenue for service is deferred for the delay period and recognized
ratably over the remaining access right period. Revenues
from access rights renewals and mobile apps represents revenues from customers purchasing rights to access the Company’s
servers beyond the access right period included in a magicJack device or magicJack service. The extended access right ranges from
one to five years. These fees charged to customers are initially deferred and recognized as revenue ratably over the extended
access right period. Revenues from access rights granted to users of the magicApp, magicJack Connect App and magicJack for Business
are recognized ratably over the access right period. Revenues
from the sale of other magicJack related products are revenues recognized from the sale of other items related to the magicJack
devices and access right renewals the Company offers its customers, including porting fees charged to customers to port their
existing phone number to a magicJack device or services, fees charged for customer to select a custom, vanity or Canadian phone
number and fees charged to customers to change their existing number. These revenues are recognized at the time of sale. Prepaid
minutes revenues are primarily from the usage and expiration of international prepaid minutes, net of chargebacks. Revenues from
prepaid minutes are recognized as minutes are used. Revenues
from access and wholesale charges are generated from access fees charged to other telecommunication carriers or providers for
Interexchange Carriers (“IXC”) calls terminated to the Company’s end-users, and other fees charged to telecommunication
carriers or providers for origination of calls to their 800-numbers. These revenues are recorded based on rates set forth in the
respective state and federal tariffs or negotiated contract rates, less provisions for billing adjustments. Revenues from access
and wholesale charges are recognized as calls are terminated to the network. UCaaS
revenues are recurring monthly service revenue from sales of its hosted services. Customers are billed monthly in advance for
these recurring services and in arrears for one time service charges and other certain usage charges. UCaas revenues also includes
non-recurring revenue from the sale of hardware and network equipment. Revenues for recurring monthly service are recorded in
the period the services are provided over the term of the respective customer agreements and revenue from the sale of hardware
and network equipment is recognized in the period that the equipment is delivered. Advertising
revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users
utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes
such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the
related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract
is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria
have been met and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment
terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided
performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where
that data is available. |
| Direct Cost of Services | (d)
Direct Cost of Services Direct
cost of services relates to service and fee revenues. The costs consist of employee compensation and related payroll benefits,
travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in
the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements
in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct
expenses related to Auction and Liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation
segment. Direct cost of services in the Principal Investments - United Online and magicJack segment include cost of telecommunications
and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and
data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization
expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to
customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an
allocation of the Company’s overhead costs. |
| Interest Expense - Securities Lending Activities | (e)
Interest Expense - Securities Lending Activities Interest
expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment.
Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the
Company. |
| Concentration of Risk | (f)
Concentration of Risk Revenues
from one liquidation service contract to a retailer represented 13.5% of total revenues during the year ended December 31, 2016.
Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments – United Online and magicJack segments
are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated
in the United States, Australia, Canada and Europe. The
Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers
and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors.
The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the
Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific
industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts
operations with third parties through collaborative arrangements. The
Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically
exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a
concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses
in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements
that are distributed to parties in accordance with the collaborative arrangements. |
| Advertising Expense | (g)
Advertising Expense The
Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled
$2,727, $1,312 and $1,456 for the years ended December 31, 2018, 2017 and 2016, respectively. Advertising expense is included
as a component of selling, general and administrative expenses in the accompanying consolidated statements of income. |
| Share-Based Compensation | (h)
Share-Based Compensation The
Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs
associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based
payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation
cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the consolidated
statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified
award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite
service period will be recognized as compensation cost over that period. In
June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees
to purchase common stock through payroll deductions as a price that is 15% of the market value of the common stock on the last
day of the offering period. In accordance with the provisions of ASC 718, Compensation – Stock Compensation |
