IPO Report: Houlihan Lokey (HLI)

Francis Gaskins |

Houlihan Lokey (HLI) is a leading global independent investment bank with expertise in M&A, financings, financial restructurings and financial advisory services. The company is based in Los Angeles, CA.

Three other companies are scheduled for the week of Aug. 9. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: BofA Merrill Lynch, Goldman Sachs
Co-managers: UBS Investment Bank, Keefe, Bruyette & Woods, Houlihan Lokey, Sandler O'Neill + Partners, JMP Securities

End of lockup (180 days): Tuesday, February 9, 2016
End of 25-day quiet period: Monday, June 8, 2015

HLI scheduled a $300 million IPO with a market capitalization of $1.5 billion at a price range midpoint of $23 for Thursday, Aug. 13, 2015 on NYSE.

HLI IPO Summary

Established in 1972, HLI is a leading global independent investment bank with expertise in M&A, financings, financial restructurings and financial advisory services.

HLI IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$11

     

Per share dilution

.

.

-$23.38

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Houlihan Lokey (HLI)

$1,500

2.6

25.0

21.3

60.5

20%

             

HLI IPO Conclusion

Neutral

Proceeds to selling shareholders

2.6% dividend

Q1 rev up 3%

25 P/E

Per share dilution about the same as IPO price

HLI IPO Business

Established in 1972, HLI is a leading global independent investment bank with expertise in M&A, financings, financial restructurings and financial advisory services.

Through its offices in the United States, Europe, Asia and Australia, HLI serves a diverse set of clients worldwide including corporations, financial sponsors and government agencies. HLI provides its financial professionals with an integrated platform that enables them to deliver meaningful and differentiated advice to its clients.

HLI advises its clients on critical strategic and financial decisions employing a rigorous analytical approach coupled with deep product and industry expertise. HLI 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 (encompassing M&A and capital markets advisory), Financial Restructuring (both out-of-court and in formal bankruptcy or insolvency proceedings) and Financial Advisory Services (including financial opinions and a variety of valuation and financial consulting services).

As of June 30, 2015, HLI had a team of 695 financial professionals across 17 offices globally and an additional three offices through its joint ventures, serving approximately 800 clients annually over the past several years, ranging from closely held companies to Fortune Global 500 corporations.

Leader in transactions under $5 billion
HLI’s Corporate Finance group is the leading M&A and capital markets advisor for mid-cap transactions. HLI was ranked the #1 M&A advisor for United States transactions under $5 billion in 2014 and HLI has been the #1 M&A advisor for United States mid-cap transactions every year for the last nine years (2006-2014).

HLI also has one of the largest, most experienced restructuring practices globally, having advised on more than 1,000 restructuring transactions, including 12 of the 15 largest United States bankruptcies, since 2000.

In 2014, HLI was ranked as the #1 global financial restructuring advisor and in 2013, HLI was recognized as the Global Restructuring Advisor of the Year by the IFR and European Restructuring House of the Year by Financial News, in addition to receiving recognition for HLI’s roles on seminal and complex United States and cross-border M&A transactions in 2013 and 2014. Finally, HLI is a respected market leader in Financial Advisory Services, as HLI has been ranked as the #1 U.S. M&A fairness opinions advisor over the past ten years.

HLI 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 services, and where HLI believes it can be a market leader in a particular segment. HLI does not lend or engage in any securities sales and trading operations or research which might conflict with its clients' interests.

Intellectual property
HLI’s trademarks, trade names and service marks, such as "HL," "Houlihan Lokey" and "Houlihan Lokey Howard & Zukin," which are protected under applicable intellectual property laws and are its property.

Competition
HLI believes its primary competitors vary by product and industry expertise and would include the following: for its Corporate Finance practice, Harris Williams & Co., Jefferies LLC, Lazard Ltd, Moelis & Company, N M Rothschild & Sons Limited, Piper Jaffray Companies, Robert W. Baird & Co. Incorporated, William Blair & Company, L.L.C. and the bulge-bracket investment banking firms; for HLI’s Financial Restructuring practice, The Blackstone Group L.P., Lazard Ltd, Moelis & Company and N M Rothschild & Sons Limited; and for HLI’s Financial Advisory Services practice, Duff & Phelps Corp. and the "big four" accounting firms.

5% shareholders pre-IPO
ORIX USA         47.9%

HL Voting Trust  47.0%

Scott L. Beiser 47.0%

Irwin N. Gold     47.0%

Robert H. Hotz              47.0%                         

Dividends
HLI intends to pay a quarterly cash dividend initially equal to $0.15 per share of its common stock, commencing with the third quarter of fiscal 2016. Any declaration and payment of future dividends to holders of HLI’s common stock will be at the discretion of its board of directors and will depend on many factors, including its financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that HLI’s board of directors deems relevant. Under the New Revolving Credit Facility and the New Note, HLI will be restricted from paying cash dividends in certain circumstances, and HLI expects these restrictions to continue in the future.

Use of proceeds
All of the shares of Class A common stock offered are being sold by the selling stockholders, ORIX USA and certain of the HL Holders. HLI will not receive any of the proceeds from the sale of shares of Class A common stock by the selling stockholders in this offering, including from any exercise by the underwriters of their option to purchase additional shares of Class A common stock.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HLI Houlihan Lokey Inc. Class A 30.19 0.21 0.70 110,193

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