Houlihan Lokey Inc., a Los Angeles boutique investment bank that has advised some of the biggest debt restructurings in history -- the bankruptcies of Enron Corp., Lehman Bros. Holdings Inc. and WorldCom Inc., among them -- went public Thursday with an initial stock offering priced at $21 a share.
The initial public offering was priced below the $22 to $24 a share that Houlihan Lokey had estimated might be the offering price. But the stock quickly climbed to $22.80 a share in early trading Thursday.
Scott Beiser, Houlihan Lokey's chief executive, said the firm went public mostly to boost its brand awareness and list of customers in the investment-banking world while also attracting bankers and other new employees who would want to own its listed shares.
"The business has grown year after year and we hit the stage where the presence and reputation we have can be further enhanced by going public," Beiser said in a telephone interview after ringing the opening bell at the New York Stock Exchange to celebrate the IPO.
"This is something that's been building for a couple of years," he said. "We really didn't need the capital; the business is a strong cash-flow generator."
The deal's 10.5 million Class A common shares were sold by Houlihan Lokey's major owners: Orix USA, a U.S. arm of the Japanese investment conglomerate Orix Corp., and the firm's executives and directors.
Current management and directors continue to control the firm mainly by holding its Class B stock, which has superior voting rights to the Class A stock being traded publicly under the ticker symbol HLI.
Houlihan Lokey, with about 980 employees, advises companies on mergers, acquisitions and other transactions in nearly 20 offices worldwide. The firm also advises on corporate bankruptcies and restructurings.
In its fiscal year ended March 31, Houlihan Lokey earned $79.9 million on revenue of $680.9 million, according to government filings.
The firm was founded in 1972 by Richard Houlihan and O. Kit Lokey to provide accounting, valuation and other financial services to privately held companies, including financially troubled companies.
Houlihan Lokey's IPO comes amid a surge in worldwide mergers and acquisitions. The firm beefed up its practice in June by acquiring Mesa Securities Inc., which provides merger advisory services to the media and entertainment industries.