Houlihan Lokey Third Quarter Fiscal 2026 Earnings Call - M&A Momentum Drives Corporate Finance, Restructuring Likely to Moderate

Conference Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan Lokey’s third quarter fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, January 28, 2026. I will now turn the call over to the company.

Christopher, Investor Relations, Houlihan Lokey: Thank you, operator, and hello, everyone. By now, everyone should have access to our third quarter fiscal year 2026 earnings release, which can be found on the Houlihan Lokey website at www.hl.com in the Investor Relations section. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should, or other similar phrases, are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore you should exercise caution when interpreting and relying on them. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

We encourage investors to review our regulatory filings, including the Form 10-Q for the quarter ended December 31, 2025, when it is filed with the SEC. During today’s call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company’s financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release and our investor presentation on the hl.com website. Hosting the call today, we have Scott Adelson, Houlihan Lokey’s Chief Executive Officer, and Lindsay Alley, Chief Financial Officer. They will provide some opening remarks, and then we will open the call to questions. With that, I’ll turn the call over to Scott.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thank you, Christopher. Welcome, everyone, to our third quarter fiscal 2026 earnings call. We ended the quarter with revenues of $717 million and adjusted earnings per share of $1.94. Revenues were up 13% and adjusted earnings per share were up 18% compared to the same period last year. We are pleased with our results for the quarter as well as our performance year to date. We continue to benefit from improving investor sentiment, partially fueled by stronger company performance and expectations of declining interest rates, both of which should continue to further the M&A recovery. As a result, private equity activity has accelerated, with an increasing number of portfolio companies choosing to explore liquidity.

Looking at each of our businesses, Corporate Finance produced $474 million of revenue for the quarter, representing a 12% increase over last year’s third quarter. Both average fee and new business activity continue to move upward. We enter our last fiscal quarter with positive inflection in the activity levels that increase our optimism for our fiscal year 2027. While we have anticipated and reported consistent progress in Corporate Finance throughout the year, our current visibility into both deal activity and backlog gives us more confidence in fiscal 2027 compared to our assessment a quarter ago. Financial Restructuring produced $156 million of revenue for the third quarter, a 19% increase versus the same period last year. We performed better than anticipated during the quarter due to accelerated transaction timelines that moved several of our deals forward into the third quarter.

Accordingly, we expect our third quarter restructuring results to be stronger than our fourth quarter results, reversing our typical seasonal pattern. Looking ahead to fiscal 2027, we expect restructuring to face some revenue pressures as it adjusts to an improving market environment. That said, recent geopolitical events introduce a new variable that could potentially drive restructuring activity levels higher. Financial and Valuation Advisory produced $87 million of revenue for the third quarter, a 6% increase versus the third quarter last year. Like Corporate Finance, this business continues to benefit from an improving M&A climate and continued strong capital markets, with solid new business generation heading into our fourth quarter. We hired six new managing directors in the third quarter, and in early January, we closed the acquisition of the real estate advisory business of Mellum Capital, bolstering our Capital Solutions capabilities.

We gained 11 new colleagues between Munich and London, and our new partners are off to a great start. In addition, last week, we announced an agreement for a controlling interest in Audere Partners, a prominent French corporate finance firm. The deal will significantly enhance our footprint in France to around 80 colleagues, making it one of our largest offices in Europe. This transaction is expected to close in our fourth quarter. We are thrilled with these transactions, which reflect our commitment to build our capabilities in the right places, at the right time, and most importantly, with the right partners. Our culture grows even stronger when we welcome new colleagues with the same vision and commitment to our clients’ success. These two deals continue to strengthen our business in Europe, which, as we have said before, has the potential to be the size of our U.S. corporate finance business.

