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1. Company Snapshot

1.a. Company Description

Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructuring, and financial and valuation advisory services worldwide.It operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory.The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as advise financial sponsors on various transactions.


The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions.It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing.The Financial and Valuation Advisory segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property.


It also provides fairness opinions in connection with M&A and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations; and other types of financial opinions.In addition, this segment offers dispute resolution services.It serves corporations, institutions, and governments.


The company was incorporated in 1972 and is headquartered in Los Angeles, California with offices in the United States, Europe, the Middle East, and the Asia-Pacific region.

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1.b. Last Insights on HLI

Houlihan Lokey's recent performance faced challenges due to increased expectations ahead of its Q2 2026 earnings release. Despite beating Q2 earnings and revenue estimates with $1.84 per share and $659 million in revenues, the company's performance may be impacted by rising operating expenses. Additionally, while the company has made strategic hires, such as Marco Voci in the Consumer Group and Jason Cohen in Healthcare Capital Solutions, these may not offset potential headwinds. Its Private Credit DataBank launch may be a growth driver. (Source: company reports, Zacks Consensus Estimate)

1.c. Company Highlights

2. Houlihan Lokey's Strong Q2 FY2026 Earnings Beat Expectations

Houlihan Lokey reported revenues of $659 million for the second quarter of fiscal 2026, representing a 15% increase compared to the same period last year. Adjusted earnings per share (EPS) came in at $1.84, beating analyst estimates of $1.69. The company's Corporate Finance business drove the growth, with revenues increasing by 21% to $439 million. The strong performance was attributed to improving M&A markets, with the number of completed corporate finance transactions in the quarter being the highest since the peak of M&A activity in late 2021. As Scott Adelson noted, "New business generation remains strong, providing visibility into continued growth in fiscal 2027."

Publication Date: Nov -02

📋 Highlights
  • Revenue Growth:: Q2 2026 revenue reached $659 million, a 15% increase from the prior year, driven by strong performance in Corporate Finance ($439 million, +21% YoY) and Financial Restructuring ($134 million, +2% YoY).
  • Transaction Volume Surge:: Corporate Finance transactions closed 171 deals in Q2, up from 131 in the same period last year, despite a decline in average transaction fees.
  • Geographic Expansion:: EMEA and Asia Pacific regions showed robust growth, with Scott Adelson highlighting their increasing importance, potentially matching U.S. fee pools in the future.
  • Restructuring Trends:: Financial Restructuring saw 37 transactions (vs. 33 prior year), but average fees declined. Activity is slowing, though backlog remains strong, and sector-specific challenges persist (e.g., alcohol industry declines).

Segment Performance

The Corporate Finance business was the main contributor to the company's growth, with revenues increasing by 21% to $439 million. The Financial Restructuring business also saw a 2% increase in revenues to $134 million. The average transaction fee on closed deals decreased in both segments, but the increase in transaction volume drove the revenue growth.

Outlook and Guidance

Houlihan Lokey's outlook for the second half of fiscal 2026 is positive, with the company expecting to continue to experience year-over-year growth. The company's backlog is still robust, and the pace of new business activity is expected to continue. The company's guidance is supported by the improving macro environment and the increasing activity in M&A markets.

Valuation and Metrics

With a P/E Ratio of 28.11 and an EV/EBITDA of 17.95, the company's valuation multiples suggest that the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 15.5%, which is in line with the company's historical performance. The company's ROE of 19.66% and ROIC of 10.52% indicate a strong return on equity and invested capital. The P/S Ratio of 4.9 also suggests that the company's revenue growth is being recognized by the market.

Growth Prospects

The company's growth prospects are supported by its strong performance in the Corporate Finance business and its expanding presence in the Asia Pacific and EMEA regions. The company's focus on achieving its goal of having a fee pool in Europe as large as the one in the U.S. is also expected to drive growth. With a strong backlog and increasing new business activity, Houlihan Lokey is well-positioned for continued growth in fiscal 2027.

