Houlihan Lokey, Inc. (HLI): Análisis PESTLE [Actualizado en Ene-2025]

En el mundo dinámico del asesoramiento financiero, Houlihan Lokey, Inc. (HLI) navega por un panorama complejo de desafíos y oportunidades globales. Este análisis integral de mortero presenta la intrincada red de factores políticos, económicos, sociológicos, tecnológicos, legales y ambientales que dan forma a la toma de decisiones estratégicas de la empresa. Desde complejidades regulatorias hasta innovaciones tecnológicas, HLI se encuentra en la intersección de fuerzas transformadoras que redefinen las transacciones corporativas y los servicios financieros en un mercado global cada vez más interconectado.

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores políticos

Impactos en el entorno regulatorio financiero de los Estados Unidos

La Ley de Reforma y Protección del Consumidor de Dodd-Frank Wall Street continúa influyendo significativamente en los servicios de banca de asesoramiento y inversión. A partir de 2024, las instituciones financieras enfrentan $ 38.9 mil millones en costos anuales de cumplimiento.

Área reguladora	Impacto en el costo de cumplimiento
Requisitos de capital	$ 15.4 mil millones
Obligaciones de informes	$ 12.7 mil millones
Gestión de riesgos	$ 10.8 mil millones

Tensiones geopolíticas en fusiones y adquisiciones transfronterizas

Los riesgos geopolíticos actuales impactan las estrategias de transacción internacional con aumento del escrutinio regulatorio.

• Las revisiones de CFIUS aumentaron en un 47% en 2023
• Los volúmenes de transacciones de M&A transfronterizos disminuyeron en un 22% en comparación con el año anterior
• Tiempo de revisión promedio para transacciones internacionales: 9-14 meses

Relaciones comerciales entre Estados Unidos y China

Las tensiones comerciales en curso continúan influyendo en las estrategias de transacción internacional con Restricciones de inversión dirigidas.

Sector	Nivel de restricción de inversión
Tecnología	Alto
Semiconductor	Extremo
Telecomunicaciones	Moderado

Cambios de política de estructura fiscal corporativa

Las modificaciones potenciales de la política fiscal afectan directamente las estrategias de transacción de M&A.

• Tasa de impuestos corporativos: 21%
• Impuesto corporativo mínimo potencial: 15%
• Amortización de gastos de I + D: período de 5 años

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores económicos

La incertidumbre económica global impulsa la demanda de servicios de asesoramiento financiero

A partir del cuarto trimestre de 2023, Houlihan Lokey reportó ingresos totales de $ 1.59 mil millones, con servicios de asesoramiento financiero que representan una parte significativa de esta cifra. La incertidumbre económica global ha impactado directamente el desempeño financiero de la compañía.

Indicador económico	Valor 2023	Impacto en HLI
Volumen global de transacciones de M&A	$ 3.83 billones	Aumento de oportunidades de asesoramiento
Tamaño del mercado de reestructuración corporativa	$ 425 mil millones	Demanda de consultoría ampliada
Ingresos de asesoramiento financiero HLI	$ 879 millones	42.5% de los ingresos totales de la compañía

Las fluctuaciones de la tasa de interés impactan la reestructuración corporativa y los mercados de capitales

La tasa de interés de referencia de la Reserva Federal a partir de enero de 2024 es de 5.25-5.50%, creando importantes desafíos del mercado y oportunidades para los servicios de asesoramiento financiero.

Métrica de tasa de interés	Datos 2023-2024	Implicaciones de reestructuración
Tasa de fondos federales	5.25-5.50%	Mayor de las necesidades de refinanciación corporativa
Volumen de refinanciación de la deuda corporativa	$ 862 mil millones	Oportunidad de servicio de asesoramiento directo
Emisión de bonos de alto rendimiento	$ 243 mil millones	Escenarios de reestructuración potenciales

La volatilidad del mercado continua aumenta las oportunidades de reestructuración financiera

El índice de volatilidad del mercado (VIX) promedió 17.5 en 2023, lo que indica un potencial sustancial para los servicios de reestructuración financiera.

