Houlihan Lokey Stock

Houlihan Lokey, Inc. is a leading global independent investment bank with expertise in mergers and acquisitions (M&A), capital markets, financial restructurings, and financial and valuation advisory.

The company, through its offices in the United States, Europe, Asia, Australia, and the Middle East, serves a diverse set of clients worldwide, including corporations, financial sponsors and government agencies. The company provides its financial professionals with an integrated platform that enables them to deliver meaningful and differentiated advice to its clients. The company advises its clients on critical strategic and financial decisions, employing a rigorous analytical approach coupled with deep product and industry expertise. The company markets its services through its product areas, its industry groups and its Financial Sponsors group, serving its clients in three primary business practices: Corporate Finance (CF) encompassing M&A and capital markets advisory, Financial Restructuring (FR) both out-of-court and in formal bankruptcy or insolvency proceedings, and Financial and Valuation Advisory (FVA), including financial opinions and a variety of valuation and financial consulting services.

The company is committed to a set of principles that serve as the backbone of its success. Independent advice and intellectual rigor, combined with consistent senior-level involvement, are hallmarks of the company’s commitment to client service. The company’s entrepreneurial culture engenders its flexibility to collaborate across its business practices to provide world-class solutions for its clients. The company’s broad-based employee ownership serves to align the interests of employees and shareholders and further encourages a collaborative environment where its CF, FR and FVA professionals work together productively and creatively to solve its clients’ most critical financial issues. The company enters into businesses or offer services where it can excel based on its expertise, analytical sophistication, industry focus and competitive dynamics. Finally, the company remains independent and specialized, focusing on advisory products and market segments where its expertise is both differentiating and less subject to conflicts of interest arising from non-advisory products and services, and where it can be a market leader in a particular segment. In 2021, the company co-sponsored Advanced Merger Partners, Inc., a special purpose acquisition company.

As of March 31, 2022, the company had a team of 1,686 financial professionals across 35 offices globally, serving more than 1,000 clients annually over the past several years, ranging from closely held companies to Fortune Global 500 corporations.

Advisory Services

The company provides its financial professionals with an integrated platform that enables them to deliver meaningful and differentiated advice to its clients. The company markets its services through its three business practices, its industry groups, and its Financial Sponsors group, who work collaboratively to deliver comprehensive solutions and seamless execution for its clients. This marketing effort is combined with an extensive network of referral relationships with law firms, consulting firms, accounting firms, and other professional services firms that have been developed by the company’s financial professionals who maintain those relationships as potential referral sources and direct clients across all of its business practices.

Corporate Finance

As of March 31, 2022, the company had 202 CF Managing Directors utilizing a collaborative, interdisciplinary approach to provide its clients with extensive industry and product expertise and global reach in a wide variety of M&A and capital markets transactions. A majority of the company’s engagements relate to mid-cap transactions. The company has a meaningful presence in every major industry segment, including business services; consumer, food and retail; energy; financial services; healthcare; industrials; real estate, lodging and leisure; and technology. The company continues to expand and deepen its specialized industry capabilities through a combination of internal promotion, external hires and acquisitions. While the majority of its engagements are in the United States, the company continues to enhance its presence in other geographies, including Europe, Asia, Australia, and the Middle East. There will be continued opportunities to grow in regions outside the United States.

The company’s CF activities consists of two significant categories:

Mergers and Acquisitions: The company has extensive expertise in mergers, acquisitions, divestitures, and other related advisory services for a broad range of the United States and international clients. The company’s CF professionals have relationships with thousands of companies and financial sponsors, providing it with valuable insights into a wide variety of relevant markets.

The company’s M&A business consists primarily of sell-side and buy-side engagements. In particular, the company has developed a reputation in the marketplace as one of the most prolific sell-side advisors. The company provides advice and services to a diverse set of parties, including public and private company executives, boards of directors, special committees, and financial sponsors.

The company’s team of experienced and talented financial professionals is well positioned to provide advice across a wide range of M&A advisory services globally, including sell-side, buy-side, joint ventures, asset sales and divestitures that are less subject to conflicts of interest arising from non-advisory services. The company’s global industry group model with embedded M&A capabilities brings sector-specific knowledge, experience, and relationships to its clients, allowing it to provide differentiated expert advice and connect buyers and sellers on a global basis.

Capital Markets Advisory: The company provides global financing solutions and capital-raising advisory services for a broad range of corporate and private equity clients across most industry sectors, from large, publicly-held, multinational corporations to financial sponsors to privately-held companies founded and run by entrepreneurs.

