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HOULIHAN LOKEY, INC.

HLI
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Business Summary

Houlihan Lokey, Inc. is a leading global independent investment bank established in 1972, with expertise in mergers and acquisitions, capital markets, financial restructurings, liability management, and financial and valuation advisory services. The company serves a diverse set of clients worldwide, including corporations, financial sponsors, and government agencies, and does not engage in any lending, securities sales and trading, or investment research that might conflict with clients' interests. As of March 31, 2026, the company had a team of more than 1,900 financial professionals across more than thirty offices globally, serving more than 2,000 clients annually, ranging from closely held companies to Fortune Global 500 corporations.

The company competes with boutique firms focused on particular industries or geographies as well as other global independent investment banks and bulge-bracket firms, and a majority of its Corporate Finance engagements relate to mid-cap transactions, which it believes is an attractive segment underserved by bulge-bracket investment banks. The Financial Restructuring group, with 59 Managing Directors as of March 31, 2026, is believed to constitute one of the largest restructuring groups in the investment banking industry, and the Financial and Valuation Advisory group, with 44 Managing Directors as of March 31, 2026, is believed to represent one of the largest and most respected valuation and financial opinion practices in the United States. The company believes it has a meaningful presence in every major industry segment, including business services, consumer, energy, financial services, fintech, healthcare, industrials, real estate, and technology.

The company generates revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters, with a significant portion of engagements including Retainer Fees, Progress Fees, and/or Completion Fees. Revenues are generated from three business segments: Corporate Finance, encompassing M&A and capital solutions; Financial Restructuring, including restructurings both out-of-court and in formal bankruptcy or insolvency proceedings; and Financial and Valuation Advisory, including financial opinions and a variety of valuation and financial consulting services. The company markets its services through its product areas, industry groups, and Financial Sponsors group, and its broad-based employee ownership serves to align the interests of employees and shareholders.

The Corporate Finance segment, with 251 Managing Directors as of March 31, 2026, provides general financial advisory services and advice on mergers and acquisitions and capital markets offerings, with the majority of its revenues consisting of Completion Fees. For the fiscal year ended March 31, 2026, Corporate Finance revenues were $1,744,634,000 , and segment profit was $581,240,000 . The Financial Restructuring segment, with 59 Managing Directors as of March 31, 2026, provides advice to debtors, creditors, and other parties-in-interest in connection with recapitalization and deleveraging transactions, with the majority of its revenues consisting of Completion Fees; for fiscal 2026, Financial Restructuring revenues were $528,655,000 , and segment profit was $179,093,000 . The Financial and Valuation Advisory segment, with 44 Managing Directors as of March 31, 2026, provides financial advisory and valuation services, fairness opinions, solvency opinions, and dispute resolution services, with the majority of its revenues consisting of Retainer Fees, Progress Fees, and/or Completion Fees; for fiscal 2026, Financial and Valuation Advisory revenues were $344,227,000 , and segment profit was $93,582,000 .

In February 2026, the company closed the Audere Partners transaction, resulting in a controlling interest in a France-based entity, with the remaining noncontrolling interest subject to a series of put and call option redemption features exercisable over a period of approximately three years. In December 2024, the company acquired Waller Helms Advisors LLC, issuing contingent consideration with a fair value of $31,670,000 as of March 31, 2026. During fiscal 2026, the company repurchased 977,600 shares of its outstanding common stock at a weighted average price of $179.42 per share for an aggregate purchase price of $175,399,000 , and as of March 31, 2026, shares with a value of $230,125,000 remained available for purchase under the share repurchase program. The company also paid dividends of $175,335,000 during fiscal 2026, and subsequent to year-end, the board of directors declared a quarterly cash dividend of $0.70 per share payable on June 15, 2026.

For the fiscal year ended March 31, 2026, total revenues were $2,617,516,000 , an increase of 10% from $2,389,416,000 in fiscal 2025. Net income attributable to Houlihan Lokey, Inc. was $425,697,000 for fiscal 2026, compared to $399,711,000 in fiscal 2025. Diluted earnings per share were $6.22 in fiscal 2026 versus $5.82 in fiscal 2025. Operating income was $527,019,000 in fiscal 2026, compared to $502,567,000 in fiscal 2025, and the Compensation Ratio was 64% for both fiscal 2026 and fiscal 2025. Cash and cash equivalents totaled $1,189,454,000 as of March 31, 2026, up from $971,007,000 as of March 31, 2025.

