BRC Group Holdings, Inc.RILY
BRC Group Holdings, Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
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, 2025 and 2024.
| Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2025 Using | |||||||||||||||||||||||
| Fair value at December 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Securities and other investments owned: | |||||||||||||||||||||||
| Equity securities | $ | 304,422 | $ | 233,199 | $ | — | $ | 71,223 | |||||||||||||||
| Partnership interests and other investments | 40,082 | — | — | 40,082 | |||||||||||||||||||
| Corporate bonds | 31,751 | — | 31,751 | — | |||||||||||||||||||
| Other fixed income securities | 4,373 | 2,957 | 1,416 | — | |||||||||||||||||||
| Total securities and other investments owned | 380,628 | 236,156 | 33,167 | 111,305 | |||||||||||||||||||
| Loans receivable, at fair value | 26,303 | — | — | 26,303 | |||||||||||||||||||
| Total assets measured at fair value | $ | 406,931 | $ | 236,156 | $ | 33,167 | $ | 137,608 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Securities sold not yet purchased: | |||||||||||||||||||||||
| Equity securities | $ | 9,342 | $ | 9,342 | $ | — | $ | — | |||||||||||||||
| Corporate bonds | 467 | — | 467 | — | |||||||||||||||||||
| Total securities sold not yet purchased | 9,809 | 9,342 | 467 | — | |||||||||||||||||||
| Liability-classified warrants | 6,400 | — | — | 6,400 | |||||||||||||||||||
| Total liabilities measured at fair value | $ | 16,209 | $ | 9,342 | $ | 467 | $ | 6,400 | |||||||||||||||
| Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2024 Using | |||||||||||||||||||||||
| Fair value at December 31, 2024 | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Securities and other investments owned: | |||||||||||||||||||||||
| Equity securities | $ | 165,408 | $ | 124,892 | $ | — | $ | 40,516 | |||||||||||||||
| Corporate bonds | 29,027 | 25,461 | 3,566 | — | |||||||||||||||||||
| Other fixed income securities | 4,923 | — | 4,923 | — | |||||||||||||||||||
| Total securities and other investments owned | 199,358 | 150,353 | 8,489 | 40,516 | |||||||||||||||||||
| Loans receivable, at fair value | 90,103 | — | — | 90,103 | |||||||||||||||||||
| Total assets measured at fair value | $ | 289,461 | $ | 150,353 | $ | 8,489 | $ | 130,619 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Securities sold not yet purchased: | |||||||||||||||||||||||
| Corporate bonds | $ | 1,891 | $ | — | $ | 1,891 | $ | — | |||||||||||||||
| Other fixed income securities | 3,784 | — | 3,784 | — | |||||||||||||||||||
| Total securities sold not yet purchased | 5,675 | — | 5,675 | — | |||||||||||||||||||
| Contingent consideration | 4,538 | — | — | 4,538 | |||||||||||||||||||
| Total liabilities measured at fair value | $ | 10,213 | $ | — | $ | 5,675 | $ | 4,538 | |||||||||||||||
As of December 31, 2025 and 2024, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $137,608 and $130,619, respectively, or 8.1% and 7.3%, 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 fair value for individual Level 3 financial assets and liabilities have various financial inputs which include multiple of sales, the market price of related securities, annualized volatility, discount rates, recovery rates and expected term inputs that may change at each reporting period and result in an increase or decrease in the valuation of Level 3 financial assets and liabilities.