Finally, as we look back at 2025, we are honored once again to be the number one most active M&A investment bank in the world, and also, once again, the number one most active financial restructuring investment bank in the world. We congratulate our colleagues around the globe for the dedication that produced these distinctions. As we look beyond our fiscal fourth quarter, our outlook for the future is positive. The expansion of our workforce across geography, industry, and product will continue. Our relentless focus on independent, high-quality advice to our clients will continue, and our drive to create value for our shareholders will continue. We thank our employees for their commitment and our shareholders for their support. With that, I will turn it over to Lindsay.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Thank you, Scott. Revenues in Corporate Finance were $474 million for the quarter, up 12% compared to the same period last year. We closed 177 transactions this quarter, up from 170 in the same period last year, and our average transaction fee on closed deals increased. Financial Restructuring revenues were $156 million for the quarter, a 19% increase versus the same period last year. We closed 41 transactions this quarter, consistent with the same quarter last year, and our average transaction fee on closed deals increased. We benefited from the closing of several transactions that were expected to close in our fiscal fourth quarter, resulting in our second strongest third quarter ever.

As a result, we expect that our fourth quarter will look more like the first two quarters of our fiscal year and won’t have the same typical seasonality associated with that quarter. For Financial and Valuation Advisory, revenues were $87 million for the quarter, a 6% increase from the same period last year. We had 1,103 fee events during the quarter, compared to 1,005 in the same period last year, a 10% increase. Turning to expenses, our Adjusted Compensation Expenses were $441 million for the quarter versus $390 million for the same period last year. Our only adjustment was $18 million for deferred retention payments related to certain acquisitions. Our Adjusted Compensation Expense Ratio for the third quarter in both fiscal 2026 and 2025 was 61.5%.

We expect to maintain our long-term target of 61.5% for the adjusted compensation expense ratio for the balance of the year. Our adjusted non-compensation expense ratio for the third quarter was 13.1%, consistent with the same period last year. For the quarter, we adjusted out of non-compensation expenses, $2.2 million in integration and acquisition-related costs, $1.3 million in non-cash acquisition-related amortization, and $600,000 pertaining to professional fees associated with streamlining our global organizational structure, also referred to as Project Solo. Looking at year-to-date performance, our adjusted non-compensation expenses increased 11% versus the same year-to-date period last year. We expect the fiscal fourth quarter year-over-year growth in adjusted non-compensation expenses to be consistent with what we’ve experienced year to date.

Our adjusted effective tax rate for the third quarter was 30.6%, compared to 33.3% for the same quarter last year. The decrease was primarily a result of decreased state taxes and decreased non-deductible expenses. For the quarter, we adjusted out of our effective tax rate the effects of non-deductible acquisition-related costs. We expect the French transaction to close in the next couple of weeks. This transaction is structured as a combination between our French operations and Audere, and will result in Houlihan Lokey owning 51% of the combined business and the previous shareholders of Audere owning 49%. As with many business combinations, we have created mechanisms that allow us to increase our ownership over time and under certain circumstances. Turning to the balance sheet, we ended the quarter with approximately $1.2 billion of cash and investments.

Also, in our third quarter, we repurchased approximately 418,000 shares as part of our share repurchase program. We will continue to evaluate balance sheet flexibility for acquisitions versus excess cash for share repurchases. With that, operator, we can open the line for questions.

Conference Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause for just a moment to assemble our roster. The first question today will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Brennan Hawken, Analyst, BMO Capital Markets: Hey, good afternoon, Scott. Good afternoon, Lindsay. I hope you guys are doing well. Would love to drill down on the outlook for restructuring. So, loud and clear on the seasonality, not gonna see the similar typical strength in, in the fiscal fourth quarter. But more importantly, you know, the outlook, you guys have been early on in saying the activity was slowing, as the capital markets activity and, and corp fin has improved. It sounds like that remains the case. Can you maybe help us bridge the gap in between increasing concerns around the private credit markets, you know, the press attention on some of those issues recently, and then the outlook for the restructuring activity as well?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, happy to do that. And if you look at structurally, what we’ve been saying is that the market is getting better for M&A, capital is very plentiful, interest rates are likely declining, and you put those all together, you’re likely to see declining activity levels in restructuring, just structural. Don’t disagree with you that there are, there are always, all over the world, pockets of opportunities, whether that is in industries, whether that’s in geographies, whether that is due to geopolitical events, that creates opportunity for restructuring. The visibility of that in what we’re talking about, it’s not clear enough that it is showing up in consistent new opportunities.

