Q1 2023 Houlihan Lokey Inc Earnings Call
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Good day, ladies and gentlemen, thank you for standing by welcome to Houlihan Lokey as first quarter fiscal year 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today July 28 2022.
I will now turn the call over to Christopher Crain, Houlihan Lokey as general counsel.
Thank you operator, and Hello, everyone by now everyone should have access to our first quarter fiscal year 2023 earnings release, which can be found on the houlihan Lokey website at www Dot <unk> dot com in the Investor Relations section.
Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward looking statements. These forward looking statements, which are usually identified by use of words, such as will expect anticipate should or other similar phrases are not guarantees of future performance. These statements.
And are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore, you should exercise caution when interpreting and relying on them.
We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.
We encourage investors to review, our regulatory filings, including the Form 10-Q for the quarter ended June 32022, when it is filed with the SEC.
During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release, and our investor presentation on the HL Dotcom website.
Hosting the call today, we have Scott Beiser, Houlihan, Lokey, Chief Executive Officer, and Lindsey Alley, Chief Financial Officer of the company.
They will provide some opening remarks, and then we will open the call to questions.
That I will turn the call over to Scott. Thank you Christopher and welcome everyone to our first quarter fiscal year 2023 earnings call. We ended the quarter with record first quarter revenues of $419 million and earnings per share of $1 10.
We are pleased with these results, particularly in light of some of the ongoing challenges in the macro environment. However to give a more complete picture while our revenues are higher than last year's reported results. If we include <unk> revenues as if we had acquired them on April one 2021 are comparable.
<unk> would have declined approximately 14%.
Throughout our fiscal first quarter and continuing into our second quarter. We are experiencing market headwinds that are impacting our corporate finance business modestly impacting our financial and valuation advisory business and improving our financial restructuring opportunities.
Our corporate finance business continues to exhibit trends, which cut in both directions.
Current market conditions, our lawn gaining the time to close transactions in selected sectors and geographies Laurie transaction valuations in fees at the same time corporate clients are performing well the volume of new business activity remains quite healthy and market sentiment seems to suggest that these.
Headwinds are temporary.
It is difficult to predict where the economy takes us over the next couple of quarters, we may slide into a recession that could have a significant effect on the M&A market. While we may continue along like this for a couple of quarters before seeing improving results.
Nonetheless, we are comforted by the fact that we are seeing strong activity levels in our corporate finance business with the quality of clients at a level, we've never seen before regardless of the timing of closing the transactions, we continue to build high quality potential deferred revenues and our backlog, suggesting that our reputation.
And market share continue to grow.
Financial and valuation advisory continues to experience solid growth and recorded a 19% increase in revenues year over year for the fiscal first quarter that being said current market conditions are also having a modest impact on the sba's growth prospects for the first quarter, our current mix of service lines.
Quality of the team and meaningful increase in head count enabled us to record solid revenue growth. Despite these market headwinds.
FCA remains our least volatile business and given its diverse service offering has historically performed better than our corporate finance business and weaker M&A markets.
Actual restructuring remains an important component of the firm's overall diversification strategy.
Based on activity levels in financial restructuring. We believe we are in the initial stages of a stronger business environment for restructuring.
The typical restructuring cycle starts with an increase in conversation, which progresses to verbal engagements to contractual engagements to execution work and finally to close transactions today, our number of verbal engagements is the highest in nearly 18 months, while these new opportunities will have limited.
Financial impact on our fiscal 2023 results. If these verbal engagements translate to close transactions, we anticipate improving results in fiscal 2024.
Today's opportunities and restructurings have been broad based across industries and up until this point greater in Europe , and Asia versus the U S.
Given the size and importance of the U S market, we are closely monitoring chain opportunities and we believe we are well positioned for when this market catches up with Europe and Asia.
Turning to growth in the quarter ended June 30th we internally promoted 29 employees to managing director. We also externally hired six managing directors on the acquisition front. We remained selective in pursuing opportunities. We believe are a strategic fit to our business model and are accretive to.
We are pleased with our current pipeline of acquisition opportunities and believe this pipeline will only increase if financial market conditions worsen.
In closing we are thrilled to be celebrating our 15th anniversary this year.
