Investment bank Houlihan Lokey (NYSE: HLI) took another step in expanding its coverage footprint last week. The firm announced the acquisition of independent advisory firm Chicago-based Waller Helms. Houlihan’s Jeffrey Levine spoke to us about the deal.
It’s the latest in a series of over a dozen acquisitions completed by the investment bank since going public in 2015. Earlier this year, the team also acquired Triago Management Development, a French specialist in direct placement and 7 Mile Advisors, an independent advisory firm focused on the IT sector.
Chicago-based Waller Helms is focused on clients in the insurance and wealth management sectors, assisting them with mergers and acquisitions, private capital raising, and valuation services. It’s a key player in a segment of the market that executives at Houlihan Lokey say they’ve monitored closely.
“We had been tracking the company for quite some time and were friendly competitors,” says Jeffrey Levine, managing director and global head of financial services at Houlihan Lokey. “The teams are highly complementary and we both have meaningful offices in each of the cities where our respective teams are located — Chicago, New York, Miami and Atlanta. The coverage sectors and client universes are very complementary so we don’t envision much overlap or duplication.”
The deal is the latest indication that a consolidation wave is sweeping across the middle-market investment banking sector. Mizuho Financial Group (NYSE: MFG) closed its acquisition of Greenhill & Co. at the end of 2023 while Janney Montgomery Scott LLC acquired TM Capital and Cascadia Capital acquired Treadstone Capital in January.
Meanwhile, Lazard (NYSE: LAZ) and Raymond James (NYSE: RJF) have recently indicated they’re looking for acquisition opportunities to boost revenue.
Besides talent acquisition and geographical expansion, one of the key motivations for these deals is to expand sector coverage. By acquiring firms that have strong footholds in specific sectors, an investment bank can diversify its portfolio and become competitive in areas where it previously had limited exposure.
For Houlihan Lokey, the insurance and wealth management sectors Waller Helms specializes in was particularly appealing.
“There’s been a huge convergence of insurance distributors and wealth management aggregators as well as the service and fintech providers that support these businesses,” says Levine. “They are acyclical businesses and fairly immune to credit cycles. Every family and business in the U.S. buys insurance, and, at the same time, needs to have a financial/asset advisor to manage its long-term and retirement savings. Finally, you have the additional sector trend of insurance companies buying asset managers and asset managers partnering with or acquiring insurance companies.”
The deal is expected to be completed by December 31, 2024.