| Income Taxes | (i)
Income Taxes The
Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included
in the consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference
between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will
result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards
is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized
in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical
and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than
not that a tax asset will be used, the related valuation allowance on such assets would be reduced. The
Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been
met, the Company's measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest
on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component
of income tax expense. The
Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act revised the U.S. corporate income
tax by, among other things, lowering the federal corporate tax rate from 35% to 21%, requiring companies to pay a one-time transition
tax on earnings of certain foreign subsidiaries that were previously tax deferred, providing an exemption from U.S. federal tax
for dividends received from foreign subsidiaries, and creating new taxes on certain foreign sourced earnings. We recorded a provisional
tax expense of $13,052, which is included as a component of income tax expense and recorded in the fourth quarter of 2017 comprising
of (a) $12,954 related to the revaluation of net deferred tax assets to reflect the reduction in the corporate income tax, and
(b) $98 related to the transition tax on non-U.S. activities resulting from the Tax Act. During the fourth quarter
of 2018, the Company completed its accounting for the provisional amounts recognized at December 31, 2017 and the impact was not
significant. In addition, the Tax Act’s international provisions regarding Global Intangible Low-Tax Income (“GILTI”,
Foreign Derived Intangible Income (“FDII”) and Base Erosion Anti-Avoidance Tax (“BEAT”) did not to have
a material impact on the Company’s financial statements for the year ended December 31, 2018. See Note 15 to the accompanying
financial statements for additional information. |
| Cash and Cash Equivalents | (j)
Cash and Cash Equivalents The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
| Restricted Cash | (k)
Restricted Cash As
of December 31, 2018, restricted cash balance of $838 included $469 cash collateral for one of the Company’s telecommunication
suppliers and $369 certificate of deposits collateral for certain letter of credits. As of December 31, 2017, restricted cash
balance of $19,711 included $19,197 of cash collateral related to a retail liquidation engagement and $514 cash segregated in
a special bank account for the benefit of customers related to the Company’s broker dealer subsidiary and collateral for
one of the Company’s telecommunication suppliers. |
| Securities Borrowed and Securities Loaned | (l)
Securities Borrowed and Securities Loaned Securities
borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions
facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to
securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for
securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable
securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with
additional collateral obtained, or excess collateral recalled, when deemed appropriate. The
Company accounts for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” |
| Due from/to Brokers, Dealers, and Clearing Organizations | (m)
Due from/to Brokers, Dealers, and Clearing Organizations The
Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount
receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s
clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company
and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for
securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the
securities owned by the Company and held on deposit at the clearing broker. |
| Accounts Receivable | (n)
Accounts Receivable Accounts
receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and
Principal Investments - United Online and magicJack customers. The Company maintains an allowance for doubtful accounts for estimated
losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer
identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’
financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does
not have any off-balance sheet credit exposure related to its customers. The Company’s bad debt expense totaled $1,308,
$1,066 and $710 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included as a component
of selling, general and administrative expenses in the accompanying consolidated statements of income. |
| Property and Equipment | (o)
Property and Equipment Property
and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated
useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter
of the lease term or estimated useful life of the asset. |
| Securities Owned and Securities Sold Not Yet Purchased | (p) Securities Owned and
Securities Sold Not Yet Purchased Securities owned
consists of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities
sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and
thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these
securities are reflected currently in the results of operations. As of December 31,
2018 and 2017, the Company’s securities owned and securities sold not yet purchased at fair value consisted of the following:
December 31, December 31,
2018 2017
Securities and other investments owned:
Common and preferred stocks and warrants $ 193,459 $ 67,306
Corporate bonds 18,825 6,539
Fixed income securities 3,825 2,329
Loans receivable at fair value 33,731 33,713
Partnership interests and other 23,737 35,473
$ 273,577 $ 145,360
Securities sold not yet purchased:
Common stocks $ 11,130 $ 19,145
Corporate bonds 16,338 1,175
Fixed income securities 10,155 699
Partnership interests and other — 7,272
$ 37,623 $ 28,291 |
| Goodwill and Other Intangible Assets | (q)
Goodwill and Other Intangible Assets The
Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and
other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate
that the fair value of an asset has decreased below its carrying value. Goodwill
includes the excess of the purchase price over the fair value of net assets acquired in a business combination. ASC 805 requires
that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment).