I don’t disagree with you at all that there is a very good chance that a number of those elements that we just discussed, some of them will occur, whether it be in a sector or geography, that will cause new opportunities to arise.

Brennan Hawken, Analyst, BMO Capital Markets: Okay, got it. Thanks for that. And then corporate finance. So the revenues picked up a bit quarter-over-quarter, but not as much as we typically see in the December quarter. So curious about the expectations for the end of the fiscal year on the corporate finance side. I believe your commentary on not the lack of the seasonality was focused on restructuring. So just wanna make sure I heard that right. And then it also sounds like the outlook is improving for next fiscal year. You know, could you maybe help us understand what-- if there’s, like, a comparable period that we should think about when we’re considering magnitude of potential growth that seems to be shaping up here as we think about next fiscal year?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: So yes, you heard that correctly, though, that was in relation to restructuring, not the Corporate Finance. Corporate Finance is continuing to get stronger and stronger. As I said in my prepared statements, the M&A activity is absolutely increasing, and even more so on the Private Equity side than we have seen in recent history. We expect that to continue and have good visibility that that is gonna continue for a while.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yeah, I mean, with respect to Q4, you know, corporate finance has seen quite solid growth year to date, and that’s probably not a bad proxy for Q4. And, and I’d say that, as Scott said, you know, the, the activity levels, which are revenues six months from now, nine months from now, continue to give us comfort in our fiscal 2027 estimates and how everyone’s thinking about the business.

Brennan Hawken, Analyst, BMO Capital Markets: Great. Thanks so much for taking my questions.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Always our pleasure.

Conference Operator: The next question will come from James Yaro with Goldman Sachs. Please go ahead.

James Yaro, Analyst, Goldman Sachs: Thanks, and thanks for taking the questions, and good afternoon. Just quickly,

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Hey, James.

James Yaro, Analyst, Goldman Sachs: Hey, guys. Just quickly on corporate finance, I just wanted to dig in a little bit on the U.S. versus non-U.S. outlook. And obviously, I understand that you have a little bit more idiosyncratic growth in Europe, given, you know, for example, the two acquisitions you just announced, and, you know, scaling from a lower base there. But maybe you could just talk a little bit about compare and contrast the growth potential of those two regions.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, happy to. Obviously, the U.S. continues to be both for us and for the market overall, the largest region, and that, therefore, is still the most important market. Having said that, our European business is growing incredibly well. We really believe we are offering a truly differentiated product in Europe, and the market is rewarding us for that, and we continue to feel very good about the traction that we’re getting in Europe.

James Yaro, Analyst, Goldman Sachs: Great. And so maybe tying that in with the acquisitions, you know, I’d just love to get your sense, if you take a step back, on just you know, the overall strategy for Europe and how these two acquisitions fit into completing the mosaic for your European business.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, happy to do that. I mean, I think that obviously we have had a presence in France for a period of time, but it was a very relatively small business relative to a number of other countries in Europe. At the same time, it’s one of the most important markets in Europe. It’s not lost on us that it is the headquarters of a couple of our sizable competitors, and we had to wait until we found the right partners to really aggressively grow that business, and we feel incredibly good with the decision we’ve made.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I’d say that the acquisition of France obviously brings, or the combination in France brings revenues along with it, but it also lifts kind of all the boats in Europe. I mean, being underweighted in that country had an impact across the UK and Europe for us. And I’d say that now that we have a solution, everyone is gonna benefit from it in the Houlihan Lokey umbrella and EMEA.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I agree with that completely. And then on the other side, within Capital Solutions, as we have said before, we’re probably underweighted on the real estate side, and this is an effort to really continue to grow that underweighting on the real estate side.

