Houlihan Lokey: A Challenging Quarter for Middle Market M&A — Business Suffers on Software and Geopolitical Risks

Research evidence excerpt

Houlihan Lokey: A Challenging Quarter for Middle Market M&A — Business Suffers on Software and Geopolitical Risks

J P M O R G A N North America Equity Research

30 July 2026

Houlihan Lokey Neutral

HLI, HLI US

A Challenging Quarter for Middle Market M&A — Price (29 Jul 26):$139.08

Business Suffers on Software and Geopolitical Risks ▼Price Target (Dec-26):$147.00 Prior (Dec-26):$200.00

HLI reported 1Q27 EPS of $1.35, below recently lowered expectations. Results

were particularly weak in its Corporate Finance business where a challenging Brokers, Asset Managers &

Exchangesenvironment for software and SaaS-related deals and the impact of geopolitical

stress had a particularly negative impact on middle-market M&A in March, April Kenneth B. Worthington, CFA AC

and May. Results in restructuring were fair. It was just FVA that showed YoY (1-212) 622-6613

kenneth.b.worthington@jpmorgan.com

growth. We are lowering our estimates and our price target. We maintain our

Neutral rating on HLI. Michael Cho

(1-212) 622-3619

• Corporate Finance business slows meaningfully in 1Q27 results. HLI michael.cho@jpmchase.com

earnings results suffered from particularly poor results, attributed to AI Madeline Daleiden

concerns in software and geopolitical concerns around the Middle East (1-212) 622-4911

madeline.daleiden@jpmchase.com

conflict. Management indicated that results in its technology business J.P. Morgan Securities LLC

firmwide were down 54% for the quarter, or down $53m. While mgmt.

indicated the activity weakness had moderated in June and July, the

recommencing of hostilities creates uncertainties around a recovery. That said, Key Changes (FYE Mar)

management indicated that deals were not being canceled, but rather delayed, Prev Cur Δ

indicating business could come back quickly. Adj.