Investment banking is quite competitive and I'm, so proud of how well our employees in this firm has done over five decades I want to thank all of our employees, our clients and our shareholders for their part in making Houlihan lokey. The successful firm head has become collectively we look forward to what we can build in the next half century.
I'll turn the call over to Lindsay.
Thank you Scott.
Revenues in corporate finance were $264 million for the quarter up 26% when compared to the same quarter last year. We closed a 124 transactions this quarter compared to 84 in the same period last year, but our average transaction fee unclosed deals decreased for the quarter as a reminder for comparative purposes.
We did not complete the acquisition of GTA until October 21, Houlihan Lokey as revenue for the quarter ended June 32021 did not include revenues for <unk> of approximately $112 million for that quarter.
Financial restructuring revenues were $79 million for the quarter, a 20% decrease from the same period last year, we closed 16 transactions in the quarter compared to 24 in the same quarter last year and our average transaction fee on closed deals increase for the quarter.
This quarter ends up as expected given the during the fourth quarter of fiscal year 2022, and being in March we had several transactions close that were expected to close because the first quarter of fiscal year 2023.
In financial and valuation advisory revenues were $76 million for the quarter and 19% increase from the same period last year, we had 876 fee events during the quarter compared to 820 in the same period last year SBA continues to see growth across almost all service lines and has good momentum as we enter.
Our second fiscal quarter, despite the headwinds that Scott mentioned.
Turning to expenses, our adjusted compensation expenses were $257 million for the first quarter versus 229 million for the same period last year only adjustment was $8 3 million for deferred retention payments related to certain acquisitions, our adjusted compensation expense ratio was 61, 5% for the <unk>.
First quarter equal to the same period last year.
Our adjusted non compensation expenses were $60 million for the quarter. This was similar to our adjusted non compensation expense in each of the last two quarters, which included <unk> non compensation expenses.
Last year's quarter that ended June 32021 does not include non compensation expenses for GPA of approximately $13 million, which led to some of the increase when comparing this year's first quarter to last year's first quarter.
Compensation expenses also increased as a result of an increase in travel meals and entertainment expenses as our bankers have significantly increased work related travel and.
Other operating expenses as we have increased in person meetings and.
In person training and conferences.
We expect to continue to see increases in all categories of non compensation expense as a result of increased travel.
Information technology, and real estate investment and in some cases inflation.
This resulted in an adjusted non compensation expense ratio of 14, 2% for the quarter versus eight 5% in the same quarter last year.
For the quarter, we adjusted out of our non compensation expenses 16 million in noncash acquisition related amortization, the vast majority of which was emard amortization related to the <unk> transaction.
We expect significantly elevated levels of amortization relating to this acquisition through fiscal year 2023.
Our adjusted other income and expense increase for the quarter to an expense of approximately 500000.
<unk> income of approximately $100000 in the same period last year, we adjusted out of our other income and expense $1 $3 million related to a noncash revaluation of the warrant who was assumed as part of the GTA acquisition.
Our adjusted effective tax rate for the quarter was 24, 9% compared to 26, 7% during the same quarter last year, we maintain our long term range for our effective tax rate of between 27% and 29%.
We had two adjustments to our effective tax rate this quarter, we adjusted out of our GAAP effective tax rate the benefit that we received as a result of our stock vesting in the first quarter and we adjusted out the benefit we received for the reversal of an uncertain tax position, we had relating to a state audit.
Turning to the balance sheet and uses of cash as of quarter end, we had approximately $525 million of unrestricted cash and equivalents and investment securities.
Our cash position declined this quarter, because we paid a significant portion of our fiscal year 2022 bonuses to employees in may.
Also in our first quarter, we issued approximately $1 8 million net new shares to employees as part of our fiscal year 2022 year end compensation.
In the first quarter, we repurchased approximately 430000 shares at an average price of $84 86 per share as part of our share repurchase program. Historically, we have sought to repurchase throughout the year whatever compensation shares we issued in may in order to offset the dilution associated with those shares.
Given the reduced amount of excess cash due to the size of the GCE acquisition and our belief that during times of stress, we have an increased potential to be opportunistic in our M&A activity.
We may be more conservative in our share repurchases in the first half of this year.
With that operator, we can open the line for questions.
Okay.
Thanks, if I can.
Ask a question please signal by pressing star one on your telephone keypad and if you're on speaker phone. Please make sure. Your mute function is turned off to allow your signal to work with but again press star one to ask a question.