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets
and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. The Company operates
four reporting units, which are the same as its reporting segments described in Note 22. Significant judgment is required to estimate
the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other
assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill
impairment. When
testing goodwill for impairment, the Company may assess qualitative factors for some or all of our reporting units to determine
whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is
less than its carrying amount, including goodwill. Alternatively, the Company may bypass this qualitative assessment for some
or all of the Company’s reporting units and perform a detailed quantitative test of impairment (step 1). If the Company
performs the detailed quantitative impairment test and the carrying amount of the reporting unit exceeds its fair value, the Company
would perform an analysis (step 2) to measure such impairment. Based on the Company’s qualitative assessments during 2018,
the Company concluded that a positive assertion can be made from the qualitative assessment that it is more likely than not that
the fair value of the reporting units exceeded their carrying values and no impairments were identified. The
Company reviews the carrying value of its amortizable intangibles and other long-lived assets for impairment at least annually
or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that
the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount,
the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds
its fair market value. During the year ended December 31, 2018, the Company recognized impairment of intangibles in the amount
of $1,070 related to the tradename of Wunderlich Securities, Inc. In June 2018, the Company changed the name Wunderlich Securities,
Inc. to B. Riley Wealth Management, Inc. This impairment charge is included in restructuring charge in the Company’s consolidated
statements of income. |
| Fair Value Measurements | (r)
Fair Value Measurements The
Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment
and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement
assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability
or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize
quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter
markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose
inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little
or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used
to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy
within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant
to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the
fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The
Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred
stocks and warrants, corporate bonds, loans receivable valued at fair value and investments in partnerships. Investments in common
stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also
holds nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined
by management on a consistent basis. For investments where little or no public market exists, management’s determination
of fair value is based on the best available information which may incorporate management’s own assumptions and involves
a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent
sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value
hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity
securities, bonds, and direct lending funds. We also invest in priority investment funds and the underlying securities held by
these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts
invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s
proportionate share of the net assets of the partnerships and funds; the value for these investments are derived from the most
recent statements received from the general partner or fund administrator. These partnership and investment fund interests are
valued at net asset value (“NAV”) in accordance with ASC “Topic 820: Fair Value Measurements The
fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash,
references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation
models. The
following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring
basis as of December 31, 2018 and 2017.
Financial
Assets and Liabilities Measured at Fair Value
on
a Recurring Basis at December 31, 2018 Using
Quoted
prices in Other Significant
Fair
value at active
markets for observable unobservable
December
31, identical
assets inputs inputs
2018 (Level
1) (Level
2) (Level
3)
Assets:
Securities and other
investments owned:
Common
and preferred stocks and warrants $ 193,459 $ 168,882 — $ 24,577
Corporate
bonds 18,825 — 18,825 —
Fixed
income securities 3,825 — 3,825 —
Loans
receivable at fair value 33,731 — — 33,731
Total 249,840 $ 168,882 $ 22,650 $ 58,308
Investment
funds valued at net asset value (1) 23,737
Total
assets measured at fair value $ 273,577
Liabilities:
Securities sold not
yet purchased:
Common
stocks $ 11,130 $ 11,130 $ — $ —
Corporate
bonds 16,338 — 16,338 —
Fixed
income securities 10,155 — 10,155 —
Total
securities sold not yet purchased 37,623 11,130 26,493 —
Mandatorily
redeemable noncontrolling interests issued after November 5, 2003 4,633 — — 4,633
Total
liabilities measured at fair value $ 42,256 $ 11,130 $ 26,493 $ 4,633
Financial
Assets and Liabilities Measured at Fair Value
on
a Recurring Basis at December 31, 2017 Using
Quoted
prices in Other Significant
Fair
value at active
markets for observable unobservable
December
31, identical
assets inputs inputs
2017 (Level
1) (Level
2) (Level
3)
Assets:
Securities and other
investments owned:
Common
stocks and warrants $ 67,306 $ 38,960 $ — $ 28,346
Corporate
bonds 6,539 — 6,539 —
Fixed
income securities 2,329 — 2,329 —
Loans
receivable at fair value 33,713 — — 33,713
Partnership
interests and other 31,883 686 5,093 26,104
Total 141,770 $ 39,646 $ 13,961 $ 88,163
Investment
funds valued at net asset value (1) 3,590
Total
assets measured at fair value $ 145,360
Liabilities:
Securities sold not
yet purchased:
Common
stocks $ 19,145 $ 19,145 $ — $ —
Corporate
bonds 1,175 — 1,175 —
Fixed
income securities 699 — 699 —
Partnership
interests and other 7,272 7,272 — —
Total
securities sold not yet purchased 28,291 26,417 1,874 —