James Yaro, Analyst, Goldman Sachs: As always-

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Reduce the underweight. Reduce the underweight would be the better way to say that. No double negatives.

James Yaro, Analyst, Goldman Sachs: Okay, that’s perfect. As always, super clear and helpful. Thank you so much.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Great. Thanks, James.

Conference Operator: The next question will come from Devin Ryan with Citizens. Please go ahead.

Devin Ryan, Analyst, Citizens: Great. Hi, Scott. Hi, Lindsay. How are you?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Hey, Devin.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thanks, Devin.

Devin Ryan, Analyst, Citizens: Wanna ask a question just on sponsor engagement, and nice to hear, you know, some of the improvement you’re seeing. And just would be good to get a little bit of a better sense of kind of the rate of change that you’re seeing with sponsors. And obviously, you know, a lot of pressure, I think, on sponsors to return capital, obviously still record dry powder to deploy. So, you know, are you seeing kind of a steady build there, or is it something maybe better than that, just given kind of those pressures? And is it broad-based across verticals, or is it targeted to certain verticals? Just love a little more context on kind of the trajectory that you’re seeing there. Thanks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, happy to do that. I mean, what we’ve been saying for a while is it’s been getting better quarter by quarter, and that has been very consistent with some bumps along the road, usually due to external factors, geopolitical mostly, that have caused that. And really, for the last couple of quarters, we’ve really been seeing it’s been picking up quite a bit, and it’s really been after the beginning of the year, continuing to pick up even more. And so it’s at an accelerating rate, is what it feels like for new opportunities.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: We’ve said this to individuals on, you know, either investor calls or analyst calls, but, you know, there’s a couple of major inflection points during the calendar year in the middle market. One of them is after Labor Day, and one of them is after New Year’s. Both of those periods of time were quite solid and strong for us and probably exceeded expectations. I think that’s a little bit why you’re hearing the commentary that we’re saying when we talk about activity levels increasing.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: In terms of your question of sectors, it is really broad and across sectors. And I would say that if anything, it’s the sectors that under. From an increase standpoint, the ones that had underperformed have come back even stronger, but it is very much cross-support.

Devin Ryan, Analyst, Citizens: Got it. Okay, I appreciate that. And then just wanna come back to, kind of a follow-up of some of the discussion you were just having in, in those questions. As we kind of think about some of the investments the firm has made over the past, you know, 5, 6 years, I mean, you’ve obviously, you’ve built out quite a bit outside the U.S., a lot of kind of sector-specific M&A, beefing up Capital Solutions. So kind of the capabilities are broader, they’re deeper. When you think about kind of the white space at the firm today, where do you still see the biggest opportunities? Like, if I look at a heat map from external data, which I know is not perfect, it looks like maybe there’s a little bit of room in healthcare and energy, just for example.

But would love to just hear from you kind of where you feel like there’s still, you know, nice white space and where you could just maybe add a little bit of resource and get, you know, some nice network effects on that.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, I mean, I am a very strong believer that it is everywhere. We have so much opportunity. I know that you want me to be more specific than that, but it is in every sector, we have really, really meaningful room to grow, and it we talk about it. We have around 200 subsectors today, and that is not built out all over the world, even remotely, and it is also not. 200 is nowhere near saturation of subsectors. So that’s just on the industry side. And then, obviously, on the product side, you’re seeing us continue to build out with the example of what we’ve done in Germany and the UK, and the Capital Solutions will continue to have build out in capabilities well around the world.

And then, obviously, we have our other product lines as well, and we have geographies. I mean, it is. There’s a tremendous amount of white space out there. Our map, our page is quite white.

