Houlihan Lokey (HLI) Set to Gain From 7 Mile Advisors Buyout
Houlihan Lokey, Inc. HLI announced that the company has agreed to purchase 7 Mile Advisors, an independent IT advisory firm. The acquisition is likely to expand HLI’s presence in the IT services market.
The financial details of the deal are yet to be disclosed. 7 Mile Advisors’ services provided to IT clients include raising private capital, mergers and acquisitions and valuation services. It was founded in 2008 and has completed over 170 transactions for clients around the globe. Its vast experience and focused operations are expected to complement Houlihan Lokey’s business.
The acquiree, with 30 employees that include five managing directors, offers numerous investment banking services to IT services clients. Following the close of the deal, they are expected to join HLI’s existing IT Services team in the Business Services Group.
The acquisition is expected to boost Houlihan Lokey’s IT services coverage capabilities and add an office in Charlotte, NC, therefore amplifying its geographical footprint. The move is expected to enable HLI to generate more cash. The deal is scheduled to close this quarter.
A clean balance sheet with around $714.4 million in cash balance as of Mar 31, 2023, positions the company in a comfortable place to grab inorganic growth opportunities. However, its net cash flow from operations has taken a hit in fiscal 2023. The figure plunged 81.5% year over year from the fiscal 2022 level to $136.3 million.
The Zacks Consensus Estimate for HLI’s current quarter earnings per share indicates a 5.5% decline from the year-ago period, despite witnessing a likely increase in revenues. This reflects growing weakness in operations.
Price Performance
Houlihan Lokey shares have declined 0.3% in the past six months against the 0.5% rise of the industry it belongs to.
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Zacks Rank & Key Picks
Houlihan Lokey currently has a Zacks Rank #4 (Sell).
Investors interested in the broader finance space can check better-ranked stocks like Burford Capital Limited BUR, Unum Group UNM and FlexShopper, Inc. FPAY, each sporting a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Based in Saint Peter Port, Guernsey, Burford Capital offers legal finance products and services around the world. The Zacks Consensus Estimate for BUR’s current-year bottom line is pegged at $2.16 per share, indicating a massive jump from 14 cents a year ago.
Chattanooga, TN-based Unum is a global financial protection benefit solutions provider. The Zacks Consensus Estimate for UNM’s current-year earnings implies 20.6% year-over-year growth. Unum beat earnings estimates in three of the last four quarters and missed once, the average surprise being 18.6%.
Headquartered in Boca Raton, FL, FlexShopper is a financial technology company. The Zacks Consensus Estimate for FPAY’s current year earnings has improved 42.3% in the past 60 days. During this time, FlexShopper witnessed one upward estimate revision against none in the opposite direction.
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