Business Outlook

The company intends to continue to grow its firm across industry sectors, geographies, and products to deliver quality advice and innovative solutions to its clients, both organically and through acquisitions. Management believes current economic conditions provide a relatively stable environment for M&A and capital markets activities, but the continued threat from elevated interest rates or inflation, international conflict, and international trade policies provide some level of uncertainty in the coming year. The company continues to see sustained levels of restructuring and liability management activity over the short to medium term due to elevated interest rates, record levels of company leverage, disruption in the software space, recent geopolitical events, and global trade policy disruption.

The company plans to continue to expand and deepen its specialized industry capabilities through a combination of internal promotion, external hires, and acquisitions, and while the majority of its engagements are in the United States, it continues to enhance its presence in other global geographies and believes there will be continued opportunities to grow both in the United States and internationally. The Financial Restructuring 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, while in robust macroeconomic environments, demand for its services generally continues due to opportunities arising from secular and cyclical disruptions in certain industries.

The Compensation Ratio was 64% for both fiscal 2026 and fiscal 2025. Non-compensation expenses increased 12% in fiscal 2026, primarily due to increases in revaluation of acquisition contingent consideration, travel, meals and entertainment, and information technology and communications expenses. The company's cost structure includes largely fixed costs for compensation, occupancy, equipment rentals, communication and information technology services, and depreciation and amortization, and management may not be able to timely adjust these costs to match fluctuations in revenue.

As of March 31, 2026, the company employed approximately 2,800 people worldwide, compared to approximately 2,700 as of March 31, 2025. The company devotes significant time and resources to training and mentoring employees and is committed to developing its brightest and most promising junior professionals into Managing Directors. The company's compensation programs offer a portion of compensation in deferred cash and a portion in deferred stock awards to provide incentives for employees to remain with the firm.

Capital expenditures were $22,312,000 in fiscal 2026, compared to $39,699,000 in fiscal 2025. The company repurchased 977,600 shares of its outstanding common stock during fiscal 2026 for an aggregate purchase price of $175,399,000 , and as of March 31, 2026, $230,125,000 remained available under the $500,000,000 share repurchase program. The company declared a quarterly cash dividend of $0.70 per share subsequent to year-end, and total dividends paid during fiscal 2026 were $175,335,000 . The company had no principal outstanding under its $150,000,000 revolving line of credit as of March 31, 2026.

The company faces headwinds from changing market conditions, including the inability to access credit markets, rising interest rates or inflation, terrorism, political uncertainty, supply chain disruptions, uncertainty in U.S. federal fiscal, monetary, or trade policies, and military conflicts around the world such as ongoing conflicts in Eastern Europe and the Middle East. The current U.S. administration has implemented significant and rapid changes in federal government operations and policies, including international trade policies, which may impact economic stability, the financial markets, and the financial services industry broadly. The company's international operations, which generated approximately 32.2% of revenue in fiscal 2026, carry special risks including fluctuations in foreign currency exchange rates, unexpected changes in trading policies, regulatory requirements, tariffs, and other barriers.

The company's ability to retain its Managing Directors and other senior professionals is critical to its success, and the market for qualified investment bankers is extremely competitive. The company faces strong competition from bulge-bracket institutions with far greater financial and other resources, as well as from independent investment banks that have emerged in recent years, which could result in pricing pressures. The company is subject to extensive and evolving regulation in the United States and internationally, and any failure to comply with applicable laws or regulations could result in adverse publicity, reputational harm, fines, suspensions, or other sanctions.