Devin Ryan, Analyst, Citizens: Okay. Well, good to hear. Thanks so much, guys. Appreciate it.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thanks.

Conference Operator: The next question will come from Brendan O’Brien with Wolfe Research. Please go ahead.

Brendan O’Brien, Analyst, Wolfe Research: Good afternoon, and thanks for taking my questions. I guess to start-

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Hi, Brendan.

Brendan O’Brien, Analyst, Wolfe Research: Hi, just wanted to follow up on the restructuring outlook. You know, I know there’s some uncertainty still, but just given the longer lead time for the business, you should have a pretty good baseline for how revenues will track at least early next year. And so I was just hoping you can put some guardrails around how we should be thinking about the magnitude of decline in this business, potentially, just given it does tend to see higher highs, higher floors, as you continue to progress through time.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yeah, I mean, I’d say we, we do have decent visibility, looking forward in restructuring. We don’t generally share that information, but I, I, I think that, you know, it, it’s kind of like, it’s kind of like anything else. With respect to cyclicality, there are going to be ebbs and flows. We, we didn’t know sitting here before the last peak what it was going to look like, and we don’t know what the next couple of years is going to look like, but we’re in an ebb period. Having said that, I, I’d say that we still believe that there are- that is a true global business for us. It is highly diversified, and at any point, whether it’s a geography, an industry, or a specific product could trigger restructuring growth.

So we’re quite comfortable with our position in restructuring over the next 10-20 years. We’re just in an ebb period right now, and what the sort of ebb looks like, I think, is anyone’s guess. But we’re certainly not sitting here concerned about the magnitude of the decline. We don’t think about it that way.

Brendan O’Brien, Analyst, Wolfe Research: Helpful color. Thank you for taking the question. I guess for my follow-up, just want to touch on capital return. You know, understand your preference for, you know, maintaining enough cash to do acquisitions as you executed this quarter. But just given revenue should only accelerate from here and you already have a fairly strong cash position, at least pre-paying out these deals, I just want to get an update as to how you’re thinking about capital management at this juncture, and also if we can get an update on what your acquisition pipeline looks like at the moment.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: So I’ll let Scott handle the acquisition pipeline. I think with respect to capital deployment, it really hasn’t changed. We have—as I think everyone knows—for the last couple quarters, we have started to repurchase some shares. I think we will continue, so long as the economy continues to perform well, we will continue to take a look at whether or not it makes sense to repurchase shares going forward, in relatively smaller increments. And the reason we do it that way is ’cause our pipeline, which Scott will talk about, is quite strong, and we want to remain flexible in terms of being able to do acquisitions for cash.

You know, we’ve said before, our strong preference is to put money to work, excess cash to work through strategic acquisitions that make sense for us, followed by dividends and, and share repurchases, and that, that really hasn’t changed for us. And Scott will talk a little-

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: ... bit about the pipeline.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Happy to do that. As I said before, we’ve been very fortunate. Our pipeline is very strong. I think these two deals are an indication, but they are backed up by a number of other opportunities that are coming through the pipe. And I wish probably even more than all of you do, that I could time them all perfectly to roll quarter by quarter. I don’t get the right to do that, but they are lined up, and it’s fair to say we have more than we have planned to do over time.

Brendan O’Brien, Analyst, Wolfe Research: Great. Thank you for taking my questions.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Our pleasure.

Conference Operator: The next question will come from Ryan Kenney with Morgan Stanley. Please go ahead.

Ryan Kenney, Analyst, Morgan Stanley: Hi, thanks for taking my questions. Wondering if you could give some more color on the non-comp expenses. It looks like IT and communication spend and professional fees have been a bit elevated, so anything that we should think about in terms of puts and takes in non-comp in the quarter and as we look forward into fiscal 2027?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I’d say no puts and takes specifically in the quarter to mention. It just looks a little bit higher than certainly the first couple of quarters in terms of growth. I’d say for Q4, you know, the year-to-date growth for non-comp is probably a decent proxy to what the Q4 is going to look like. Probably a little bit higher than expected in terms of rent, particularly in Europe and particularly around the acquisitions. You’re seeing a little bit of that. But other than that, not much to mention, and I’d say year to date, as a proxy for Q4 growth is probably how I think about it.