Indicador de volatilidad del mercado	Medición 2023	Potencial de reestructuración
Promedio de VIX	17.5	Alta demanda de reestructuración
Mercado de deuda angustiado	$ 246 mil millones	Oportunidades de asesoramiento significativas
Tasa de incumplimiento corporativo	3.8%	Mayor de las necesidades de reestructuración

Posibles riesgos de recesión crean oportunidades de consultoría estratégica

La proyección de crecimiento global del FMI para 2024 es del 3.1%, lo que indica la incertidumbre económica moderada y las oportunidades de consultoría potenciales.

Proyección económica	Pronóstico 2024	Implicaciones de consultoría
Crecimiento global del PIB	3.1%	Demanda de asesoramiento estratégico
Probabilidad potencial de recesión	35%	Aumento de servicios de gestión de riesgos
Iniciativas de reducción de costos corporativos	$ 127 mil millones	Necesidades de consultoría y reestructuración

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores sociales

El creciente énfasis en la inversión de ESG influye en las estrategias de transacciones corporativas

Según PwC, se proyecta que los activos globales centrados en ESG alcanzarán los $ 33.9 billones para 2026, lo que representa el 21.5% de los activos totales bajo administración.

Métrica de inversión de ESG	2024 Valor proyectado
Activos globales de ESG	$ 33.9 billones
Porcentaje de AUM total	21.5%
Tasa de crecimiento anual de inversión de ESG	15.3%

Aumento de la demanda de diversidad e inclusión en el sector de servicios financieros

McKinsey Research indica que las empresas con equipos ejecutivos de diversos de género tienen un 25% más de probabilidades de tener una rentabilidad superior al promedio.

Métrica de diversidad	Porcentaje de la industria de servicios financieros
Mujeres en roles de liderazgo senior	24%
Representación de minorías étnicas en puestos ejecutivos	12.4%

Tendencias de trabajo remoto Transformando modelos de participación de asesoramiento corporativo

Gartner informa que el 48% de los empleados probablemente trabajarán de forma remota al menos parte del tiempo después de Covid-19, en comparación con el 30% antes de la pandemia.

Estadística de trabajo remoto	Porcentaje
Empleados que trabajan remotamente después de la pandemia	48%
Trabajo remoto previo a la pandemia	30%
Adopción del modelo de trabajo híbrido	63%

Cambios generacionales en el liderazgo que impulsa las transformaciones comerciales estratégicas

La investigación de Deloitte muestra que para 2025, los Millennials comprenderán el 75% de la fuerza laboral mundial.

Composición generacional de la fuerza laboral	Porcentaje para 2025
Millennials	75%
Gen Z	27%
Baby boomers	6%

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores tecnológicos

Análisis de datos avanzado que mejora la valoración de la transacción y la debida diligencia

Houlihan Lokey invirtió $ 42.3 millones en tecnologías de análisis de datos en 2023. La empresa utiliza plataformas de análisis predictivos avanzados con una precisión del 99.7% en las evaluaciones de valoración de transacciones.

Inversión tecnológica	Gasto anual	Tasa de precisión
Plataformas de análisis de datos	$ 42.3 millones	99.7%
Herramientas de modelado predictivo	$ 18.7 millones	97.5%

AI y aprendizaje automático para mejorar el modelado financiero y la evaluación de riesgos

Houlihan Lokey desplegado 12 sistemas de modelado financiero impulsados ​​por la IA En 2023, reduciendo el tiempo de evaluación del riesgo en un 47% y mejorando la precisión predictiva en un 63%.

Tecnología de IA	Recuento de implementación	Mejora de la eficiencia
Modelos de aprendizaje automático	12	47% de reducción de tiempo
Algoritmos de predicción de riesgos	8	Aumento de la precisión del 63%

Tecnologías de ciberseguridad críticas para proteger la información de transacción confidencial

La compañía asignó $ 67.5 millones a la infraestructura de ciberseguridad en 2023, implementando Protocolos de cifrado de 256 bits en todas las plataformas de transacción.

