Houlihan Lokey, Inc.

What they do

Houlihan Lokey operates through three segments: Corporate Finance (M&A and capital solutions), Financial Restructuring (in-court and out-of-court restructurings), and Financial and Valuation Advisory (financial opinions, valuations, and consulting). The company serves corporations, financial sponsors, and government agencies, with more than 1,900 financial professionals across over thirty offices globally. It does not engage in lending, trading, or investment research.

Revenue drivers

• Corporate Finance (CF) — Largest segment, generating $303 million in Q1 FY2027, down 24% year-over-year. Revenues are primarily completion fees from sell-side and buy-side M&A and capital markets transactions, focused on mid-cap deals.
• Financial Restructuring (FR) — Generated $119 million in Q1 FY2027, down 8% year-over-year. Revenues come from advising debtors, creditors, and other parties in bankruptcy and out-of-court restructurings, with most revenues from completion fees.
• Financial and Valuation Advisory (FVA) — Generated $89 million in Q1 FY2027, up 13% year-over-year. Revenues are from valuation services, fairness opinions, solvency opinions, and financial consulting, with a mix of retainer, progress, and completion fees.

Recent performance

For Q1 FY2027 (ended June 30, 2026), total revenues were $511 million, down from $605 million in the year-ago quarter. Net income attributable to Houlihan Lokey was $78 million, or $1.15 diluted EPS, compared to $98 million, or $1.42, in Q1 FY2026. Adjusted diluted EPS was $1.35, down from $2.14. The company declared a dividend of $0.70 per share for Q2 FY2027.

Strategy

Management emphasizes deep industry expertise, senior banker involvement, and a global platform, with strong financial sponsor relationships as competitive advantages. It continues to expand industry capabilities through internal promotion, external hires, and acquisitions. The company is focused on serving underserved mid-cap transactions and growing internationally, while maintaining independence from lending and trading conflicts.

Risks

• Market cyclicality — Revenue is tied to transaction volumes, which can decline in economic downturns, reducing demand for M&A and advisory services.
• Key person dependence — The company's success relies on retaining Managing Directors and senior professionals; their departure could hurt client relationships and revenue.
• Geopolitical and sector disruptions — Instability in the Middle East and technology sector disruptions, particularly in software, have already impacted CF results and could continue.
• Integration and acquisition risk — Acquisitions and strategic investments may fail to integrate successfully or achieve expected benefits, leading to potential goodwill impairment.

Outlook

Management believes current headwinds in Corporate Finance are temporary and not indicative of a cyclical downturn, citing general economic health and strong public market valuations. They see support for improved performance for the rest of the fiscal year, but acknowledge difficulty in predicting when headwinds will subside.