Houlihan Lokey, Inc. (HLI): Análise de Pestle [Jan-2025 Atualizada]

No mundo dinâmico do Conselho Financeiro, a Houlihan Lokey, Inc. (HLI) navega em um cenário complexo de desafios e oportunidades globais. Essa análise abrangente de pestles revela a intrincada rede de fatores políticos, econômicos, sociológicos, tecnológicos, legais e ambientais que moldam a tomada de decisão estratégica da empresa. De complexidades regulatórias a inovações tecnológicas, o HLI está no cruzamento de forças transformadoras que redefinem transações corporativas e serviços financeiros em um mercado global cada vez mais interconectado.

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores políticos

Impactos do ambiente regulatório financeiro dos EUA

A Lei de Reforma e Proteção ao Consumidor de Dodd-Frank Wall Street continua a influenciar significativamente os serviços de consultoria e bancos de investimento. A partir de 2024, as instituições financeiras enfrentam US $ 38,9 bilhões em custos anuais de conformidade.

Área regulatória	Impacto de custo de conformidade
Requisitos de capital	US $ 15,4 bilhões
Obrigações de relatórios	US $ 12,7 bilhões
Gerenciamento de riscos	US $ 10,8 bilhões

Tensões geopolíticas em fusões e aquisições transfronteiriças

Os riscos geopolíticos atuais afetam as estratégias de transação internacional com aumento do escrutínio regulatório.

• As revisões do CFIUS aumentaram 47% em 2023
• Os volumes de transação transfronteiriços de fusões / a diminuíram 22% em comparação com o ano anterior
• Tempo médio de revisão para transações internacionais: 9-14 meses

Relações comerciais EUA-China

As tensões comerciais em andamento continuam a influenciar estratégias de transação internacional com Restrições de investimento direcionadas.

Setor	Nível de restrição de investimento
Tecnologia	Alto
Semicondutor	Extremo
Telecomunicações	Moderado

Alterações da política da estrutura tributária corporativa

As possíveis modificações da política tributária afetam diretamente as estratégias de transação de fusões e aquisições.

• Taxa de imposto corporativo: 21%
• Imposto sobre corporativo mínimo potencial: 15%
• Amortização de despesas de P&D: período de 5 anos

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores econômicos

A incerteza econômica global impulsiona a demanda por serviços de consultoria financeira

A partir do quarto trimestre de 2023, Houlihan Lokey registrou uma receita total de US $ 1,59 bilhão, com serviços de consultoria financeira representando uma parcela significativa desse número. A incerteza econômica global impactou diretamente o desempenho financeiro da empresa.

Indicador econômico	2023 valor	Impacto no HLI
Volume global de transações de fusões e aquisições	US $ 3,83 trilhões	Oportunidades de consultoria aumentadas
Tamanho do mercado de reestruturação corporativa	US $ 425 bilhões	Demanda de consultoria expandida
Receita consultiva financeira de HLI	US $ 879 milhões	42,5% da receita total da empresa

As flutuações das taxas de juros afetam a reestruturação corporativa e o mercado de capitais

A taxa de juros de referência do Federal Reserve em janeiro de 2024 é de 5,25 a 5,50%, criando desafios e oportunidades significativos de mercado para serviços de consultoria financeira.

Métrica da taxa de juros	2023-2024 dados	Implicações de reestruturação
Taxa de fundos federais	5.25-5.50%	Maior necessidades de refinanciamento corporativo
Volume de refinanciamento de dívida corporativa	US $ 862 bilhões	Oportunidade de serviço de consultoria direta
Emissão de títulos de alto rendimento	US $ 243 bilhões	Cenários de reestruturação potencial

A volatilidade do mercado em andamento aumenta as oportunidades de reestruturação financeira

O Índice de Volatilidade do Mercado (VIX) teve uma média de 17,5 em 2023, indicando potencial substancial para serviços de reestruturação financeira.