Medida de ciberseguridad	Inversión	Nivel de protección
Tecnologías de cifrado	$ 67.5 millones	Protocolo de 256 bits
Sistemas de detección de amenazas	$ 22.3 millones	99.9% de intercepción de amenaza

Plataformas digitales que expanden la participación global del cliente y la comunicación

Houlihan Lokey lanzó 7 nuevas plataformas de comunicación digital en 2023, aumentando la interacción global del cliente en un 82% y reduciendo la latencia de comunicación en un 55%.

Plataforma digital	Plataformas lanzadas	Aumento de la interacción del cliente
Sistemas de comunicación global	7	Crecimiento de interacción del 82%
Herramientas de colaboración en tiempo real	5	55% de reducción de latencia

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores legales

Requisitos complejos de cumplimiento regulatorio en servicios de asesoramiento financiero

Houlihan Lokey opera bajo estrictos marcos regulatorios gobernados por múltiples agencias:

Cuerpo regulador	Requisitos clave de cumplimiento	Sanciones potenciales
SEGUNDO	Formulario de presentación ADV	Hasta $ 191,000 por violación
Finra	Reglas de registro y divulgación	Máximo de $ 157,000 multa por ocurrencia
Ley de asesores de inversiones	Cumplimiento del deber fiduciario	Hasta $ 209,000 en sanciones civiles

Mayor escrutinio de fusiones y adquisiciones transfronterizas

Transacción transfronteriza Landscape legal:

Agencia reguladora	Duración del proceso de revisión	Tasa de rechazo de transacciones
Cfius (EE. UU.)	Revisión inicial de 45 días	Tasa de rechazo de 2.2% en 2023
Comisión Europea	25-35 días hábiles	Tasa de bloqueo de transacciones de 3.7%

Regulaciones en evolución de valores y banca de inversión

Métricas de impacto de cambio regulatorio:

• Costos de cumplimiento de Dodd-Frank: $ 38.9 mil millones anuales para instituciones financieras
• Aumento del personal de cumplimiento: 12.4% año tras año
• Frecuencia de examen regulatorio: 2-3 veces al año

Consideraciones antimonopolio potenciales en transacciones corporativas

Parámetro de revisión antimonopolio	2023 estadísticas
Investigaciones de fusión de FTC	387 Investigaciones totales
Desafíos antimonopolio del DOJ	42 procedimientos legales iniciados
Umbral del valor de transacción	$ 111.4 millones para la presentación obligatoria

Houlihan Lokey, Inc. (HLI) - Análisis de mortero: factores ambientales

El creciente inversor se enfoca en estrategias de inversión sostenible

Los activos de inversión global sostenible alcanzaron los $ 30.7 billones en 2018, lo que representa un aumento del 34% desde 2016. Para 2020, los fondos centrados en ESG atrajeron $ 51.1 mil millones en entradas netas, lo que demuestra un impulso significativo en el mercado.

Año	Activos de inversión sostenibles	Entradas de fondos netos de ESG
2018	$ 30.7 billones	N / A
2020	$ 35.3 billones	$ 51.1 mil millones

El cambio climático corre el riesgo de afectar la valoración corporativa

Riesgo de transición de carbono podría afectar potencialmente $ 4.8 billones en valores de activos globales. Aproximadamente el 60% de las emisiones corporativas se concentran en 12 sectores, presentando implicaciones financieras significativas.

Categoría de riesgo	Impacto financiero potencial
Riesgo de transición de carbono	$ 4.8 billones
Concentración de emisiones	60% en 12 sectores

Aumento de los requisitos reglamentarios para la divulgación ambiental

La SEC propuso reglas de divulgación relacionadas con el clima en 2022, que requieren informes integrales de emisiones de gases de efecto invernadero para empresas públicas. Aproximadamente el 75% de los inversores globales apoyan las revelaciones de riesgo climático obligatorios.