Risk Factors

Changing market conditions can materially reduce revenue, as weak economic conditions decrease the volume and size of M&A transactions, reducing demand for Corporate Finance and Financial and Valuation Advisory services, while strong conditions reduce demand for Financial Restructuring services. The company's revenue and profits are highly volatile on a quarterly basis because a substantial portion of fees are contingent on the completion of transactions, the timing of which is outside the company's control. Goodwill and other intangible assets totaled $1.60 billion as of March 31, 2026, and an impairment of these assets could have a material adverse effect on financial condition and results of operations. The company depends on retaining its Managing Directors and senior professionals, and the loss of these individuals could jeopardize client relationships and result in the loss of engagements. The company is subject to extensive regulation, and in fiscal 2026, it earned approximately 32.2% of its revenue from international operations, exposing it to foreign currency fluctuations, which led to a net gain in cash of $4.9 million in fiscal 2026, and to risks from tariffs, trade policies, and geopolitical events.

Management Priorities

Management's message emphasizes the company's commitment to independent advice, intellectual rigor, and consistent senior-level involvement as hallmarks of client service, with an entrepreneurial culture that fosters collaboration across business practices. The strategic priorities emphasized for the period ahead include continuing to grow the firm across industry sectors, geographies, and products both organically and through acquisitions, while maintaining a focus on advisory products and market segments where the company's expertise is differentiating and less subject to conflicts of interest. Management believes current economic conditions provide a relatively stable environment for M&A and capital markets activities, but acknowledges uncertainty from elevated interest rates, inflation, international conflict, and trade policies, while noting that dialogue with clients evaluating strategic alternatives remains positive and that Financial Restructuring activity remains stable with sustained levels expected over the short to medium term.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  2. [2] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  3. [3] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  4. [4] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  5. [5] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  6. [6] Item 7, MD&A — Business Segments; Item 8, Note 18 — Segment and Geographical Information
  7. [7] Item 8, Note 10 — Other Liabilities
  8. [8] Item 8, Note 15 — Stockholders' Equity
  9. [9] Item 8, Note 15 — Stockholders' Equity
  10. [10] Item 8, Note 15 — Stockholders' Equity
  11. [11] Item 8, Note 15 — Stockholders' Equity
  12. [12] Item 8, Consolidated Statements of Changes in Stockholders' Equity
  13. [13] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 15 — Stockholders' Equity
  14. [14] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  15. [15] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  16. [16] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  17. [17] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  18. [18] Item 8, Consolidated Statements of Income; Item 8, Note 13 — Earnings Per Share
  19. [19] Item 8, Consolidated Statements of Income; Item 8, Note 13 — Earnings Per Share
  20. [20] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  21. [21] Item 7, MD&A — Results of Consolidated Operations; Item 8, Consolidated Statements of Income
  22. [22] Item 7, MD&A — Results of Consolidated Operations
  23. [23] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Consolidated Balance Sheets
  24. [24] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Consolidated Balance Sheets
  25. [25] Item 1, Business — Human Capital Resources
  26. [26] Item 1, Business — Human Capital Resources
  27. [27] Item 8, Consolidated Statements of Cash Flows
  28. [28] Item 8, Consolidated Statements of Cash Flows
  29. [29] Item 8, Note 15 — Stockholders' Equity
  30. [30] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 10 — Other Liabilities
  31. [31] Item 1A, Risk Factors — International Operations
  32. [32] Item 1A, Risk Factors — Goodwill and Intangible Assets; Item 8, Note 9 — Goodwill and Other Intangible Assets
  33. [33] Item 1A, Risk Factors — Fluctuations in Foreign Currency Exchange Rates
  34. [34] Item 7, MD&A — Cash Flows; Item 8, Consolidated Statements of Cash Flows
  35. [35] Item 7, MD&A — Cash Flows; Item 8, Consolidated Statements of Cash Flows
  36. [36] Item 7, MD&A — Liquidity and Capital Resources
  37. [37] Item 7, MD&A — Liquidity and Capital Resources
  38. [38] Item 7, MD&A — Results of Consolidated Operations; Item 8, Note 12 — Income Taxes
  39. [39] Item 8, Note 12 — Income Taxes
  40. [40] Item 7, MD&A — Results of Consolidated Operations; Item 8, Note 12 — Income Taxes
  41. [41] Item 8, Note 12 — Income Taxes
  42. [42] Item 8, Consolidated Statements of Income
  43. [43] Item 8, Consolidated Statements of Income

Analysis on 9/27/2026