Indicador de volatilidade do mercado	2023 Medição	Potencial de reestruturação
VIX média	17.5	Alta demanda de reestruturação
Mercado de dívida angustiado	US $ 246 bilhões	Oportunidades de consultoria significativas
Taxa de inadimplência corporativa	3.8%	Aumento das necessidades de reestruturação

Riscos de recessão potenciais criam oportunidades de consultoria estratégica

A projeção de crescimento global do FMI para 2024 é de 3,1%, indicando incerteza econômica moderada e possíveis oportunidades de consultoria.

Projeção econômica	2024 Previsão	Implicações de consultoria
Crescimento global do PIB	3.1%	Demanda consultiva estratégica
Probabilidade potencial de recessão	35%	Maior de serviços de gerenciamento de riscos
Iniciativas corporativas de corte de custos	US $ 127 bilhões	Necessidades de consultoria e reestruturação

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores sociais

A ênfase crescente no investimento ESG influencia estratégias de transação corporativa

De acordo com a PWC, os ativos globais focados em ESG devem atingir US $ 33,9 trilhões até 2026, representando 21,5% do total de ativos sob gestão.

Esg Métrica de Investimento	2024 Valor projetado
Ativos globais de ESG	US $ 33,9 trilhões
Porcentagem de AUM total	21.5%
Taxa anual de crescimento de investimento ESG	15.3%

Crescente demanda por diversidade e inclusão no setor de serviços financeiros

A McKinsey Research indica que as empresas com equipes executivas de diversidade de gênero têm 25% mais chances de ter lucratividade acima da média.

Métrica de diversidade	Porcentagem do setor de serviços financeiros
Mulheres em funções de liderança seniores	24%
Representação da minoria étnica em cargos executivos	12.4%

Tendências de trabalho remotas transformando modelos de engajamento de consultoria corporativa

O Gartner relata que 48% dos funcionários provavelmente trabalharão remotamente pelo menos parte do tempo após a Covid-19, em comparação com 30% antes da pandemia.

Estatística de trabalho remoto	Percentagem
Funcionários que trabalham remotamente pós-pandêmica	48%
Trabalho remoto pré-pandêmico	30%
Adoção do modelo de trabalho híbrido	63%

Mudanças geracionais na liderança que impulsionam transformações estratégicas de negócios

A pesquisa da Deloitte mostra que, em 2025, os millennials compreenderão 75% da força de trabalho global.

Composição geracional da força de trabalho	Porcentagem até 2025
Millennials	75%
Gen Z	27%
Baby Boomers	6%

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores tecnológicos

Analítica de dados avançada aprimorando a avaliação da transação e a due diligence

Houlihan Lokey investiu US $ 42,3 milhões em tecnologias de análise de dados em 2023. A empresa utiliza plataformas avançadas de análise preditiva com precisão de 99,7% nas avaliações de avaliação de transações.

Investimento em tecnologia	Gastos anuais	Taxa de precisão
Plataformas de análise de dados	US $ 42,3 milhões	99.7%
Ferramentas de modelagem preditivas	US $ 18,7 milhões	97.5%

Aprendizagem de IA e máquina Melhorando a modelagem financeira e a avaliação de riscos

Houlihan Lokey implantado 12 sistemas de modelagem financeira orientados pela IA Em 2023, reduzindo o tempo de avaliação de risco em 47% e melhorando a precisão preditiva em 63%.

Tecnologia da IA	Contagem de implementação	Melhoria de eficiência
Modelos de aprendizado de máquina	12	47% de redução de tempo
Algoritmos de previsão de risco	8	63% de precisão aumenta

Tecnologias de segurança cibernética críticas para proteger informações de transações sensíveis

A empresa alocou US $ 67,5 milhões à infraestrutura de segurança cibernética em 2023, implementando Protocolos de criptografia de 256 bits em todas as plataformas de transação.

Medida de segurança cibernética	Investimento	Nível de proteção
Tecnologias de criptografia	US $ 67,5 milhões	Protocolo de 256 bits
Sistemas de detecção de ameaças	US $ 22,3 milhões	99,9% de interceptação de ameaças

Plataformas digitais expandindo o engajamento e comunicação global do cliente

A Houlihan Lokey lançou 7 novas plataformas de comunicação digital em 2023, aumentando a interação global do cliente em 82% e reduzindo a latência da comunicação em 55%.