The company’s Capital Markets Advisory professionals leverage a wide array of longstanding, senior-level lender and investor relationships, including with traditional and non-traditional direct capital providers (such as institutional credit funds, commercial finance companies, business development companies, insurance companies, pension funds, mutual funds, global asset managers, special situations investors, and structured equity providers). The company excels in providing its clients with sophisticated and thoughtful advice and access to traditional and non-traditional capital providers in the private and public capital markets.

Financial Restructuring

As of March 31, 2022, the company had 53 FR Managing Directors working around the globe, which it constitutes one of the largest restructuring groups in the investment banking industry. The company’s FR group has earned a reputation for being the advisor of choice for many of the largest and most complex restructurings, offering knowledge, experience, and creativity to address challenging situations. The company operates in all major worldwide markets as debt issuances has increased around the world. The company’s FR professionals bring to bear deep expertise and experience in restructurings in the United States, Canada, Europe, Asia, Australia, the Middle East, Latin America, and Africa.

The group employs an interdisciplinary approach to engagements, calling upon the expertise of the company’s industry groups, Capital Markets Advisory group and Financial Sponsors group, and drawing on the worldwide resources of the FR team as each situation may require. The FR group has deep experience evaluating complex, highly leveraged situations. In addition to comprehensive financial restructurings, the company works with distressed companies on changes of control, asset sales and other M&A and capital markets activities, many times involving the sale of a company or its assets quickly, and in contested or litigious settings on expedited timeframes. The company advises companies and creditor constituencies at all levels of the capital structure, in both out-of-court negotiations and in formal bankruptcy or insolvency proceedings. The company’s experience, geographic diversity and size allow it to provide the immediate attention and staffing required for time-sensitive and mission-critical restructuring assignments, making it a valued partner for its clients.

The company’s FR practice serves as a countercyclical hedge across macroeconomic cycles, with increasing levels of restructuring opportunities often occurring during periods when demand for M&A and capital markets advisory services may be reduced. In robust macroeconomic environments, demand for the services of the company’s FR team generally continues due to opportunities arising from secular and cyclical disruptions in certain industries. The company’s geographic diversity and global market leadership allow its FR group to maintain significant levels of activity even when the U.S. capital markets are vibrant.

The company’s broad base of clients and its extensive experience allow it to understand the dynamics of each restructuring situation and strengthen its negotiating strategies by providing it insight into the needs, attitudes and positions of all parties-in-interest. The company’s clients include companies, bondholder groups, financial institutions, banks and other secured creditor groups, trade creditors, official Chapter 11 creditors’ committees, equity holders, acquirers, equity sponsors, and other parties-in-interest involved with financially challenged companies.

The company’s FR professionals work closely with its CF and FVA professionals to provide holistic advice and services.

Financial and Valuation Advisory

As of March 31, 2022, the company had 34 Managing Directors in its FVA group, which represents one of the largest and most respected valuation and financial opinion practices in the United States. The company has developed a reputation as a thought-leader in the field of valuation, and its professionals produce influential studies and publications, which are recognized and valued throughout the financial industry. The company’s extensive transaction expertise and leadership in the fields of valuation, diligence, tax and financial analytics inspire the confidence of the financial executives, boards of directors, special committees, retained counsel, financial and strategic investors and business owners that it serves. The company’s reputation for delivering an outstanding analytical product that will withstand legal or regulatory scrutiny coupled with its independent financial, accounting and tax skills makes it the advisor of choice for clients with complex valuation, transaction opinion, transaction accounting, tax and diligence needs.

The company’s core competencies in its FVA practice are based in its deep technical financial, accounting and tax skills. These capabilities include its ability to analyze and value companies, security interests, and different types of assets, including complex illiquid investments, as well as its ability to analyze, diligence and structure the financial and tax aspects of public and private transactions. The company is organized around different service lines as each line has different regulatory or compliance specializations, as well as different marketing channels.

Regulation

Houlihan Lokey Capital, Inc. (Houlihan Lokey Capital) and Houlihan Lokey Advisors, LLC (Houlihan Lokey Advisors), two of the company’s wholly owned subsidiaries, through which it conducts its CF, FR, and transaction opinion businesses in the United States, are registered as a broker-dealers with the U.S. Securities and Exchange Commission (the SEC). Houlihan Lokey Capital and Houlihan Lokey Advisors are subject to regulation and oversight by the SEC. In addition, the Financial Industry Regulatory Authority, Inc. (FINRA), a self-regulatory organization that is subject to oversight by the SEC, adopts and enforces rules governing the conduct, and examines the activities, of its broker-dealer member firms, including Houlihan Lokey Capital and Houlihan Lokey Advisors.