Ryan Kenney, Analyst, Morgan Stanley: Got it. Thanks.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: And then-

Ryan Kenney, Analyst, Morgan Stanley: And then-

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Fiscal 2027, you know, same as I’ve mentioned before, kind of high single digits, which is kind of how we’re, how we’re thinking about non-comp.

Ryan Kenney, Analyst, Morgan Stanley: All right, great. And then, you announced the data bank product in November. Can you give more color on what the strategy is with data bank, and is it something that you’re charging for, and how should we expect that, in general, your data strategy will evolve over time?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, I mean, I would love to spend the next hour talking about that. Lindsay would remind me that this is a small part of our business, and, I mean... but it certainly is an important indicator of what’s to come, and I think the fact that we have a tremendous amount of what we perceive to be very valuable data, and the marketplace seems to be indicating that as well. It’s super early days for us.

Right now, where some of that is available to some existing clients, there’s a technological front end to making it available and things like that for other people that is in the works, but, that, as I have stated many times before, the ability to monetize some of our proprietary data is something that is certainly top of mind to us.

Ryan Kenney, Analyst, Morgan Stanley: Thank you.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Sure thing.

Conference Operator: The next question will come from Alex Bond with KBW. Please go ahead.

Alex Bond, Analyst, KBW: Hey, everyone. Good afternoon. Just wanted to drill down on the corporate finance business a little bit more. So it sounds like the outlook for fiscal 2027 remains upbeat, which is great. But just curious if you’ve seen activity levels impacted at all really by, you know, recent geopolitical happenings or I guess, you know, a heightened sense of geopolitical uncertainty over the last couple of weeks, or have clients really been willing to look through these issues and are now maybe just more accustomed to higher uncertainty levels? So any color there would be great.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: ... Yeah, happy to do that. And I think that ties well to what Lindsay was talking about after the and kind of some inflection points, and most recently, again, at the beginning of the year. It really is. We recognize there is noise, right? That around the world, and the people’s willingness and ability to just look through that noise and just get on with business is stronger than it has ever been.

Alex Bond, Analyst, KBW: Got it. That makes sense. And maybe just moving over to Capital Solutions. You know, you’ve touched on, you know, continuing to build out a few of the teams within the group as an area of focus for you recently. It’d be great if you can just go into maybe a little bit more detail there and maybe comment on what inning you think you might be in, in terms of the build-out for the Capital Solutions group more broadly.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: We are still in very early innings on Capital Solutions. I mean, pick your innings. We’re using a baseball analogy, but third inning, fourth inning, I mean, very, very early. And that business is growing really nice on call with one of the heads of it before this, and the demand is really significant. In terms of where it’s coming from, it is literally all over the map, from the traditional business to the secondaries to directs, and even primary. So it is on all fronts at this point.

Alex Bond, Analyst, KBW: Got it. Great. Thank you both.

Conference Operator: The next question will come from Nathan Stein with Deutsche Bank. Please go ahead.

Brendan O’Brien, Analyst, Wolfe Research0: Hey, everyone. Good evening. One of your larger peers suggested on their earnings call a couple weeks ago, "we’re in the third inning of the broader capital market cycle." So this comment constitutes more than just advisory revenues, but I think that caught some folks by surprise just because it’s- that still seems rather early. Wanted to address- wanted to ask you guys your thoughts on that and what inning you see us being in for the broader, call it, advisory cycle.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Well, when you say advisory cycle, it means different things to different people, right? ’Cause we... Our bull-bear business makes it mix, makes that it- when you just say advisory, I’m not quite-

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I think M&A-

Scott Adelson, Chief Executive Officer, Houlihan Lokey: If you’re talking about M&A-

Brendan O’Brien, Analyst, Wolfe Research0: Yeah.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Sorry.

