Transaction Advisory Services

Our Accounting and Financial Reporting (AFR) advisory team works closely with clients through their strategic dealmaking financial reporting requirements. Our specialists have deep knowledge of deals, sectors, accounting, and regulatory matters that enables them to fully understand the challenges you face, including:

• Structuring deal documents and corporate agreements
• Buyer/seller financial statements and disclosures
• Sponsor-driven management reporting
• Regulator-imposed rules and filing requirements
• Lender financial and covenant requirements

Our specialists can help you to meet your financial reporting needs efficiently as well as help you seize opportunities to keep moving forward with agility and speed in order to achieve your strategic deals-related vision and goals.

We are dedicated to providing corporate and financial sponsor clients with accounting and financial reporting advisory services in conjunction with all of their transaction needs, including:

• Navigating the complexities of a business combination with the proper accounting experience in order to best stand up the newly combined company’s opening balance sheet and subsequent periodic reporting
• Preparing the standalone historical carve-out financial information oftentimes required by buyers, lenders, or regulators and bridging the gap to deal basis financial statements and other diligence materials
• Evaluating the financing terms and requirements to successfully raise capital, maintain lender compliance, and report on the business post close
• Drafting complex financial disclosures in public and private capital-raise offering documents
• Implementing complex accounting changes resulting from transaction-driven events
• Deciphering the changes in accounting and financial reporting requirements as a result of the bankruptcy process and presenting a new financial basis properly on the road to recovery
• Decoding GAAP differences present in cross-border transactions in order to compare key figures and terms on a like-for-like basis

Mergers and acquisitions are by nature disruptive and introduce unique risks and opportunities impacting all aspects of a business. Houlihan Lokey’s Digital Value Creation (DVC) professionals work closely with financial sponsors and company management teams to identify, implement, track, and execute impactful pre- and post-investment initiatives focused on preserving and creating value.

Our DVC team, which includes business analytics professionals, data scientists, and data engineers, works synchronously with the M&A diligence professionals to provide rapid, in-depth, and actionable insights from our clients’ digital assets. We leverage cutting-edge data analytics methods to enhance the executive decision-making process throughout the investment lifecycle, including pre-close diligence, ongoing business intelligence services, and sellside assistance.

Our group integrates, cleans, synthesizes, and analyzes structured or unstructured data sources of any size to provide insights, in deal speed, on:  

• Pricing and SKU rationalization
• Full costed profitability analysis
• Customer churn
• Cash flow waterfall analysis
• Working capital optimization
• Sales and operations planning
• Network optimization
• Spend rationalization

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Our globally experienced, industry-focused teams of diligence professionals comprise former Big Four trained CPAs and transaction accounting professionals. Drawing on Houlihan Lokey’s market leadership in middle-market corporate finance transactions and competitive intelligence, our diligence teams leverage our DVC capabilities and our industry focus to provide independent, value relevant insights to our clients at deal speed.

Our Financial Due Diligence services assist financial investors, lenders, corporates, and other advisors in identifying and evaluating key value drivers and risk factors most impacting value. Our scope, access to data and management, and cost are tailored around the various stages of the deal cycle, including:

• Pre-LOI phase one
• Stoplight analysis
• Full scope buyside diligence (including M&A tax diligence, tax structuring , and tech and cyber diligence)
• Due diligence for add-ons
• Full scope sellside diligence (including M&A tax diligence, tax structuring, and tech and cyber diligence)

 Financial Due Diligence is organized by the following industries:

• Business services
• Consumer, food, and retail
• Financial services
• Healthcare
• Industrials
• TMT

Working through industry-specific approaches, we enable our clients to:

• Access a higher confidence and more timely provided quality of earnings
• Focus on the sustainability of free cash flow
• Analyze the pro forma adjustment’s impact on revenue, EBITDA, and working capital
• Assess revenue, gross margin, and EBITDA with respect to customers and products, regardless of the sophistication of the reporting capabilities of the target
• Analyze the quality and potential realizability of the balance sheet and net assets
• Understand historical working capital patterns and levels relative to management’s projections and identify opportunities to improve working capital efficiency while managing post-closing adjustments
• Identify and evaluate the potential impact of key assumptions and sensitivities on the achievability of management’s financial and operating forecasts
• Address key accounting and financial reporting risks to credit and purchase agreement negotiations
• Assess accounting positions and pro forma transaction impacts to post-closing reporting (considering the potential buyer’s or seller’s position)
• Evaluate post-closing purchase price adjustments, purchase accounting, and valuation requirements in post-transaction financial models

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Our M&A tax professionals help our clients navigate tax challenges and capture tax opportunities inherent in the entire transaction lifecycle. We increase value through thoughtful, tax-advantaged transaction structuring as well as through identification and mitigation of relevant historical and projected tax risks. Our national team of tax professionals brings tax expertise from Big Four and nationally recognized law and accounting firms. We work with clients on transactions that cover the entire range of a business evolution—from founders undertaking their first recapitalization to secondary market transactions to public listings. 

Our M&A tax services include:

• Industry-focused domestic and international buyside and sellside tax due diligence
• Scenario-based after-tax cash flow modeling to compare and contrast the projected benefits of alternative structures at target and shareholder levels
• Tax structuring to meet buyer and seller business objectives in a tax-efficient manner
• Post-transaction support in the form of:
  • Tax purchase price allocations
  • Opening deferred tax analysis
  • Tax attribute limitations under Section 382
  • Transaction cost analyses
  • Mitigation of identified risks
• Section 280G golden parachute analyses

We also team up with our world-class professionals in the corporate finance, financial restructuring, and financial and valuation advisory businesses to provide tax guidance in connection with complex valuations and negotiations. 