Mandatorily
redeemable noncontrolling interests issued after November 5, 2003 4,478 — — 4,478
Total
liabilities measured at fair value $ 32,769 $ 26,417 $ 1,874 $ 4,478
(1) Certain investments
that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been
classified in the fair value hierarchy in accordance with ASC “Topic 820 Fair Value Measurements.” As
of December 31, 2018 and 2017, financial assets measured and reported at fair value on a recurring basis and classified within
Level 3 were $58,308 and $88,163, respectively, or 3.0% and 6.4%, respectively, of the Company’s total assets. In determining
the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate
the value, including where applicable, over-the-counter market trading activity. The
following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities
by category of investment and valuation technique as of December 31, 2018:
Fair
value at
December
31, Weighted
2018 Valuation
Technique Unobservable
Input Range Average
Assets:
Common
and preferred stocks and warrants $ 24,577 Market
approach Over-the-counter
trading activity $7.18-$10.50/share $ 7.79
Market price of related security $0.48/share $ 0.48
Yield analysis Market yield 13% 13 %
Option pricing model Annualized volatility 26% - 53% 26 %
Discounted cash flow Cost of capital 12% 12 %
Market Comparable Companies Revenue Multiple 1.0X 1.0 X
Loans
receivable at fair value 33,731 Discounted
cash flow Market
interest rate 11.0%
- 14.8% 11.80 %
Total
level 3 assets measured at fair value $ 58,308
Liabilities:
Mandatorily
redeemable noncontrolling interests issued after November 5, 2003 $ 4,633 Market approach Operating income multiple 6.0x 6.0 x The
changes in Level 3 fair value hierarchy during the year ended December 31, 2018 and 2017 is as follows:
Level
3 Level
3 Changes During the Year Level
3
Balance
at Fair Relating
to Purchases, Transfer
in Balance
at
Beginning
of Value Undistributed Sales
and and/or
out End
of
Year Adjustments Earnings Settlements of
Level 3 Year
Year
Ended
December
31, 2018
Common
and preferred stocks and warrants $ 28,346 $ (4,220 ) $ 578 $ 20,843 $ (20,970 ) $ 24,577
Corporate
bonds — — — — — —
Loans
receivable at fair value 33,713 35 300 (317 ) — 33,731
Partnership
interests and other 26,104 1,108 607 (26,087 ) (1,732 ) —
Mandatorily
redeemable noncontrolling interests issued after November 5, 2003 4,478 — 155 — — 4,633
Contingent
consideration — — — — — —
Year
Ended
December
31, 2017
Common
stocks and warrants $ 299 $ 3,028 $ 3,419 $ 21,600 $ — $ 28,346
Corporate
bonds 160 — — — (160 ) —
Loans
receivable at fair value — 1,447 — 32,266 — 33,713
Partnership
interests and other 13,426 3,465 — 9,213 — 26,104
Mandatorily
redeemable noncontrolling interests issued after November 5, 2003 3,214 9,000 (8,542 ) — 806 4,478
Contingent
consideration 1,242 8 — (1,250 ) — — The
fair value adjustment for contingent consideration of $8 represents imputed interest for the years ended December 31, 2017. The
Company had a triggering event in 2017 for the mandatorily redeemable noncontrolling interests that resulted in a fair value adjustment
of $7,850 of the total fair value adjustment of $9,000 for the year ended December 31, 2017. In connection with this event, the
Company received proceeds of $6,000 from key man life insurance. These amounts have been recorded in the consolidated statements
of income in Selling, general and administrative expenses in the corporate segment. The amount reported in the table above also
for the years ended December 31, 2018 and 2017 includes the amount of undistributed earnings attributable to the noncontrolling
interests that is distributed on a quarterly basis. The
carrying amounts reported in the consolidated financial statements for cash, restricted cash, accounts receivable, loan receivable,
accounts payable, accrued payroll and related, accrued value added tax, income taxes payable and accrued expenses and other current
liabilities approximate fair value based on the short-term maturity of these instruments. The
carrying amount of the senior notes payable approximates fair value because the contractual interest rates or effective yields
of such instruments are consistent with current market rates of interest for instruments of comparable credit risk. During
the years ended December 31, 2018, 2017 and 2016, there were no assets or liabilities measured at fair value on a non-recurring
basis. |
| Derivative and Foreign Currency Translation | (s)
Derivative and Foreign Currency Translation The
Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain
Auction and Liquidation engagements with operations outside the United States. During the year ended December 31, 2018, the Company’s
use of derivatives consisted of the purchase of forward exchange contracts in the amount of $42,108 Canadian dollars that were
settled during the first and second quarter of 2018. During the year ended December 31, 2017, the Company’s use of derivative
consisted of the purchase of forward exchange contracts (a) in the amount of $8,000 Australian dollars that was settled on March
31, 2017; (b) in the amount of $27,100 Canadian dollars, of which $20,703 remained open at December 31, 2017 and was settled in
2018, and (c) $1,500 Euro’s that was settled in March 2018. The
forward exchange contract was entered into to improve the predictability of cash flows related to a retail store
liquidation engagement that was completed in December 2016. The net (loss) gain from forward exchange contracts was $ (91)
and $31 during the years ended December 31, 2018 and 2017, respectively. These amounts are reported as a component of
Selling, general and administrative expenses in the consolidated statements of income. The
Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations
has been determined to be the local country's currency, revenues and expenses of operations outside the United States are translated
into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are
translated into United States dollars using year-end exchange rates. The effects of foreign currency translation adjustments are
included in stockholders' equity as a component of accumulated other comprehensive income in the accompanying consolidated balance
sheets. Transaction gains (losses) were $1,294, ($786) and ($848) during the years ended December 31, 2018, 2017 and 2016, respectively.
