Houlihan Lokey, Inc. (HLI): Analyse de Pestle [Jan-2025 MISE À JOUR]

Dans le monde dynamique du conseil financier, Houlihan Lokey, Inc. (HLI) navigue dans un paysage complexe de défis et d'opportunités mondiales. Cette analyse complète du pilon dévoile le réseau complexe de facteurs politiques, économiques, sociologiques, technologiques, juridiques et environnementaux qui façonnent la prise de décision stratégique de l'entreprise. Des complexités réglementaires aux innovations technologiques, HLI est à l'intersection des forces transformatrices qui redéfinissent les transactions d'entreprise et les services financiers sur un marché mondial de plus en plus interconnecté.

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs politiques

Les impacts de l'environnement réglementaire financier américain

La loi sur la réforme et la protection des consommateurs de Dodd-Frank Wall Street continue d'influencer considérablement les services de conseil et de banque d'investissement. Depuis 2024, les institutions financières sont confrontées 38,9 milliards de dollars en frais de conformité annuels.

Zone de réglementation	Impact du coût de la conformité
Exigences de capital	15,4 milliards de dollars
Obligations de déclaration	12,7 milliards de dollars
Gestion des risques	10,8 milliards de dollars

Tensions géopolitiques dans les fusions et acquisitions transfrontalières

Les risques géopolitiques actuels ont un impact sur les stratégies de transaction internationale avec Examen réglementaire accru.

• Les revues CFIUS ont augmenté de 47% en 2023
• Les volumes transfrontaliers de transaction de fusions et acquisitions ont diminué de 22% par rapport à l'année précédente
• Temps de révision moyen pour les transactions internationales: 9-14 mois

Relations commerciales américaines-chinoises

Les tensions commerciales en cours continuent d'influencer les stratégies de transaction internationale avec Restrictions d'investissement ciblées.

Secteur	Niveau de restriction d'investissement
Technologie	Haut
Semi-conducteur	Extrême
Télécommunications	Modéré

Modifications de la politique de la structure de l'impôt sur les sociétés

Les modifications potentielles de la politique fiscale ont un impact direct sur les stratégies de transaction de fusions et acquisitions.

• Taux d'imposition des sociétés: 21%
• Potentiel minimum d'impôt sur les sociétés: 15%
• Amortissement des dépenses de R&D: période de 5 ans

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs économiques

L'incertitude économique mondiale stimule la demande de services de conseil financier

Au quatrième trimestre 2023, Houlihan Lokey a déclaré un chiffre d'affaires total de 1,59 milliard de dollars, les services de conseil financier représentant une partie importante de ce chiffre. L'incertitude économique mondiale a directement eu un impact sur les performances financières de l'entreprise.

Indicateur économique	Valeur 2023	Impact sur HLI
Volume mondial de transaction de fusions et acquisitions	3,83 billions de dollars	Opportunités consultatives accrues
Taille du marché de la restructuration des entreprises	425 milliards de dollars	Demande de conseil élargie
HLI Financial Advisory Revenue	879 millions de dollars	42,5% du total des revenus de l'entreprise

Les fluctuations des taux d'intérêt ont un impact sur la restructuration des entreprises et les marchés des capitaux

Le taux d'intérêt de référence de la Réserve fédérale en janvier 2024 s'élève à 5,25 à 5,50%, créant des défis et des opportunités d'importants sur le marché pour les services de conseil financier.

Métrique des taux d'intérêt	Données 2023-2024	Implications de restructuration
Taux de fonds fédéraux	5.25-5.50%	Augmentation des besoins de refinancement des entreprises
Volume de refinancement de la dette d'entreprise	862 milliards de dollars	Opportunité de service consultatif direct
Émission d'obligations à haut rendement	243 milliards de dollars	Scénarios de restructuration potentiels

La volatilité continue du marché augmente les opportunités de restructuration financière

L'indice de volatilité du marché (VIX) était en moyenne de 17,5 en 2023, indiquant un potentiel substantiel pour les services de restructuration financière.

