Houlihan Lokey Inc (HLI)

Houlihan Lokey Inc.: A Detailed Overview

Company Profile:

Detailed history and background: Founded in 1972 as W.R. Houlihan & Co., Houlihan Lokey Inc. (HLI) is a global investment bank and financial services company headquartered in Los Angeles. Initially focusing primarily on corporate finance, HLI has grown significantly, expanding its service portfolio to include financial restructuring, mergers and acquisitions, capital markets advisory, and wealth management. The firm has established a strong presence across North America, Europe and Asia, employing over 1,600 professionals.

Description of core business areas:

• Investment Banking & Debt Solutions: This segment provides financial advisory and capital-raising solutions to corporations, financial sponsors, institutions, and governments, encompassing mergers and acquisitions (M&A), divestitures, financial restructurings, privatizations, and public offerings.

• Wealth Management & Institutional Advisory: This segment caters to high-net-worth individuals, families, and institutional investors, offering a comprehensive range of services, including wealth planning and investment advisory, trust and estate services, private equity investing, philanthropy support, and banking solutions.

Overview of leadership team:

• Scott Beiser, Chief Executive Officer: Beiser joined HLI in 1991 and currently leads the firm as CEO, having held various executive roles across investment banking during his tenure.

• Robert Wolf, President: Wolf joined HLI in 2003 and serves as President, leading the firm's strategic growth initiatives across all business lines and regions.

• David Solomon, Managing Director & Chief Financial Officer: Solomon joined HLI in 1997 and oversees the company's financial management, reporting, and investor relations.

• Corporate structure:** Houlihan Lokey is organized into two operating segments: Investment Banking & Debt Solutions, and Wealth Management & Institutional Advisory. These segments operate under the umbrella of the parent company, Houlihan Lokey Inc. The firm utilizes a decentralized structure with independent regional offices and business lines, enabling flexibility and responsiveness to client needs across diverse locations.

Top Products and Market Share:

Identifying and describing top products: HLI's key offerings encompass a diverse spectrum of financial services within its two main business segments:

1. Investment Banking & Debt Solutions:

• M&A Expertise: HLI has garnered recognition for expertise in mergers and acquisitions, advising both strategic and financial buyers in a wide range of transactions across industries. This includes advising on divestitures and carve-out transactions for large corporations and private equity firms.
• Restructuring and Capital Solutions: HLI stands as a prominent advisor for companies facing financial distress. They provide comprehensive services, encompassing debt renegotiations, asset sales, capital raising, and bankruptcies, helping companies restructure operations for financial viability.
• Capital Markets Advisory: Drawing upon deep relationships with investors, HLI helps corporations and financial sponsors access the public and private debt and equity capital markets. Their team advises on IPOs, debt offerings, equity placements, convertible and preferred stock offerings, and other forms of capital raising.

2. Wealth Management & Institutional Advisory:

• Customized Portfolio Solutions: HLI provides personalized wealth management services for high-net-worth individuals and families. They offer customized portfolio solutions across a spectrum of asset classes tailored to client risk appetite, financial goals, and individual needs.
• Institutional Advisory & Investment Management: HLI's team assists institutional investors, such as endowments, foundations, and pension plans, by delivering tailored solutions for investment strategy, asset allocation, and manager selection across diverse asset classes, including public equity and fixed income, alternative investments, private equity, and real estate.
• Trust & Estate Services: The company offers sophisticated trust and estate planning, settlement, and administration services to ensure the seamless transfer of wealth across generations and the fulfillment of estate planning goals.

Market Share Analysis:

• HLI holds a leading global position, ranking as the 4th largest investment banking firm globally.
• In 2022, HLI captured the second-largest market share for M&A transactions among financial advisors globally, with a notable focus on middle-market deals.
• However, it's crucial to consider that this information is based on data up to November 2023 and market positions may have subsequently shifted.

Total Addressable Market:

Industry size:

• The financial information and financial advisory industry is vast, encompassing global investment banks, small-to-medium-sized advisory firms, and independent consultants. The precise market size remains challenging to define due to its diverse nature.

Potential market size:

• HLI focuses primarily on serving middle-sized corporations with revenues ranging between $25 and 500 million, financial sponsors seeking mid-cap acquisitions, and institutional investors with $50 million or greater in investable assets.
• This market segment represents a substantial potential market size, encompassing numerous businesses and institutions globally.

Financial performance:

Revenue, Net Income, and EPS (2019 - 2023)

Profit Margin:

The profit margin has shown an upward trend, increasing to 14% in 2023 compared