In particular, as a registered broker-dealer and member of a self-regulatory organization, the company is subject to the SEC’s uniform net capital rule, Rule 15c3-1. Rule 15c3-1 specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer’s assets be kept in relatively liquid form.

Houlihan Lokey Financial Advisors, Inc. (HLFA), the company’s wholly owned subsidiary, provides valuation services and related financial analyses of various businesses and types of assets, which are used by clients in connection with mergers and acquisitions, divestitures, recapitalizations, dispute analysis, and estate, gift, and income tax support.

The USA PATRIOT Act of 2001 and the Treasury Department’s implementing federal regulations require the company, as a financial institution, to establish and maintain an anti-money-laundering program. The company’s European advisory business is conducted primarily through its subsidiaries namely, as regards the provision of regulated investment services:

In the United Kingdom, Houlihan Lokey EMEA, LLP (HL EMEA, LLP); Houlihan Lokey UK Limited (HL UK); and Houlihan Lokey (Corporate Finance) Limited (HLCF Ltd), a limited liability partnership and private limited companies, respectively, each of which is organized under the laws of England and Wales.

In Germany, Houlihan Lokey (Europe) GmbH (HLE GmbH), a private limited company organized under the laws of such jurisdiction with branches in England, France, and Spain in addition to its main office in Germany.

Each of HL EMEA, LLP; HL UK; and HLCF Ltd are authorized and regulated by the United Kingdom’s Financial Conduct Authority. The the U.K. regulatory regime is based upon the Financial Services and Markets Act 2000 (FSMA), together with secondary legislation and other rules made under FSMA and other relevant legislation. These rules govern the company’s financial advisory business in the United Kingdom, including regulated activities, record keeping, approval standards for individuals, anti-money laundering and periodic reporting.

HLE GmbH, through which the company conducts its regulated business in the EU, was established in order to mitigate the effects of the United Kingdom ceasing to be a member of the EU (Brexit) on its European business, further to the end of the Brexit transitional period and the withdrawal of ‘passport’ rights in favor of HL EMEA, LLP and HLCF Ltd. HLE GmbH is approved to conduct regulated investment services by the German regulatory authority, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

HLE GmbH has exercised the appropriate European financial services passport rights to provide cross-border services into all other members of the EEA from Germany and to establish branches in France and Spain. These passport rights derive from the pan-European regime established by the EU Markets in Financial Instruments Directive, which regulates the provision of investment services and ancillary activities throughout the EEA.

Houlihan Lokey (Australia) Pty Limited is licensed and subject to regulation by the Australian Securities & Investments Commission and must also comply with applicable provisions of the Corporations Act 2001 and other Australian legal and regulatory requirements, including capital adequacy rules, customer protection rules, and compliance with other applicable trading and investment banking regulations.

In Israel, the company provides unregulated corporate finance advisory services through the Israel branch of Houlihan Lokey Israel Limited, a private limited company organized under the laws of England and Wales. The branch is registered with the Israeli Corporations Authority.

In Hong Kong, the Securities and Futures Commission (the SFC) regulates the company’s subsidiary, Houlihan Lokey (China) Limited.

Houlihan Lokey’s Indian advisory business is conducted through GCA India Investment Advisers Private Limited, which is licensed by the Securities and Exchange Board of India (SEBI) as an Investment Adviser.

In Japan, financial advisory services are provided by Houlihan Lokey Corporation, G-FAS Corporation, HL Succession Corporation, and BIZIT Inc., none of which conducts regulated activities in Japan.

In Singapore, the company conducts its business through Houlihan Lokey (Singapore) Private Limited and Houlihan Lokey Advisers Singapore Private Limited, both of which are registered with the Monetary Authority of Singapore (MAS) as exempt corporate finance advisers, and are therefore able to provide exempt corporate finance advisory services to accredited investors only, subject to compliance with regulation governing such status as applicable from time to time in Singapore.

In Vietnam, the company provides unregulated corporate finance advisory services through Houlihan Lokey Vietnam LLC.

The company is also subject to laws and regulations prohibiting corrupt or illegal payments to government officials and other persons, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.

History

Houlihan Lokey, Inc. was founded in 1972.