If you just read the headlines, you’re likely to believe that all investment banks are shrinking. Truth being told, many are. Large bulge bracket banks facing strict regulations have been forced to pare back their investment banking staff and reallocate resources to less risky business units. Quietly, smaller private investment banks have been picking up the pieces and adding bankers to their payroll. Count Houlihan Lokey among this group.
"We are looking to grow the organization aggressively, but thoughtfully,” said Scott Adelson, Houlihan Lokey’s co-president and co-head of corporate finance. “Along with other independent advisers, we've benefited from the changes that have occurred at the bulge bracket investment banks. Some sources cite a 50% recruiting decline at bulge bracket firms coupled with a 50% increase among independent advisors. Our hiring has matched that statistic very well, and we expect that trend to continue.”
Adelson said the 1,000-person firm doesn’t hold itself to specific hiring targets so he couldn’t provide projections. “Our view is that if we find great bankers, we will hire them,” he said.
Houlihan Lokey is best known for its restructuring business – likely the cash cow for the 41-year-old firm – but it’s also been building out its M&A, capital markets and financial advisory services units. Within M&A, the firm’s specialty is in the mid-market. Houlihan Lokey has held the top ranking for U.S. M&A deal volume for deals under $1 billion for seven years running.
Its restructuring team, meanwhile, goes after bigger fish. The group has worked on some of the nation’s largest bankruptcy proceedings, including Lehman Brothers, General Motors and Enron, among others.
Looking forward, Adelson plans to add bankers within its industry verticals and product-oriented teams. “We will announce additional hires in those areas over the next few weeks,” he said.
The firm, which has nine offices in the U.S. as well as locations in London, Paris and Hong Kong, just announced a new industry practice last week. Houlihan’s financial advisory unit is launching a forensic services practice that will provide corporate investigations and forensic accounting, bankruptcy and insolvency investigations, and anti-corruption consulting, among other services. Bert Lacativo, formerly of Mesirow Financial Consulting and PricewaterhouseCoopers' Forensic Services, will lead the team. Expect additional hires to be made.
For years, Houlihan Lokey has found itself atop Wall Street rankings when it comes to quality of life and work/life balance. In the most recent Vault.com survey, Houlihan Lokey ranked first in an unprecedented 18 of 24 workplace categories, including employee satisfaction, firm culture, benefits and work hours.
"At Houlihan Lokey, time is considered valuable for all staff, not just senior executives,” said Cynthia Bush, the firm’s director of recruiting. “We work to build that into the culture at all levels."
Houlihan Lokey didn’t do nearly as well in the category of prestige, or how the firm is judged by outsiders on Wall Street. In the North American rankings, the firm finished 20th. It didn’t crack the top 25 in Europe. Houlihan points to its smaller size as a key contributing factor. Large, better-known firms like Goldman Sachs and J.P. Morgan led the prestige rankings.
Part of what makes the firm unique is its lack of turnover and promotion policies, according to Bush. "We promote through the ranks as well as hiring laterally,” she said. “As a result, officers understand what it's like to be in the junior person's seat and want to help them grow."
Even though the firm has only been around for 41 years, several top executives and board members have spent well over 15 years with the firm. Houlihan Lokey is the top-rated bank on the Street when it comes to promotion policies, according to the survey.
Some alleged former employees have noted – on this site – that Houlihan Lokey’s mid-market M&A and financial advisory services practices fail to fully complement its thriving restructuring group, creating the potential for tension among employees at the firm.
Houlihan rejects the idea, noting that, if you look at the contributions to the bottom line, particularly recently, it’s a lot more balanced than people think. In a bear market, restructuring has the advantage. In a bull market, you’re likely to see more M&A wins.