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1972 marketing services, but that’s not likely,” explains Adelson. “Houlihan, on the other hand, has a team of people who don’t just cover marketing services but pharma marketing services and, beyond that, new pharma marketing services. It’s multiple teams of senior people and junior staff in nearly every sector you can think of.”

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This is a viable strategy in large part because of Houlihan’s mid-cap focus. “If we were focused on larger cap deals, there just wouldn’t be enough opportunities,” says Adelson.

Houlihan was a leading advisor across multiple industries in 2022 in the U.S., according to Refinitiv. Compared to competitors, the firm advised on the highest number of U.S. deals under $1 billion in the business services; consumer, food and retail; technology; industrials; and healthcare categories.

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Houlihan’s focus on industry specialization has continued to grow in recent years. “When I first joined the firm in 2016, there was a hybrid industry and regional coverage model in place, where people worked with businesses depending on a combination of their location and industry. Today, we’re almost 100% industry focused,” says DeAngelo. This is possible in part because of a large headcount increase firmwide. “The business services practice has 128 people in the U.S. and Europe—up from 12 people when I started at the firm—and now covers 12 industry verticals.”

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The division closed 79 deals worldwide last year. Two notable recent deals include advising on the sale of testing, inspection and certification company National Technical Systems to Element Materials Technology in September 2022 and the sale of waste and recycling company Rogue Waste to Waste Connections in October 2022.

Clients seek out Houlihan specifically for this industry expertise. Connecticutbased private equity firm Amulet Capital engaged Houlihan to advise on the sale of its portfolio company OPEN Health, a global provider of scientific communications and market access services to the pharmaceutical industry.

“OPEN Health was a flagship investment for Amulet,” says Nick Amigone, partner at Amulet Capital. “We had built the company very intentionally around our thesis in medical affairs, forming the company through three complementary acquisitions and then driving abovemarket organic growth. When it came time to exit our investment, we hired Houlihan because we wanted an advisor who knew the market cold.”

Amulet was looking for an advisor that understood how best to position OPEN Health in the market, while achieving the private equity firm’s valuation expectations. “Houlihan differentiated itself through its knowledge of the market, experience in past transactions and direct relationships with the buyer universe,” says Amigone. Amulet worked primarily with Mark Martin, managing director at Houlihan and the lead for the firm’s pharma services and marketing services efforts. OPEN Health ultimately sold to European private equity firm Astorg in July 2022.

Collaborative Culture

Houlihan Lokey has grown tremendously in recent years, and with that, some change is inevitable. “But our culture has remained intact,” says Adelson. “The same spirit of partnership and entrepreneurship that existed in 1987 when I joined is still there today.”

Chris Hebble, managing director, capital markets, at Houlihan and a board member for ACG Los Angeles, left the firm in 2004 but then returned in 2015, in large part because of its unique culture. “It’s like a family—it’s a great place to work, and it’s where I wanted to be,” he says.

Multiple employees speak to Houlihan’s no-star ethos. The core components of the firm’s cultural DNA, according to Adelson, include a focus on collaboration, a drive to succeed and grow both as a team and individually, and an overarching emphasis on client relationships. “For us, it’s all about people,” says Adelson. “We don’t have a balance sheet; we’re not offering money. Our business is intellectual capital—advice, expertise, relationships—and that business continues to grow and be successful.”

The Pulse of the Middle Market

Houlihan Lokey’s involvement in ACG events has been wide and deep for many years now, particularly in the Los Angeles chapter and at the national level. “We send 30-40 bankers to DealMAX [formerly known as

InterGrowth] every year, and that’s because of the immense amount of connectivity you can establish in three days’ time. Our presence there typically translates to over 250 meetings. The immediate access to meetings and the deal flow that comes out of it is invaluable,” says Hebble, who has been on the ACG Los Angeles board for nearly 20 years.

ACG events and involvement serve as an important career development tool for junior staff, helping them market themselves and understand trends and key players in the middle market. Seventeen Houlihan Lokey employees were ACG members in 2022, and the firm’s employees attended 62 events, according to data collected by ACG.

Looking Forward

Despite current market conditions, Houlihan Lokey is optimistic about the future. “Our pipeline is actually bigger this year than last,” says DeAngelo. That said, he acknowledges that given the state of the debt capital markets and a lack of credit availability, some deals are on ice and likely will continue to be until the market is more liquid. “Our clients want to get a little more clarity on the economy and feel good about financing the business at reasonable levels and interest rates.”

Houlihan’s diversified business model—across clients, geographies, industries and bankers—also contributes to the firm’s confidence going into this economic cycle. In fiscal year 2022, no single transaction fee represented more than 2% of the firm’s revenue, and no single banker was responsible for more than 2% of revenues. The firm served a wide range of industries, including financial institutions; energy; healthcare; industrials; consumer, food and retail; business services; and technology. No single industry made up more than 20% of deals. Furthermore, the investment bank’s clients are a diversified mix of public and government-owned companies, and private equitybacked and private non-sponsored companies.

In general, for M&A to pick up, the key is for everyone involved to adjust to the new normal, notes Adelson. “This isn’t some hideous market we’re in. It’s just that we were in an exuberant market—and we’ve returned to normal. Unfortunately, when you’ve been living in exuberance, normal feels rotten. But the truth is that interest rates aren’t particularly high, they’re just high compared to all-time lows.”

Players on the buy-side and sell-side need to recalibrate to this reality. “Business owners may have been planning to sell for an enormous amount before the market fell apart, and now they’re struggling with the fact that multiples are down,” says Adelson. “But whatever assets they were going to buy went down as much or more.”

Houlihan doesn’t “tend to be an organization that makes giant leaps,” Adelson adds. The firm has been in the business long enough to recognize that markets move up and down and that strategies must change accordingly. The firm’s best bet for success is to stay true to its values while cultivating flexibility and adapting to the new normal, whatever it may be. It’s an approach that has paid off many times over in the past and helped Houlihan Lokey grow into the market-leading firm it is today. //