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, 2025 and 2024:
Fair value at December 31, 2025 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Equity securities | $ | 25,572 | Market approach | Multiple of Sales | 0.7x - 6.0x | 2.3x | |||||||||||||||||||||||
| Market price of related security | $2.14 - $12.01 | $10.97 | |||||||||||||||||||||||||||
| 43,101 | Monte Carlo simulation | Annualized volatility | 120.0% - 148.0% | 121.0% | |||||||||||||||||||||||||
| 2,550 | Option pricing model | Annualized volatility | 46.0% - 115.0% | 57.0% | |||||||||||||||||||||||||
| Partnership interests and other investments | 40,082 | Market approach | Discount rate | —% - 3.5% | 0.5% | ||||||||||||||||||||||||
| Market price of related security | $421.00 | $421.00 | |||||||||||||||||||||||||||
| Loans receivable at fair value | 24,468 | Discounted cash flow | Discount rate | 6.8% - 56.5% | 21.0% | ||||||||||||||||||||||||
| 1,835 | Market approach | Market price of related security | $8.56 | $8.56 | |||||||||||||||||||||||||
| Total Level 3 assets measured at fair value | $ | 137,608 | |||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Liability-classified warrants | $ | 6,400 | Monte Carlo simulation and Black-Scholes option pricing model | Annualized volatility | 85.0% | 85.0% | |||||||||||||||||||||||
| Discount for lack of marketability | 14.7% | 14.7% | |||||||||||||||||||||||||||
| Total Level 3 liabilities measured at fair value | $ | 6,400 | |||||||||||||||||||||||||||
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
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, 2024:
| Fair value at December 31, 2024 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Equity securities | $ | 34,654 | Market approach | Multiple of EBITDA(2) | 6.3x | 6.3x | |||||||||||||||||||||||
| Multiple of Sales | 2.1x - 8.0x | 3.1x | |||||||||||||||||||||||||||
| Market price of related security | $9.97 - $11.10 | $10.76 | |||||||||||||||||||||||||||
| 5,862 | Option pricing model | Annualized volatility | 47.0% - 171.0% | 87.0% | |||||||||||||||||||||||||
| Loans receivable at fair value | 86,150 | Discounted cash flow | Discount rate | 7.3% - 69.1% | 19.7% | ||||||||||||||||||||||||
| 3,953 | Market approach | Market price of related security | $9.60 - $16.48 | $12.90 | |||||||||||||||||||||||||
| Total Level 3 assets measured at fair value | $ | 130,619 | |||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Contingent consideration | $ | 4,538 | Discounted cash flow | Discount rate | 5.0% - 7.5% | 5.0% | |||||||||||||||||||||||
| Total Level 3 liabilities measured at fair value | $ | 4,538 | |||||||||||||||||||||||||||
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
(2) Multiple of earnings before interest, taxes, depreciation, and amortization (“EBITDA”).
The changes in Level 3 fair value hierarchy during the year ended December 31, 2025 and 2024 are as follows:
| Equity Securities | Partnership Interests And Other Investments | Loans Receivable at Fair Value | Contingent Consideration | Liability-Classified Warrants | Embedded Derivatives | ||||||||||||||||||||||||||||||
| Year Ended December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Level 3 Balance at Beginning of Year | $ | 40,516 | $ | — | $ | 90,103 | $ | 4,538 | $ | — | $ | — | |||||||||||||||||||||||
Fair Value Adjustments(1) | (362) | — | (448) | (4,394) | (1,460) | (8,119) | |||||||||||||||||||||||||||||
| Relating to Undistributed Earnings | — | — | 16 | — | — | — | |||||||||||||||||||||||||||||
| Purchases/Originations | 372,104 | — | 117,714 | — | 7,860 | 11,244 | |||||||||||||||||||||||||||||
| Sales | (10,586) | — | (10,415) | — | — | — | |||||||||||||||||||||||||||||
| Settlements / Repayments | (330,449) | — | (170,667) | (144) | — | (3,125) | |||||||||||||||||||||||||||||
Transfers in and /or out of Level 3(2) | — | 40,082 | — | — | — | — | |||||||||||||||||||||||||||||
| Level 3 Balance at End of Period | $ | 71,223 | $ | 40,082 | $ | 26,303 | $ | — | $ | 6,400 | $ | — | |||||||||||||||||||||||
Change in unrealized gains (losses)(3) | $ | (339) | $ | — | $ | (1,985) | $ | — | $ | 1,460 | $ | — | |||||||||||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Level 3 Balance at Beginning of Year | $ | 452,581 | $ | — | $ | 532,419 | $ | 25,194 | $ | — | $ | — | |||||||||||||||||||||||
Fair Value Adjustments(4) | (349,918) | — | (325,499) | 850 | — | — | |||||||||||||||||||||||||||||
| Relating to Undistributed Earnings | 20 | — | 5,420 | — | — | — | |||||||||||||||||||||||||||||
| Purchases/Originations | 3,862 | — | 107,025 | — | — | — | |||||||||||||||||||||||||||||
| Sales | (78,197) | — | (30,936) | — | — | — | |||||||||||||||||||||||||||||
| Settlements / Repayments | 13,245 | — | (198,326) | (10,693) | — | — | |||||||||||||||||||||||||||||
Transfers in and /or out of Level 3(5) | (1,077) | — | — | (10,813) | — | — | |||||||||||||||||||||||||||||
| Level 3 Balance at End of Period | $ | 40,516 | $ | — | $ | 90,103 | $ | 4,538 | $ | — | $ | — | |||||||||||||||||||||||
Change in unrealized gains (losses)(3) | $ | (65,839) | $ | — | $ | (335,295) | $ | — | $ | — | $ | — | |||||||||||||||||||||||