One an opportunity to signal for questions.
And we will go first to Brennan hawken of UBS.
Okay.
Good afternoon, Thanks for taking my questions.
Well, Scott and Lindsey.
Right.
Wanted to start out.
Scott you made some comments about restructuring.
Europe prepared remarks.
And spoke to an improving environment for restructuring, particularly in Europe and Asia. So so based on that.
I understand that probably a lot of the outlook there is going to depend on the trajectory.
Economy, but.
Based upon what you can see today and what you are.
What is you know.
The consensus view of the outlook today.
What kind of an opportunity do you think we could be expecting is there a historical period that you could point to that you think would make for a fair comparison.
Well I think we've said for quite some time the opportunity has always been larger today than it has been in previous periods. Just the total amount of leverage indebtedness is much greater than any period, we've seen theres just more companies with leverage we think what happened, especially.
Coming out of our during Covid a lot of companies, we're just able to install.
Any difficulties they might had probably due to the central bank intervention and so well clearly ongoing distress in the economy higher interest rates inflation et cetera will improve prospects for financial restructuring, but we think many of these companies, which probably in a normal cycle would.
Have had some difficulties one or two years ago, they're just coming into play now.
Obviously seen a bit more stress as we mentioned in Europe and Asia.
So I don't see at this juncture, they're kind of very sharp downward decline that we saw for a very short period and COVID-19 or a more lengthy period, we saw in the great recession, but at the moment. This just feels like a longer duration of some level of distress and probably some of the companies that could have entered into differ.
<unk> previously are now in that stage. Our current moment, we said it will take some time before these produce actual and sizable financial results, but the volume of conversations are clearly up.
Okay.
That's helpful.
Then.
Switching gears to the corporate finance business.
The release pointed to healthy new business activity. Despite the fact that it also said there was a slowdown in global M&A. So maybe.
Maybe if you could help square that is the idea that maybe there's just more resilience in deals under $1 billion or is the resilience from our corporate finance business more about <unk>.
Up in non M&A advisory activity.
I think it's partly what we built I believe we're very diversified across geographies now very diversified across different industry sectors do have some diversification away from traditional M&A and whether that's capital markets.
Private funds placements et cetera, so all of that as well is I think an ongoing increased presence and brand reputation of the phone.
<unk> has continued to enable us to do better than the macro market statistics.
At the moment, we do think that the mid cap deals that we're working on there's a good amount of volume out there I know there's been a lot of commentary by others on what are the financial sponsors are doing but we still see activity level and the financial sponsors I think also the fact that we're now call it five or six months.
This at least stock market bond market business downturn sellers and buyers are getting closer.
To parity in terms of how they view assets, which is a better comment than maybe where we were three months ago I wouldn't say that they're identical at this point, but usually when these downturns occur after a while eventually sellers to move into a buyer's perspective, which tend to move quicker than sellers.
Great. Thanks for the color really appreciate it.
Okay. Thanks, Brad.
And we'll go next to James <unk> of Goldman Sachs.
Hey, Thanks for taking my questions. So maybe I can just turn to FCA, which is continue to see really robust growth, reaching a record this quarter.
You've been growing at roughly 20% year on year for almost two years now in that business.
As we head into what could be a more challenging.
M&A backdrop, what's the ability to continue this cadence of growth given that as you have talked about in the past some businesses that are more M&A activity related.
So we still feel very good about.
FBA business and whether it's mid term or long term, we think we've got a lot of growth potential up there. So.
As we mentioned the headwinds that are impacting M&A still do impact FAA as well, but not as much.
There are certain components of the service lines that are not nearly <unk>.
Impacted by what's happening in the market environment I think we've added some great talented people, we've expanded into some new geographies become probably a little bit more sector focused in this area.
And we think theres still plenty of potential for growth out here, all things being equal it would grow faster if we weren't in the market environment that we are but we still think we can continue to grow that business for the foreseeable quarters and years.
If market conditions stay at least where they're at yeah, Yeah, and I think thats. The key as you know in these market conditions. The headwinds are more manageable than if we drop into a more severe M&A market, where youll start to see some of the product lines and some of the service lines with FAA affected in a much more meaningful way.