Brendan O’Brien, Analyst, Wolfe Research0: All right.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I assume you’re talking about M&A.

Brendan O’Brien, Analyst, Wolfe Research0: M&A specifically within the corporate finance.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Got it. I do agree with that. I mean, I agree it’s very early innings. I mean, third inning is as good a number. I mean, I don’t think we’re in the first, and we’re definitely not in the fifth or sixth, so yeah, third, fourth, something like that. Third, actually, third feels even better as I think about it.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I’d say-

Scott Adelson, Chief Executive Officer, Houlihan Lokey: It feels early. There is an enormous amount of pent-up demand. I mean...

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yeah, and for, okay.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: All of that, that everybody has talked about and read about and everybody’s backlogs that have been on hold, that still exists. It has been picking up, but there is still a tremendous amount of pent-up demand out there.

Brendan O’Brien, Analyst, Wolfe Research0: And following up on that, if when I was looking at 2025 calendar year industry M&A data, it shows, call it the middle market and below size feels stable, down slightly, up slightly, you know, versus the year before. So really just consistent with the broader messaging of almost everyone who’s just very excited about the upper middle market space and below. I just wanted to, I guess, gauge how you guys are thinking about, like, anything you guys can do to kind of capitalize on what could be, like, a really strong next couple of years, in terms of, in terms of, you know, just being... Well, anyway, I, I think I’m just asking, like, do you guys agree with that statement, and how prepared do you feel for the cyclical rebound?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah, I do agree with this statement, and I do think that many of the things that we have done are positioning ourselves to be continued to be even better positioned to take advantage of it, and that is why we continue to take share in that marketplace and have for quite a while, and intend to for quite a while, to the best of our ability. And that is through this continuing subsectorization, just knowing more about sectors and doing more deals in sectors, giving us more knowledge than other people. The growth in our Capital Solutions group, being able to provide a broader array of services and helping people evaluate how they want to seek liquidity. I mean, the global reach continues to expand so that we are able to...

that much better be able to service our clients. I mean, the list goes on and on. But, I’m starting to sound just like a pitch on it, but the reality of the matter is that those are all things we are constantly working on. So yes, we do. We’re well positioned for it.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I would add that, you know, it’s not lost on us that large cap M&A has come out faster and more aggressively than middle market M&A. And frankly, for us, we don’t think about it that way. We are going to grow with the markets, but the sizzle is market share. We believe we continue to take market share in the middle market every single year, regardless of whether the market is up or the market is down. We don’t think... We think it’s increasingly harder to compete with our business model and the size of our platform, and that’s the story. It’s not what the M&A markets are doing and whether they’re up or whether they’re down.

It doesn’t matter what the large cap the space is doing and whether it’s up or whether it’s down. I mean, I think we are quite focused on the area that we’ve been focused on for decades. Rain or storm, we are going to continue to take market share, and that story is not gonna end.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Just a reminder, that large cap is 1% of the volume, right? I mean, 98%-99% of all the M&A volume around the world is mid-cap.

Brendan O’Brien, Analyst, Wolfe Research0: Okay. Hello?

Conference Operator: Nathan, your line may be muted.

Brendan O’Brien, Analyst, Wolfe Research0: No, that’s, that’s all. Those were my two questions, so I appreciate it. Thanks, guys.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Thanks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thanks. Appreciate it.

Conference Operator: This will conclude our question and answer session. I would like to turn the conference back over to Scott Adelson for any closing remarks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I want to thank you all for participating in our third quarter fiscal 2026 earnings call. We look forward to updating everyone on our progress when we discuss our fourth quarter and full year results for the fiscal 2026, this spring. Thank you.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.