(1) | Fair value adjustments during the year ended December 31, 2025 includes the following: $(362) of realized and unrealized gains (losses) on equity securities is comprised of $(1,493) included in “Trading gains (losses), net” and $1,131 included in “Realized and unrealized gains (losses) on investments”, $(448) of fair value adjustments on loans included in “Fair value adjustments on loans”, $4,394 of realized and unrealized gains related to contingent consideration included in “Selling, general and administrative expenses”, $1,460 of realized and unrealized gains related to liability-classified warrants included in “Change in fair value of financial instruments and other”, and $8,119 of unrealized gains related to embedded derivatives included in “Change in fair value of financial instruments and other” line items in the accompanying consolidated statements of operations. | ||||
(2) | At December 31, 2025, investments in certain funds with a fair value of $40,082 was transferred from NAV to Level 3. The transfer occurred because NAV no longer represented fair value due to adjustments implemented by the fund managers. The investment is now valued using a market approach based on recent observable transactions adjusted for specific risk factors. | ||||
(3) | For the years ended December 31, 2025 and 2024, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period. | ||||
(4) | Fair value adjustments during the year ended December 31, 2024 includes the following: $(349,918) of realized and unrealized gains (losses) on equity securities is comprised of $(70,437) included in “Trading gains (losses), net” and $(279,481) included in “Realized and unrealized gains (losses) on investments”, $(325,499) of fair value adjustments on loans included in “Fair value adjustments on loans”, and $(850) realized and unrealized losses related to contingent consideration included in “Selling, general and administrative expenses” line items in the accompanying consolidated statements of operations. | ||||
(5) | The $10,813 transfer out of Level 3 represents the reclassification of contingent consideration associated with Atlantic Coast Recycling to liabilities held for sale during the year ended December 31, 2024. Refer to Note 5 for more information. | ||||
Partnership and investment fund interests valued at NAV were $1,833 and $15,867 as of December 31, 2025 and 2024, respectively.
Beginning in April 2025, the Company entered into purchase agreements with public companies that allow the counterparties to put their convertible preferred stock to the Company from time to time at its discretion (the “Written Puts”) (see Note 30 – Commitments and Contingencies). The Written Puts are recognized at fair value on a recurring basis within the “Accrued expenses and other liabilities” line item on the consolidated balance sheet, with changes in fair value recognized in earnings.
At inception and as of December 31, 2025, the Company determined that the fair value of the Written Put liability is de minimis due to its discount to market prices being advantageous to the Company, and no liability or changes in earnings were recorded on the consolidated balance sheets or consolidated statements of operations, respectively. The Company holds the Written Puts as investments to advantageously monetize the underlying stock and provide capital raising activities for customers. The Company’s exposure is driven primarily by movements in the Issuer’s common stock price, the put writer’s credit, and by assumptions regarding the likelihood and timing of exercise.
Assets and Liabilities Not Measured at Fair Value
The carrying amounts reported in the consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Fair Value Hierarchy Level | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||
| Notes payable | Level 2 | $ | — | $ | — | $ | 28,021 | $ | 28,021 | ||||||||||||||||||||
| Revolving credit facility | Level 2 | $ | 6,638 | $ | 6,638 | $ | 16,329 | $ | 16,329 | ||||||||||||||||||||
| Term loans, net | Level 2 | $ | 119,297 | $ | 120,931 | $ | 199,429 | $ | 199,429 | ||||||||||||||||||||
| Senior notes payable | Level 2 | $ | 1,033,782 | $ | 681,890 | $ | 1,530,561 | $ | 769,476 | ||||||||||||||||||||
| New Notes payable | Level 3 | $ | 268,016 | $ | 166,796 | $ | — | $ | — | ||||||||||||||||||||
The carrying values of the Company’s notes payable, revolving credit facility, and term loans approximate their respective estimated fair values because the effective yield of such instrument is consistent with current market rates of interest for instruments of comparable credit risk. The Company used a market approach for estimating the fair value of senior notes payable as they are listed and actively traded on the Nasdaq with sufficient frequency and volume to utilize quoted market prices.
Nonrecurring Fair Value Measurement
The following table presents the carrying amounts of equity securities valued under the measurement alternative that were still held as of the balance sheet date for which a nonrecurring fair value measurement was recorded during the period:
| Fair Value | Level 2 | Level 3 | |||||||||||||||
| As of December 31, 2025 | |||||||||||||||||
| Non-marketable equity securities measured using the measurement alternative | $ | 13,867 | $ | 13,739 | $ | 128 | |||||||||||
| As of December 31, 2024 | |||||||||||||||||
| Non-marketable equity securities measured using the measurement alternative | $ | 7,294 | $ | 7,294 | $ | — | |||||||||||
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.