Okay that makes a lot of sense, maybe if I just turn to the your capital return priorities at this point and specifically around the attractiveness of inorganic growth maybe if you could just talk about whether you think thats <unk>.
Inorganic growth opportunity has increased over the course of the year and maybe if you could perhaps compare it against what you saw in 2021 I know you had talked about.
The attractiveness of going out and doing some deals.
We've been active for probably at least a decade always talking to a certain number of companies.
For different reasons, I think when times get a little tougher companies that are much smaller than ours realize that the expanded platform that we have should enable their bankers to do much better on a platform like ourselves then.
The platform that they might have so that starts to the conversations.
Still needs to be a good strategic fit their needs to be good people fit and so I think at any given time, we are always looking at a handful or maybe more than a handful of different companies across some different geographies or industries sectors are incremental service lines.
Okay. Thank you so much.
Thanks.
And we'll hear next from Menno.
Morgan Stanley .
Hey, good afternoon.
Wanted to follow up on restructuring.
Appreciate all the comments on.
On the fact that distressed opportunities ramping up.
Yes, there is a view out there that given the sheer volume of refinancing done last year, while rates were low that liquidity ratios are still healthy and that will give some of the high yield an equivalent borrowers a little bit more time, but it sounds like that's not what you're saying. So I was wondering if you can comment on that.
Well I always start with the fundamentals of the company itself and what is their business plan and does their business plan work or need to be tweaked in some fashion in today's marketplace. Then I think you start overlaying, what's the capital structure. They have certain companies I think need.
Changes in business plans some companies just need changes in their capital structure.
Some they're not really at all a traditional restructuring.
Our liquidity.
Our liability management type of work stream so I.
I wouldn't say because what you described is going to in our minds slow down the amount of restructuring work I think it really does start with what the company does for a living and how well it fits in the marketplace today and like I said you have to then layer in the capital structure issues.
So as a follow up to that are there any.
Clear leader is a clear problem set does that do you see I I appreciate you've called out.
Asia and Europe .
But are there any comp.
Companies, maybe on the tech side or maybe.
So may be exposed to the consumer.
And if it stack is there an opportunity for you to get additional business given the GCE acquisition or is it too early to talk about synergies on the restructuring side.
So I think it's still pretty broad based and we went to a particular sector per se, but a few things that Mike mentioned, you know the whole crypto situation Didnt really exist a couple of years ago. So that's a new area I think on the tech side, both our capabilities are much enhanced because of the gcs.
Acquisition. In addition, if you went back maybe a decade or so ago. Most tech companies just never had that much debt and their capital structure a lot of tech companies.
Many of them with repeat type of business have taken on a series of debt over the last handful of years that becomes more available in terms of potential restructuring.
Clearly the.
Wore out in Ukraine has impacted many out in Europe more so than the states at this point and so that's caused some of the stress.
We know and commentary that we can all read about certain property real estate issues out in China and other parts of the globe have been increasing out there in the U S itself I Wouldnt point, it yet to a particular industry or two that's leading it and so far I'd say, it's a pretty broad based.
Great. Thanks, so much.
And we'll go next to Devin Ryan with JMP Securities.
Oh.
Thanks, Hey, good afternoon, guys how are you.
Hey, David.
Maybe to come back to the.
Conversation on the M&A advisory outlook.
Yeah, so good to hear kind of new business activities coming in on the other side.
You know here in about the elongation deal closings and just maybe a slowdown the deal closings, which I think is being seen by most in the industry.
Are you guys actually seeing deals because now were maybe a couple of quarters into that are you seeing deals actually breaking off yet or are people still kind of kicking the can down the road and then is the.
Issue.
Just uncertainty around just the macro and the outlook and that's creating a wide bid ask spread or.
Financing or maybe financing friction, creating meaningful challenges as well.
So in contrast, or I think the <unk> recession, and maybe even the Covid 2020, where we saw a substantial amount of business go into what I'll call permit hold or the dead category, we're not seeing that or at least not seen that yet.
In our business now part of it or you maybe don't really ultimately know whether something will go on hold or will fall apart until you there.
We are in many cases seen maybe not as many.
Would be buyers approaching.
Sellers. So you don't have the urgency of.
Convincing a buyer to close rather quickly.
