The BFD: B. Riley buys FBR & Co.

B. Riley Financial (Nasdaq: RILY) on Tuesday said that it has agreed to acquire FBR & Co. (Nasdaq: FBRC), an Arlington, Va.-based small-cap investment banking and brokerage firm, in an all-stock transaction valued at $160.1 million.

• Why it's the BFD: The small-cap investment banking market is unlikely to ever again reach its pre-millennium heyday, but this deal should at least ensure some added stability for companies that are worried about maintaining coverage. There also isn't too much overlap in terms of business units of clients for this pairing, as B. Riley concentrates on research while FBR is more equity transaction-oriented.

• Bottom line: "We've seen a lot of contraction among firms that provide small-cap research, and we were fortunate in that we successfully diversified around some other businesses. Now we're seeing that high ETF valuations have created a real stock-picker's market. The bet we're making isn't that the whole passive investment theme has necessarily run its course, but that it certainly has created a lot of opportunity." ― B. Riley chairman and CEO Bryant Riley, speaking with Axios