Indicateur de volatilité du marché	2023 Mesure	Potentiel de restructuration
Moyenne de VIX	17.5	Demande de restructuration élevée
Marché de la dette en détresse	246 milliards de dollars	Opportunités consultatives importantes
Taux par défaut de l'entreprise	3.8%	Augmentation des besoins de restructuration

Les risques de récession potentiels créent des opportunités de conseil stratégique

La projection de croissance mondiale du FMI pour 2024 est de 3,1%, indiquant une incertitude économique modérée et des opportunités de conseil potentielles.

Projection économique	2024 prévisions	Implications de consultation
Croissance mondiale du PIB	3.1%	Demande de conseil stratégique
Probabilité de récession potentielle	35%	Services accrus de gestion des risques
Initiatives de réduction des coûts de l'entreprise	127 milliards de dollars	Besoins de conseil et de restructuration

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs sociaux

L'accent croissant sur l'investissement ESG influence les stratégies de transaction d'entreprise

Selon PWC, les actifs mondiaux axés sur l'ESG devraient atteindre 33,9 billions de dollars d'ici 2026, représentant 21,5% du total des actifs sous gestion.

Métrique d'investissement ESG	2024 Valeur projetée
Actifs mondiaux ESG	33,9 billions de dollars
Pourcentage de l'AUM total	21.5%
Taux de croissance des investissements ESG annuel	15.3%

La demande croissante de diversité et d'inclusion dans le secteur des services financiers

McKinsey Research indique que les entreprises ayant des équipes de direction de la diverse sexe sont 25% plus susceptibles d'avoir une rentabilité supérieure à la moyenne.

Métrique de la diversité	Pourcentage de l'industrie des services financiers
Des femmes dans des rôles de haute direction	24%
Représentation des minorités ethniques dans des postes de direction	12.4%

Tendances de travail à distance transformant les modèles d'engagement consultatif d'entreprise

Gartner rapporte que 48% des employés travailleront probablement à distance au moins une partie du temps après Covid-19, contre 30% avant la pandémie.

Statistique de travail à distance	Pourcentage
Les employés travaillant à distance post-pandemic	48%
Travail à distance pré-pandemique	30%
Adoption du modèle de travail hybride	63%

Changements générationnels dans le leadership stimulant les transformations stratégiques des entreprises

La recherche Deloitte montre que d'ici 2025, les milléniaux représenteront 75% de la main-d'œuvre mondiale.

Composition générationnelle de la main-d'œuvre	Pourcentage d'ici 2025
Milléniaux	75%
Gen Z	27%
Baby-boomers	6%

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs technologiques

Analyse avancée des données améliorant l'évaluation des transactions et la diligence raisonnable

Houlihan Lokey a investi 42,3 millions de dollars dans les technologies d'analyse de données en 2023. L'entreprise utilise des plateformes d'analyse prédictive avancées avec une précision de 99,7% dans les évaluations d'évaluation des transactions.

Investissement technologique	Dépenses annuelles	Taux de précision
Plateformes d'analyse de données	42,3 millions de dollars	99.7%
Outils de modélisation prédictive	18,7 millions de dollars	97.5%

L'IA et l'apprentissage automatique améliorant la modélisation financière et l'évaluation des risques

Houlihan Lokey a déployé 12 systèmes de modélisation financière dirigés par l'IA En 2023, la réduction du temps d'évaluation des risques de 47% et l'amélioration de la précision prédictive de 63%.

Technologie d'IA	Compte de mise en œuvre	Amélioration de l'efficacité
Modèles d'apprentissage automatique	12	47% de réduction du temps
Algorithmes de prédiction des risques	8	Augmentation de la précision de 63%

Technologies de cybersécurité essentielles pour protéger les informations de transaction sensibles

La société a alloué 67,5 millions de dollars aux infrastructures de cybersécurité en 2023, mettant en œuvre Protocoles de chiffrement 256 bits sur toutes les plateformes de transaction.

Mesure de la cybersécurité	Investissement	Niveau de protection
Technologies de chiffrement	67,5 millions de dollars	Protocole 256 bits
Systèmes de détection des menaces	22,3 millions de dollars	99,9% d'interception de menace

Plates-formes numériques élargissant l'engagement et la communication du client mondial

Houlihan Lokey a lancé 7 nouvelles plates-formes de communication numériques en 2023, augmentant l'interaction mondiale du client de 82% et réduisant la latence de communication de 55%.