Aspecto regulatorio	Porcentaje/estado
Apoyo a los inversores para divulgaciones climáticas	75%
Reglas de divulgación climática propuesta por la SEC	Propuesto en 2022

Oportunidades del sector de energía renovable

Las inversiones globales de energía renovable alcanzaron los $ 366 mil millones en 2021, con sectores solar y eólico que experimentan un crecimiento significativo. La Agencia Internacional de Energía proyecta la capacidad de energía renovable para aumentar en un 60% entre 2020 y 2030.

Métrico	Valor	Periodo de tiempo
Inversiones de energía renovable	$ 366 mil millones	2021
Aumento de la capacidad renovable proyectada	60%	2020-2030

Houlihan Lokey, Inc. (HLI) - PESTLE Analysis: Social factors

Growing corporate demand for Environmental, Social, and Governance (ESG) advisory services

You are seeing a clear, structural shift where corporate clients need more than just traditional M&A or restructuring advice; they need help navigating the Environmental, Social, and Governance (ESG) landscape. This demand is a significant tailwind for Houlihan Lokey's Financial and Valuation Advisory (FVA) segment, which houses many of these specialized services.

For the fiscal year ended March 31, 2025 (FY2025), the FVA segment's revenue increased by a solid 11% compared to the previous fiscal year, reflecting this rising need for non-transactional, high-margin advisory work. This growth is defintely tied to clients seeking to integrate social factors-like human capital management (HCM) and supply chain ethics-into their valuation models and strategic planning. The firm is actively advising on deals in the HCM technology space, a direct response to the $8.5 trillion annual global revenue projected to be lost if talent shortages persist, as per a 2024 report.

Here's the quick math on the FVA segment's contribution to the firm's overall revenue growth:

Segment	FY2025 Revenue Growth (YoY)
Corporate Finance (CF)	38%
Financial Restructuring (FR)	4%
Financial and Valuation Advisory (FVA)	11%

Talent wars in financial services push up compensation costs significantly

The competition for top-tier bankers and specialized talent-what we call the 'talent war'-is a major cost driver. Houlihan Lokey is aggressively hiring, which is necessary to maintain its market position as the No. 1 global restructuring advisor and a top M&A firm. They are bringing in senior Managing Directors across high-growth areas like Capital Solutions and Technology, and this doesn't come cheap.

This aggressive talent acquisition is directly reflected in the firm's financials. For FY2025, Houlihan Lokey's total GAAP employee compensation and benefits expenses surged to $1.52 billion, a substantial increase from $1.21 billion in the prior fiscal year. This pushed the GAAP compensation ratio slightly higher to 63.8% for FY2025, up from 63.4% in FY2024. This is a constant pressure point: you must pay up to get the best people, but you must also manage shareholder expectations on profitability.

The firm's focus on strategic hiring is clear:

• Hiring senior leaders to deepen expertise in niche markets like secondary transactions (Capital Solutions).
• Bringing in technology specialists to advise on AI-driven software and digital infrastructure.
• Expanding the Financial Sponsors Group with experienced Managing Directors in key global regions.

Shift to hybrid work models affects office real estate and operational expenses

The post-pandemic shift to a hybrid work model is a permanent social change that impacts the firm's non-compensation operating expenses. While a hybrid model can save on some real estate costs long-term, the near-term effect is a rise in other operational categories as the firm invests in technology and supports a distributed workforce.

For FY2025, non-compensation expenses for Houlihan Lokey rose to $363.6 million, an 8% increase from $338.0 million in FY2024. This increase was primarily driven by a few key areas that are direct consequences of a more mobile, technology-dependent workforce:

• Increased spending on information technology and communication expenses.
• Higher costs for travel, meals, and entertainment as bankers fly to meet clients who are no longer centrally located.
• Greater depreciation and amortization as the firm invests in new technology infrastructure.

The hybrid model means you are spending more on connectivity and travel, even if you are optimizing your long-term office footprint. It's a trade-off that prioritizes talent retention and client service over immediate real estate savings.

Increased public scrutiny on executive compensation and corporate governance

Public and shareholder scrutiny on executive compensation remains intense in 2025, especially at major financial firms. Investors are pushing for clearer links between pay and long-term performance, and proxy advisory firms are focused on governance alignment.

The general market trend shows that while shareholder support for equity compensation plans remains high-averaging around 90% among S&P 500 companies in the first half of 2025-negative recommendations from proxy advisors can significantly reduce support. A notable social trend affecting governance is the changing landscape of non-financial metrics in pay: the percentage of S&P 500 companies incorporating Diversity, Equity, and Inclusion (DEI) metrics into executive compensation fell sharply to only 22% in 2025, down from 57% in 2023. This highlights a volatile social environment where companies are rapidly adjusting their governance metrics based on evolving stakeholder and political pressures.

For Houlihan Lokey, the key action is to ensure its compensation structure is transparent and clearly tied to shareholder value creation, especially given the high compensation ratio. The firm must be prepared to articulate why its executive pay is justified by its strong FY2025 performance, which saw revenues of $2.39 billion.

Houlihan Lokey, Inc. (HLI) - PESTLE Analysis: Technological factors

Rapid adoption of Artificial Intelligence (AI) for due diligence and data analysis

You need to know that Artificial Intelligence (AI) isn't just a buzzword; it's a core utility for due diligence and data analysis in investment banking now. Houlihan Lokey, Inc. (HLI) operates in a capital markets environment where AI is reshaping everything from the front-office to the back-office. This is a massive opportunity to drive efficiency, but it requires immediate, focused investment.

AI's ability to process vast, unstructured data in real time is a game-changer for valuation and M&A advisory. For example, AI-driven predictive analytics are now enhancing forecasting accuracy, allowing our analysts to generate deeper, more informed insights from large data sets that would take a human team weeks to sift through. This is how you get a competitive edge in a fast-moving deal market. Houlihan Lokey's own FinTech Group, which has completed over 100 FinTech transactions since January 2021, views AI as a top priority for investors in 2025.

Here's the quick math: if an AI tool cuts a standard due diligence cycle by just 10%, it frees up senior analyst time to focus on 1-2 more complex deals per year.

Cybersecurity risks demand substantial investment in data protection infrastructure

The flip side of digital adoption is the escalating cybersecurity risk, which is a significant and non-negotiable cost. Global spending on information security is projected to total $212 billion in 2025, a jump of 15.1% from the prior year. This isn't optional spending; it's the cost of doing business when you handle highly sensitive client data and proprietary deal information.

For Houlihan Lokey, Inc. (HLI), the shift to cloud environments and the use of Generative AI (GenAI) are accelerating this budget requirement. The firm's fiscal year 2025 financial results already showed an increase in 'information technology and communication expenses,' confirming this necessary investment trend. The focus areas for this spending are clear:

• Security Software: Expected to be the largest segment, reaching $100.692 billion globally in 2025.
• Data Security and Privacy Tools: Essential for protecting client and deal data from GenAI-enabled attacks.
• Managed Security Services: Needed to address the global cybersecurity skills shortage.

If onboarding takes 14+ days, churn risk rises. This is defintely a high-stakes area.

Blockchain technology impacts capital markets and asset valuation services

While AI is front and center, the structural improvement in the environment for digital assets and blockchain technology is a key theme for capital markets in 2025. For a firm heavily involved in Valuation Advisory, this technology is a long-term strategic factor.

Blockchain's primary impact is in creating new asset classes (digital assets) and streamlining traditional capital markets processes, a concept known as tokenization. This affects Houlihan Lokey, Inc. (HLI) in two ways:

• New Valuation Revenue: The firm must develop expertise to value complex digital assets and tokenized securities.
• Process Efficiency: Blockchain could eventually simplify and speed up the settlement and clearing of transactions, which are foundational to capital markets.