3. NewsRoom

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Houlihan Lokey to Present at the Goldman Sachs 2025 U.S. Financial Services Conference

Dec -01

Source: businesswire.com

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Houlihan Lokey: Valuation Has Become More Attractive (Rating Upgrade)

Nov -26

Source: seekingalpha.com

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After Plunging 10.8% in 4 Weeks, Here's Why the Trend Might Reverse for Houlihan Lokey (HLI)

Nov -20

Source: zacks.com

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Aviva PLC Sells 1,061 Shares of Houlihan Lokey, Inc. $HLI

Nov -14

Source: defenseworld.net

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Houlihan Lokey Continues to Strengthen European Financial Sponsors Coverage Team With Senior U.K. Hire

Nov -12

Source: businesswire.com

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Houlihan Lokey Expands Capital Solutions Group With Senior Infrastructure Hire in Europe

Nov -10

Source: businesswire.com

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Houlihan Lokey Continues Expansion of Equity Capital Solutions Capabilities With Senior Hire

Nov -05

Source: businesswire.com

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Houlihan Lokey Announces the Houlihan Lokey Private Credit DataBank

Nov -04

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.28%)

6. Segments

Corporate Finance

Expected Growth: 10%

Houlihan Lokey's Corporate Finance segment growth is driven by increasing M&A activity, strategic advisory services, and debt and equity capital markets transactions. Strong demand for restructuring and recapitalization services, as well as expansion into new markets and industries, also contribute to the 10% growth rate.

Financial Restructuring

Expected Growth: 12%

Houlihan Lokey's 12% growth in Financial Restructuring is driven by increasing demand for debt advisory services, rising distressed debt opportunities, and expansion into new markets. The firm's expertise in complex restructuring cases, strong relationships with stakeholders, and strategic acquisitions also contribute to its growth.

Financial and Valuation Advisory

Expected Growth: 9%

Houlihan Lokey's 9% growth in Financial and Valuation Advisory is driven by increasing demand for M&A advisory services, expansion into new markets, and growth in restructuring and debt advisory practices. Additionally, the firm's investments in technology and data analytics have enhanced its service offerings, attracting new clients and increasing wallet share.

7. Detailed Products

Mergers and Acquisitions

Houlihan Lokey's Mergers and Acquisitions team advises clients on buying and selling companies, including negotiating deal terms, conducting due diligence, and structuring transactions.

Capital Markets

Houlihan Lokey's Capital Markets team helps clients raise capital through debt and equity offerings, including IPOs, follow-on offerings, and debt placements.

Restructuring and Reorganization

Houlihan Lokey's Restructuring and Reorganization team advises clients on debt restructuring, bankruptcy, and turnaround situations.

Financial Restructuring

Houlihan Lokey's Financial Restructuring team advises clients on debt restructuring, debt-for-equity swaps, and other financial restructuring transactions.

Valuation Advisory

Houlihan Lokey's Valuation Advisory team provides independent valuation opinions for financial reporting, tax, and transaction purposes.

Dispute Resolution

Houlihan Lokey's Dispute Resolution team provides expert testimony and advisory services in litigation and arbitration matters.

8. Houlihan Lokey, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Houlihan Lokey, Inc. operates in a niche market, providing specialized financial services, which reduces the threat of substitutes. However, the company still faces competition from other financial institutions and boutique firms.

Bargaining Power Of Customers

Houlihan Lokey, Inc.'s clients are primarily large corporations and financial institutions, which have limited bargaining power due to the specialized nature of the company's services.

Bargaining Power Of Suppliers

Houlihan Lokey, Inc. has a diverse range of suppliers, including technology providers, consultants, and other service providers, which reduces the bargaining power of individual suppliers.

Threat Of New Entrants

The financial services industry has high barriers to entry, including regulatory requirements, capital requirements, and the need for specialized expertise, which reduces the threat of new entrants.

Intensity Of Rivalry

Houlihan Lokey, Inc. operates in a highly competitive industry, with many established players, which increases the intensity of rivalry among firms.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.01%
Debt Cost 3.95%
Equity Weight 60.99%
Equity Cost 7.36%
WACC 6.03%
Leverage 63.95%

11. Quality Control: Houlihan Lokey, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PJT Partners

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Growth: 8.2

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Yield: 3.0

Momentum: 8.0

Volatility: 7.3

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Houlihan Lokey

A-Score: 5.9/10

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Quality: 7.8

Yield: 3.0

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Quality: 5.6

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StoneX

A-Score: 5.2/10

Value: 6.9

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

179.69$

Current Price

179.69$

Potential

-0.00%

Expected Cash-Flows