These amounts are included in selling, general and administrative expenses in the Company’s consolidated statements of income. |
| Common Stock Warrants | (t) Common
Stock Warrants The
Company issued 821,816 warrants to purchase common stock of the Company in connection with the acquisition of Wunderlich on July
3, 2017. The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from
the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion
of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise
are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications
of the Company’s common stock. The common stock warrants expire on July 3, 2022. |
| Equity Investments | (u) Equity
Investments Bebe
stores, inc. At
December 31, 2017, the Company had a loan receivable from bebe stores, inc. (“bebe”) with a fair value of $16,867
included in securities and other investments owned. On January 12, 2018, the loan receivable in the amount of $16,867 plus accrued
interest of $51 was converted into 2,819,528 shares of common stock of bebe, representing a conversion price at $6.00 per share.
On January 12, 2018, the Company also purchased 500,000 shares of bebe common stock at $6.00 per share of which 250,000 shares
were newly issued common stock by bebe and 250,000 shares were purchased from the majority shareholder of bebe. At December 31,
2018, the Company had an ownership of approximately 30.1% of bebe’s outstanding common shares. The equity ownership in bebe
is accounted for under the equity method of accounting. The carrying value for the bebe investment at December 31, 2018 was $27,053
and is included in prepaid expenses and other assets in the consolidated balance sheets. National
Holdings Corporation On
November 14, 2018, the Company entered into an agreement to acquire shares of National Holdings Corporation (“National Holdings”),
a Nasdaq-listed issuer, from Fortress Biotech, Inc. for an aggregate purchase price totaling approximately $22.9 million. The
transaction was completed in two tranches. In the first tranche, which was completed in the fourth quarter of 2018, the Company
acquired shares representing 24% of the total outstanding shares of National Holdings. As of December 31, 2018, the Company purchased
3,010,054 shares of National Holdings’ common stock, representing 24% of National Holdings’ outstanding shares, at
$3.25 per share. The carrying value for the National Holdings investment at December 31, 2018 was $9,902 and is included in prepaid
expenses and other assets in the consolidated balance sheets. The second tranche was contingent upon receipt of the approval of
Financial Industry Regulatory Authority, Inc., which was obtained in the first quarter of 2019. As a result of the closing of
the second tranche, the Company now holds 49% of the outstanding shares of National Holdings. The equity ownership in National
Holdings is accounted for under the equity method of accounting. For
the year ended December 31, 2018, equity income from bebe and National Holdings was $9,135 and is included in income from equity
investments on the consolidated statements of income. |
| Statements of Cash Flows - Supplemental Non-cash Disclosures | (v) Statements
of Cash Flows – Supplemental Non-cash Disclosures During
the year ended December 31, 2018, non-cash investing activities included the conversion of a loan receivable in the amount of
$16,867 and accrued interest receivable of $51 into an equity investment that totaled $16,918 as more fully discussed in Note
2(u) above. |
| Variable Interest Entity | (w) Variable
Interest Entity In
January 2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced
operations. The Company’s investment in the Partnership is a VIE since the unaffiliated limited partners do not have substantive
kick-out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership.
The Company has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market
and thus not deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered
to be more than insignificant. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved
with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary,
the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties.
The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is
not the primary beneficiary, a quantitative analysis may also be performed. The
carrying value of the Company’s investments in the VIE that was not consolidated is shown below.
December
31, 2018
Partnership
investments $ 7,012
Due
from related party 570
Maximum
exposure to loss $ 7,582 |
| Recent Accounting Pronouncements | (x)
Recent Accounting Pronouncements In
August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2018-13: Fair Value Measurement (Topic 820) In
March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118. In
February 2016, FASB issued ASU. 2016-02: Leases (Topic 842) In
February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and
Cash Payments In
January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment On
January 1, 2018, the Company adopted ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash On
January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers |
