Houlihan Lokey Is Said in Advanced Talks to Buy Japan’s GCA
Read more at: https://www.bloombergquint.com/business/houlihan-lokey-is-said-in-advanced-talks-to-buy-japan-s-gca
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Interesting. I think this does a lot for HL. $600MM is a big acquisition for a pure advisory shop. This gives them like 500 new employees and like 80 new MDs. + a way bigger presence in Asia
This is huge
Interesting. Thanks for sharing. Good luck to them on that deal
Huge
What does this mean for HL Tech? I would expect it's probably still a middle market player - below other SF groups like Barclays / DB / RBC / PWP.
According to their IP, tech is now HL's largest group. GCA was mostly a tech bank and did high quality deals. So this puts HL right up there with any MM tech group in the world. Still a notch below the BBs, but I don't really doubt that they'll grow to compete with the BBs on some deals.
Bump
FIG fellas - how do you value advisory focused nvestment banks?
EV/Revenue? P/E?
Not actually a FIG guy but if they don't lend then you can value them the same way as a normal company. Relevant revenue driver is probably banker count or MD count and then you can adjust for dealmaking environment.
Typically just an EBITDA or Revenue multiple. A lot advisory shop analysis is focused on:
Ratios you’d look at would be:
Since firms like HL doesn’t have assets under management, or a balance sheet with funding coming from investors/deposits, it’s not too complicated, like you mentioned.
Growth mainly comes from 3 places:
So for example, this deal kind of helps with 1 and 3 primarily.
Usually valued on revenue multiples b/c the acquirer will assume their own compensation structure
Depending on size of target, deals can be pretty structured with a material percentage of deferred compensation in the form of retention/earnouts
Will be great for the tech industry
Any update on how they are getting along?
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