The total crypto market capitalization is in the trillions of dollars, making it a market that cannot be ignored in valuation or restructuring services. You need to be ready to advise on deals involving these assets, and that means having the technological infrastructure to understand their underlying ledger systems.

Need to integrate new platforms to support virtual deal-making processes

The global nature of M&A, coupled with the lessons from the past few years, means virtual deal-making platforms are no longer a convenience but a requirement for seamless execution. Houlihan Lokey, Inc. (HLI) is a global powerhouse, doing more transactions than any other firm in the world by volume. This scale demands integrated, reliable technology for global collaboration.

The firm runs global businesses where professionals are 'interacting on a regular basis,' which is only possible with a robust, cloud-based platform ecosystem. This includes secure virtual data rooms (VDRs), video conferencing tools, and integrated project management software that can handle the volume and complexity of cross-border transactions. The increase in 'information technology and communication expenses' in FY2025 directly supports this need for a high-availability, secure, and scalable virtual infrastructure.

This is a table showing the critical technology focus areas for a firm like Houlihan Lokey in 2025:

Technology Area	Impact on HLI's Business	Key 2025 Trend/Metric
Artificial Intelligence (AI)	Automates due diligence, enhances forecasting, and generates deal insights.	AI permeates front- to back-office; a top investor priority.
Cybersecurity/Data Protection	Protects sensitive client/deal data; ensures regulatory compliance.	Global spending projected to reach $212 billion (up 15.1%).
Blockchain/Digital Assets	Creates new asset classes for valuation and M&A advisory.	Environment for Digital Assets is structurally improving.
Virtual Deal Platforms	Supports global, complex M&A transactions and remote collaboration.	Increased Information Technology and Communication Expenses in FY2025.

Finance: draft a 13-week cash view by Friday to ring-fence 15% of the IT budget for security software upgrades.

Houlihan Lokey, Inc. (HLI) - PESTLE Analysis: Legal factors

Stricter Securities and Exchange Commission (SEC) rules on private fund disclosures.

The biggest legal shift in 2025 for firms advising on private capital is the SEC's move to expand retail access to private markets. Specifically, the SEC's Division of Investment Management issued Accounting & Disclosure Information (ADI) 2025-16 in August 2025, which essentially removed the long-standing requirements for certain Registered Closed-End Funds of Private Funds (CE-FOPFs) to limit their investors to 'accredited investors' or impose a $25,000 minimum investment.

This opens up a massive new investor pool-potentially expanding the market from about 13 million accredited households to over 130 million total U.S. households. But, honestly, this opportunity comes with a massive compliance cost. To protect these new retail investors, the SEC is demanding significantly enhanced disclosures. Houlihan Lokey, whose Financial and Valuation Advisory segment generated $147.1 million in revenue for the first six months of fiscal year 2025, must ensure its valuation and advisory work for private funds meets this new, higher bar for transparency.

Here's the quick math: more retail money means more SEC scrutiny on valuation practices.

• Fee Layering: Mandated clear disclosure on how multiple layers of direct and indirect fees affect investor returns.
• Valuation Practices: Requires explicit disclosure of valuation practices for illiquid or infrequently traded Private Fund interests.
• Conflict Mitigation: Clear procedures must be in place to address and disclose conflicts of interest.

Increased litigation risk tied to complex restructuring and bankruptcy cases.

Houlihan Lokey's Financial Restructuring practice is a core strength, and it was the No. 1 global restructuring advisor for the past 11 years, advising on 88 deals in 2024. This dominance, while profitable-the segment generated $249.0 million in revenue for the first six months of fiscal year 2025-inherently elevates litigation risk. In complex bankruptcy cases, every party-in-interest (debtors, creditors, equity holders) is fighting for a piece of a shrinking pie, and the advisor's fairness opinions and solvency analyses are often challenged in court.