Buyers have been able to hold a bit more sway than they used to be for lenders, who are able to hold more sway than they did before and all of that is generally, causing I think either buyers or lenders. If you want to look at it that way to ask more questions, maybe ask for another month or another quarter, where the financial results, maybe theres a little bit of price.
Renegotiation of all those things just kind of cause timing delays from.
M&A investment bankers perspective, we'd rather have deals closed quicker.
But they are just taking longer so we're not seeing a meaningful or even even at this juncture, probably a minor drop off in terms of number of deals that we just don't think we're gonna happen, but they are just continually taking longer than we would've experienced three months ago six months ago a year ago.
And as Scott has said in the past I mean, if we're still having the same conversation next quarter I think youre going to start those those on hold deals will likely start to move into a done deal category. It just really depends on how long. This choppiness in the market occurs in which direction, we come out of it.
Yes.
I appreciate the color there and then.
I guess somewhat interrelated, but.
The capital markets business, I believe that sounded like it was doing relatively well.
Thank you.
Well in this environment, there might be need for your services.
A bit more competition in the backdrop, but can you maybe just talk about how that business is actually doing now and then just the outlook.
The intermediate term for the capital markets business specifically.
Yes short term market conditions.
Make it a little more choppy to complete deals.
In the capital markets area, but mid term long term, we actually think the amount of Choppiness out there is actually good for us and our competitors.
Because the real competition is always been clients themselves, believing that they can complete the deals. So it's not as easy for somebody to do financings I think there is continually being a shift away from the traditional bank lending marketplace to the nonbank direct lenders.
And that's been much more where we can do participate in so I think the outlook actually looks better.
And I think the business is doing well.
Probably on a percentage basis. This fiscal year. It will do a larger percentage of corporate financing as it did last year.
Mostly just because the M&A marketplace is much stronger I think in our fiscal 'twenty, two and its clearly tailed off in fiscal 'twenty three.
Yes that makes sense, okay terrific I'll leave it there thanks guys.
Thanks, Tim.
And well go to our next question from Stephen Shamrock Wolfe Research.
Good afternoon. This is Brendan O'brien filling in for Steven.
So I guess first the comments on the pace of new activity.
Encouraging given the current environment.
So just wanted to get a sense of how the current pace compares with last quarter and maybe relative to 2019 levels. I was also hoping you could provide some color as to how things are trajectory so far this quarter.
Just wanted to get a sense as to how things.
Thanks progression Sui last heard from you.
So in terms of absolute new business activity the June quarter versus the March quarter.
It's probably flat to maybe even slightly better so new activity has just not been the issue I think for our company and many in the industry and comparing it to calendar 2019, a little harder for us because that was pre the acquisition.
So the amount of new business, whether by numbers by dollar amount perspective dollar amount is meaningfully up today versus where it was in 2019.
Even through in the acquisition.
It would still be very strong, but it's not at the same level of trying to compare two identical time periods, just due to the size and importance of the GCI acquisition.
And then I think relating to.
How is the quarter going I mean.
Clearly our comments today reflect what we've seen so far in this quarter, even though they're.
There are supposedly as of June 30th So I'd say our comments reflect the first what is the 27% 28 days of July as well.
Okay.
Gotcha, that's that's very helpful.
On the corporate finance business again.
Noted.
Europe is obviously facing.
More significant headwinds arguably given its proximity to the war in Ukraine, and greater reliance on Russian exports as well as the.
Weaker weakening global growth outlook in China, I was hoping you could maybe discuss.
The differences in activity levels that you're seeing between the different geographies.
Across both.
Traditional M&A and restructuring.
So two different.
Task, obviously on M&A versus restructuring in Europe .
The economy does clearly feel well.
Worse than the United States, having said that I think because of the substance and quality of people. We have in part because of the recent acquisition. We did is a presence is much greater.
And in fact, the number of.
Significantly larger sized transactions and therefore potentially larger sized fees is much greater today than we've seen before and I think that's a testament to once again, combining with our new partners.
What we're able to achieve.
In.
In Asia, we still tend to do more work, we're seeing more volume on the restructuring side, we do have a very good and strong presence in Japan as well.
The healthy M&A side.
And in the United States.
We haven't seen the speed of increase volume on restructuring like we mentioned in our comments that we had in either Europe or Asia at this point, but the U S marketplace for restructuring potentials is just much greater just a bigger market. So I think we'll have to see kind of how the U S economy U S.