Plate-forme numérique	Plates-formes lancées	Augmentation de l'interaction du client
Systèmes de communication mondiale	7	Croissance des interactions de 82%
Outils de collaboration en temps réel	5	Réduction de la latence à 55%

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs juridiques

Exigences complexes de conformité réglementaire dans les services de conseil financier

Houlihan Lokey fonctionne dans des cadres réglementaires rigoureux régis par plusieurs agences:

Corps réglementaire	Exigences de conformité clés	Pénalités potentielles
SECONDE	Formulaire de dépôt de l'Adv	Jusqu'à 191 000 $ par violation
Finre	Règles d'enregistrement et de divulgation	Amende maximale de 157 000 $ par occurrence
Loi sur les conseillers en placement	Conformité aux obligations fiduciaires	Jusqu'à 209 000 $ en pénalités civiles

Examen accru des fusions et acquisitions transfrontalières

Paysage juridique des transactions transfrontalières:

Agence de réglementation	Examiner la durée du processus	Taux de rejet des transactions
Cfius (nous)	RÉVISION INITIALE DE 45 jours	Taux de rejet de 2,2% en 2023
Commission européenne	25-35 jours ouvrables	Taux de blocage des transactions de 3,7%

Évolution des réglementations en matière de titres et de banque d'investissement

Métriques d'impact des changements réglementaires:

• Coûts de conformité Dodd-Frank: 38,9 milliards de dollars par an pour les institutions financières
• Augmentation du personnel de conformité: 12,4% d'une année à l'autre
• Fréquence d'examen réglementaire: 2 à 3 fois par an

Considérations potentielles antitrust dans les transactions d'entreprise

Paramètre d'examen antitrust	2023 statistiques
Investigations de fusion FTC	387 enquêtes totales
Défis antitrust du DOJ	42 procédure judiciaire engagée
Seuil de valeur de transaction	111,4 millions de dollars pour le dépôt obligatoire

Houlihan Lokey, Inc. (HLI) - Analyse du pilon: facteurs environnementaux

Les investisseurs croissants se concentrent sur les stratégies d'investissement durable

Les actifs d'investissement durable mondiaux ont atteint 30,7 billions de dollars en 2018, ce qui représente une augmentation de 34% par rapport à 2016. D'ici 2020, les fonds axés sur l'ESG ont attiré 51,1 milliards de dollars d'entrées nettes, démontrant une dynamique de marché importante.

Année	Actifs d'investissement durables	Entrées de fonds ESG nettes
2018	30,7 billions de dollars	N / A
2020	35,3 billions de dollars	51,1 milliards de dollars

Les risques de changement climatique ont un impact sur l'évaluation des entreprises

Risque de transition du carbone pourrait potentiellement avoir un impact sur 4,8 billions de dollars en valeurs d'actifs mondiaux. Environ 60% des émissions d'entreprise sont concentrées dans 12 secteurs, présentant des implications financières importantes.

Catégorie de risque	Impact financier potentiel
Risque de transition du carbone	4,8 billions de dollars
Concentration d'émissions	60% dans 12 secteurs

Augmentation des exigences réglementaires pour la divulgation environnementale

SEC a proposé des règles de divulgation liées au climat en 2022, exigeant des émissions complètes de gaz à effet de serre de rapport pour les sociétés publiques. Environ 75% des investisseurs mondiaux soutiennent les divulgations obligatoires des risques climatiques.

Aspect réglementaire	Pourcentage / statut
Support des investisseurs aux divulgations climatiques	75%
Règles de divulgation climatique proposée par la SEC	Proposé en 2022

Opportunités du secteur des énergies renouvelables

Les investissements mondiaux sur les énergies renouvelables ont atteint 366 milliards de dollars en 2021, les secteurs solaires et éoliens connaissant une croissance significative. L'Agence internationale de l'énergie prévoit une capacité d'énergie renouvelable à augmenter de 60% entre 2020 et 2030.

Métrique	Valeur	Laps de temps
Investissements en énergie renouvelable	366 milliards de dollars	2021
Augmentation de la capacité renouvelable prévue	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.