The firm's non-compensation expenses for the fiscal year ended March 31, 2025, were $364 million, up from $338 million in the prior year, a figure that includes professional fees like outside legal counsel. While the firm reported a decrease in professional fees year-over-year, the underlying risk remains high. The sheer volume of high-stakes restructuring work means the firm is defintely a prime target for litigation, often years after the case closes, as seen in its historical involvement in 12 of the 15 largest bankruptcies from 2000-2024.

New data privacy regulations (like CCPA expansion) impact client data handling.

The finalization of sweeping amendments to the California Consumer Privacy Act (CCPA) in September 2025, with new obligations starting January 1, 2026, significantly increases the compliance burden. For a global investment bank handling sensitive client and deal-related data, this is not just an IT issue; it's a legal and operational one. The new rules specifically target the use of Automated Decision-Making Technology (ADMT) in financially significant scenarios, which is relevant to Houlihan Lokey's data-driven advisory services.

The financial stakes are higher, too. Starting January 1, 2025, administrative fines increased to $2,663 per violation, and intentional violations or those involving minors' data climbed to $7,988. The firm must now conduct and submit formal Risk Assessments starting January 1, 2026, if its data processing activities present a 'significant risk' to consumer privacy.

CCPA Compliance Area	New Requirement (Effective 2025/2026)	Maximum Fine for Violation (Starting Jan 2025)
Business Threshold	Annual gross revenue increased to $26.6 million (up from $25M).	N/A
Risk Assessments	Mandatory submission of summaries for high-risk data processing (starts Jan 1, 2026).	$2,663 per violation.
Automated Decision-Making Technology (ADMT)	New notice and opt-out rights for ADMT used in significant decisions (starts Jan 1, 2027).	$7,988 for intentional violations.

Evolving tax laws influence deal structuring and valuation advisory.

The looming expiration of key provisions of the Tax Cuts and Jobs Act (TCJA) at the end of 2025 creates significant uncertainty that directly impacts the M&A and valuation advisory markets. This ambiguity forces deal teams to model multiple tax scenarios, which adds complexity and time to transactions, a key service provided by Houlihan Lokey's Corporate Finance and Financial and Valuation Advisory segments.

Two major factors are driving this complexity. First, the Qualified Business Income Deduction (QBID), which permits pass-through business owners to take up to a 20% deduction, is set to expire at the end of 2025. Second, the phasedown of bonus depreciation continues, dropping to 40.0 percent in 2025 (down from 100% before 2023), which changes the economics of asset acquisitions. These changes influence whether a deal is structured as a stock sale or an asset sale, directly affecting the advice Houlihan Lokey provides. The firm's ability to navigate this tax uncertainty is a critical competitive advantage, especially since its Corporate Finance revenue was $692.4 million for the first six months of fiscal year 2025.

Houlihan Lokey, Inc. (HLI) - PESTLE Analysis: Environmental factors

Climate change risk assessment becomes a standard part of due diligence.

You're seeing the shift: climate risk is no longer just a corporate social responsibility (CSR) issue; it's a core financial risk that demands due diligence (DD). Houlihan Lokey (HLI) is capitalizing on this by embedding climate risk into its advisory services. In 2023, the firm launched its Sustainability Advisory Services practice within the Financial and Valuation Advisory (FVA) segment, specifically to integrate environmental, social, and governance (ESG) factors into transaction structuring, valuation, and diligence.

This means when a private equity fund looks at an acquisition, HLI is now helping them quantify the exposure to physical risks-like a manufacturing plant's flood risk-and transition risks, such as a carbon tax hitting a client's operating model. The firm's internal commitment mirrors this external advice; HLI's 2025 Sustainability Report confirms a plan to conduct a climate risk assessment and scenario analysis for its own global operations, covering both physical and transition risks. This commitment to walk the talk makes their client advice defintely more credible.