Plataforma digital	Plataformas lançadas	Aumento da interação do cliente
Sistemas de comunicação global	7	Crescimento da interação de 82%
Ferramentas de colaboração em tempo real	5	Redução de latência de 55%

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores Legais

Requisitos complexos de conformidade regulatória em serviços de consultoria financeira

Houlihan Lokey opera sob rigorosos estruturas regulatórias governadas por várias agências:

Órgão regulatório	Principais requisitos de conformidade	Penalidades potenciais
Sec	Formulário ADV arquivamento	Até US $ 191.000 por violação
Finra	Regras de inscrição e divulgação	Máxima de US $ 157.000 por ocorrência
Lei dos Consultores de Investimento	Conformidade fiduciária	Até US $ 209.000 em multas civis

Aumento do escrutínio de fusões e aquisições transfronteiriças

Cenário jurídico de transação transfronteiriça:

Agência regulatória	Duração do processo de revisão	Taxa de rejeição da transação
Cfius (EUA)	45 dias de revisão inicial	2,2% de taxa de rejeição em 2023
Comissão Europeia	25-35 dias úteis	Taxa de bloqueio de transação de 3,7%

Regulamentos de valores mobiliários e de investimento em evolução

Métricas de impacto de mudança regulatória:

• Custos de conformidade com Dodd-Frank: US $ 38,9 bilhões anualmente para instituições financeiras
• Aumento do pessoal de conformidade: 12,4% ano a ano
• Frequência do exame regulatório: 2-3 vezes por ano

Possíveis considerações antitruste em transações corporativas

Parâmetro de revisão antitruste	2023 Estatísticas
Investigações de fusão da FTC	387 Investigações totais
Desafios antitruste do DOJ	42 processos legais iniciados
Limite de valor da transação	US $ 111,4 milhões para registro obrigatório

Houlihan Lokey, Inc. (HLI) - Análise de Pestle: Fatores Ambientais

O investidor crescente se concentra em estratégias de investimento sustentável

Os ativos globais de investimento sustentável atingiram US $ 30,7 trilhões em 2018, representando um aumento de 34% em relação a 2016. Até 2020, os fundos focados em ESG atraíram US $ 51,1 bilhões em entradas líquidas, demonstrando um momento significativo no mercado.

Ano	Ativos de investimento sustentável	A entradas de fundos de ESG líquidos
2018	US $ 30,7 trilhões	N / D
2020	US $ 35,3 trilhões	US $ 51,1 bilhões

Riscos de mudanças climáticas que afetam a avaliação corporativa

Risco de transição de carbono poderia impactar potencialmente US $ 4,8 trilhões em valores globais de ativos. Aproximadamente 60% das emissões corporativas estão concentradas em 12 setores, apresentando implicações financeiras significativas.

Categoria de risco	Impacto financeiro potencial
Risco de transição de carbono	US $ 4,8 trilhões
Concentração de emissões	60% em 12 setores

Aumente requisitos regulatórios para divulgação ambiental

A SEC proposta regras de divulgação relacionada ao clima em 2022, exigindo relatórios abrangentes de emissões de gases de efeito estufa para empresas públicas. Aproximadamente 75% dos investidores globais apóiam divulgações obrigatórias de riscos climáticos.

Aspecto regulatório	Porcentagem/status
Apoio aos investidores para divulgações climáticas	75%
SEC proposta Regras de divulgação climática	Proposto em 2022

Oportunidades do setor de energia renovável

Os investimentos globais de energia renovável atingiram US $ 366 bilhões em 2021, com setores solares e eólicos experimentando um crescimento significativo. A Agência Internacional de Energia projeta capacidade de energia renovável para aumentar em 60% entre 2020 e 2030.

Métrica	Valor	Tempo de tempo
Investimentos de energia renovável	US $ 366 bilhões	2021
Aumento de capacidade renovável projetada	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.