• We value tax receivable agreements in connection with up-C structures
• We assist sellers in monetizing tax assets in connection with recapitalizations
• We analyze the tax impacts of using or preserving tax attributes in connection with restructuring
• We assist in technical valuation processes surrounding IP migration, FIRPTA, and other global reorganizations

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Our global Technology and Cybersecurity team consists of experienced, hands-on, and strategic practitioners from the Big Four, startups, and corporate executives, including former CIOs/CTOs, architects, and program managers. Our professionals have experience supporting hundreds of transactions across all industries and company sizes. We leverage our experience combined with Houlihan Lokey’s market position to help clients maximize their transaction value by providing leading insights and actionable recommendations.

Our Technology and Cybersecurity services assist financial sponsors and corporate clients in identifying the key value drivers impacting the transaction thesis and value. Working alongside Houlihan Lokey’s Transaction Advisory Services teams, our Technology and Cybersecurity team enables our clients to:

• Understand the suitability of the technology ecosystem to deliver a combination of qualitative and quantitative board-level insights as well as actionable next steps to mitigate transaction-related risks and expedite the value creation process
• Identify the milestones in a company's growth forecast or hold period requiring material investment in IT’s systems, governance, people, and support model to optimize the technology ecosystem for efficiency, scale, and performance
• Evaluate cybersecurity maturity, including the organization’s ability to prevent and recover from cybersecurity incidents relative to its peers/industry, and customer expectations as well as meet IT compliance and data privacy obligations
• Prepare for, manage, and execute complex integration and separation activities throughout the transaction lifecycle, including pre-market preparedness, diligence, and pre- and post-close planning and project execution
• Prepare for the company sale or business unit divestiture through a combination of technology and cybersecurity diligence and seller preparedness activities to best position the technology organization to deliver greater value in the transaction process
• Evaluate how the product management organization strategically manages the digital product lifecycle to meet business goals
• Optimize the technology organization’s business operations and provide recommendations to better align the technology systems, support model, and processes to investment objectives

Exiting an investment, whether through a partial or complete sale of a stand-alone business, carve-out, spin-out, or IPO, requires a thoughtful and rigorous approach. Identifying and mitigating potential issues while structuring and positioning the business or assets properly is essential to maximizing value and avoiding surprises and potential disruption. By integrating our deep heritage in valuation and investment banking with robust transaction support capabilities, Houlihan Lokey provides a market-based, defensible approach to helping clients realize value and manage messaging to potential buyers.

We support clients with the following Seller Readiness Services:

• Assisting in determining the defensible, normalized run-rate performance of the business
• Providing distributable, branded seller diligence reports and non-branded seller assist reports
• Identifying and validating key risks and opportunities impacting future performance and valuation
• Assessing the quality and consistency of underlying financial record keeping and management’s ability to respond to buyer requests
• Working closely with clients’ other advisors and providing specific, real-time market-based input regarding the confidential information memorandum and other process documents
• Evaluating potential buyer positions and developing tax and financial scenarios to help maximize after-tax proceeds
• Preparing a strategic and competitive industry-based market assessment
• Identifying, assessing, and supporting potential revenue and cost synergies
• Preparing, populating, and managing data rooms and buyer information requests
• Creating and implementing transition planning and post-separation activities
• Assessing indirect and non-allocated costs, stranded costs, idled capacity, and potential impacts of wind-down in carve-outs and divestitures
• Evaluating, providing input on, and assisting with the management of the Transition Services Agreement (TSA)
• Providing technical tax and accounting support regarding divestitures, carve-outs, and dispositions

No two transactions are the same, nor is our seller approach. We tailor and deliver these specific services with the buyer and transaction in mind and focus on helping you run an efficient process while maximizing after-tax proceeds and achieving your strategic goals.

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Whether originating a new debt investment or monitoring an existing credit, Houlihan Lokey’s Lender Services team partners with private equity sponsors, corporate clients, and debt providers to deliver an informed, customized credit diligence solution that leverages real-world lending experience. Houlihan Lokey’s heritage of credit expertise makes us a natural partner when our clients assess credit risk. Our transaction professionals leverage that heritage and draw on their own experience originating senior and junior debt to provide our clients with credit-oriented visibility into the key factors impacting cash flow, asset coverage, and capital security. By drawing on market-leading resources in valuation, transaction support, and financial restructuring, we provide a seamless solution to lenders considering multiple outcomes. 

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Our suite of sustainability advisory services provides bespoke support and solutions to address our clients’ environmental, social, and governance (ESG) and sustainability objectives. Our approach is outcome-oriented, targeting several discrete areas in which our clients are looking to strengthen oversight, manage risk, and enhance credibility with stakeholders. These services include:

• Greenhouse Gas Emissions (GHG) Estimation
• Sustainability Financial Modeling and Value Impact
• ESG Due Diligence and Analytics
• ESG Board Advisory and Vulnerability Assessment

Our dedicated sustainability professionals assist investors, boards, and management teams around the world by providing a broad range of sustainability capabilities. These offerings include comprehensive support in various areas such as recurring reporting and disclosures, due diligence, valuation, data analytics, data privacy, modeling, and tailored vulnerability assessments, among other impactful initiatives. 

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