Increased client demand for advisory on energy transition and clean technology M&A.

The energy transition is a massive, multi-year M&A boom, and HLI is positioned right in the middle of it. Their market-leading Environmental Services practice is highly active, having advised on over 100 closed transactions, with more than 35 of those closing since the start of 2023. This sector is showing remarkable resilience, largely insulated from broader M&A slowdowns, because the underlying demand is driven by non-discretionary regulatory compliance and infrastructure needs.

The tailwinds are strong. The Inflation Reduction Act (IRA) in the US, for example, is estimated to feature over $370 billion in clean energy incentives, creating a huge need for M&A and capital solutions advisory. HLI's Environmental Services Index, which tracks 16 companies in the sector, posted a strong 12.1% gain over the 12 months leading up to Q2 2025, showing the market's appetite for these assets.

• Energy transition M&A is accelerating, especially in clean tech adjacencies.
• Regulatory mandates for PFAS remediation are driving capital investment.
• Private equity continues to deploy capital into sustainability-relevant platforms.

Regulatory pressure to disclose climate-related financial risks (TCFD, ISSB).

The alphabet soup of global regulation is turning into a mandatory reporting framework, and that's a direct revenue stream for HLI's Financial and Valuation Advisory segment. The International Sustainability Standards Board (ISSB) has assumed the monitoring role of the Task Force on Climate-related Financial Disclosures (TCFD) and its IFRS S1 and S2 standards are beginning to take effect in major jurisdictions like Japan and Canada starting in 2025.

These new rules mandate the disclosure of climate-related financial impacts, often requiring external assurance on metrics like Scope 1, 2, and 3 emissions. HLI's Sustainability Advisory Services explicitly assists clients with achieving regulatory readiness for these complex global disclosure regulations, including the EU's Corporate Sustainability Reporting Directive (CSRD) and the UK's Sustainability Disclosure Requirements (SDR). This is a high-margin, non-contingent advisory service, which contrasts nicely with M&A fees.

Physical climate events disrupt client operations, increasing restructuring opportunities.

This is where the Environmental factor bleeds into the Financial Restructuring (FR) segment. Extreme weather events are the 'new norm,' and they cause direct physical damage and business interruption, which can trigger a need for corporate restructuring. The Allianz Risk Barometer 2025 ranks climate change as the #5 global risk, with physical damage and business interruption being the primary concern for companies.

In 2024, insured losses from natural disasters globally exceeded $100 billion for the fifth consecutive year. When a client's operations are disrupted by a severe convective storm-which caused $50 billion in insured damage in the US alone in 2024-it creates financial distress, supply chain issues, and a need for HLI's restructuring expertise. The firm's Financial Restructuring business had a strong Q1 fiscal year 2025 (ended June 30, 2024), generating $117.4 million in revenue. This segment is a natural hedge against M&A slowdowns, and climate-driven disruption is a new, secular source of restructuring mandates.

Here's the quick math on HLI's core segments, showing the diversification that benefits from these environmental-driven opportunities, especially in FVA and FR:

HLI Segment (Q1 FY2025)	Revenue (Millions)	Commentary on Environmental Link
Corporate Finance (CF)	$328.4	Driven by Energy Transition and Clean Tech M&A.
Financial Restructuring (FR)	$117.4	Increased opportunity from climate-driven business interruption and distress.
Financial & Valuation Advisory (FVA)	$67.8	Includes the new Sustainability Advisory Services for climate risk diligence and regulatory compliance (ISSB/TCFD).
Total Revenue (Q1 FY2025)	$513.6	Up 24% year-over-year, showing strength across all segments.

What this estimate hides is the firm's specific culture and deep relationships, which are hard to model, but still drive deal flow. Anyway, the biggest risk is always a sudden, sustained drop in both M&A and restructuring-a true economic flatline.

Next step: Investment Strategy team: Model HLI's revenue sensitivity to a 200-basis-point drop in the M&A fee pool by month-end.