Interest rates U S supply issues et cetera continue to fold out.
When we look at actual amount of sponsor activity, it's still you know doing rather well.
Not only in the United States as well in Europe .
And like I said, we continue to see relatively good results in terms of new activities.
We're really waiting and hoping that we'll be able to start shrinking the timeframe and be able to take a lot of that new activity and turning into revenues. It just hasn't happened at the pace that we would have thought or on a comparison basis. If you were asking that question six or nine months ago.
That's great color thanks for taking my questions.
Thanks.
And we'll move to a question from Michael Brown with K B W.
Okay.
Scott, Hi, Lindsay or you guys Hey, Mike.
I wanted to follow up on the capital markets Advisory commentary from the earlier question.
Just Scott you mentioned that the contribution will likely be higher this year, which are which makes sense could you just put a finer point on that I don't think we ever.
<unk> heard what the contribution is from that business I know you've been investing to grow.
<unk> finance so.
Generally what would be the range in terms of the revenue contribution and what is the MD head count in that business now.
We never disclose the MD head count in that business. We have said on previous calls I believe.
That the revenues for that business as you know anywhere from 15% to 25% and now expect it to be towards the higher end of the range. This year, but in previous years, depending on just how strong the M&A markets are.
It's been towards the lower end of the range, but it contributes.
It contributes significantly to the total revenue for corporate finance.
Okay great.
And lastly, just on the expenses.
Clearly there is inflationary pressure on the expense base and genius has been rising as you as you mentioned in your prepared comments.
How should we think about.
Maybe the right jumping off point from here when we're thinking about the.
Our expenses going forward.
But we've had consistency for three quarters, which has been nice I do think there is some seasonality in these numbers just based on sort of investments we make in the business throughout the year, whether it's training or whether it's.
Can be off sites, we have so.
If you take a look at some historical years in terms of how that business or how our non compensation expenses have moved I'd say, you're likely to see some pressure certainly the second half of the year on the $60 million.
We delivered this quarter.
Next quarter I would say probably.
Youre going to see slightly higher non compensation non compensation.
Patient expenses.
But I would take a look at the seasonality you use that last two or three years as a kind of a proxy and thats probably not a bad estimate for this year.
Okay. That's helpful. Thanks for taking my questions.
And we'll go next to Jeff Harte with Piper Sandler.
Hey, good afternoon guys.
A couple cleanups for me.
You talked everybody wants to talk to the box financial or the availability of financing.
Can you speak a little more to it and I guess I'm more specifically interested in kind of its impact on the middle markets relative to kind of some of the large transactions <unk> sitting out there.
Available is financing it how important is that to the middle markets business.
So availability of financing I think it's always important but I think you need to make sure. We have a correct debt perspective, we're just nowhere near eight.
Oh, nine where financing just was not available.
First of all we had into this.
Downturn. However, you want to look at it the number of parties that are providing financing is so much greater than what existed 15 years ago, the balance sheets of the money Center.
Banks are so much better.
People are able willing and more creative to come up with a new structures and so while financing is tougher to come by today than a year ago no dispute on that.
And some of the traditional bank lending has clearly cool down.
But for deals for the most part that you know we're in dialogue with the executives are private equity firms. There are parties that have and are financing. The deals. They are clearly at higher interest rates are.
A different set of structures or covenants to them, but I would not be you know at least for the kinds of deals that we're doing I won't be having a mindset that says theyre not getting done because they can't get financing.
Okay, and then sticking with the middle market can you give us some kind of incremental color chain.
Changes you are seeing if you are seeing any kind of dialogues.
Transaction appetites I suppose I'm thinking those middle market activity is kind of a leading indicator seems to slow first a restart first in prior cycles.
Yeah.
Yeah.
What we've said is first of all the typical timeline to close a middle market deal is less than a large cap deals. So a lot of the larger cap deals that are closing today are three months ago were things that were brought in a call. It in.
Excuse me in calendar 2021.
Of that dynamic.
Yeah, there's still I think.
When we take a look at the <unk>.
Interest of both strategics and private equity to do deals. It's out there I would just describe that the number of participants in a <unk>.
General transaction and a general auction, if you might if less than we've seen before but there's still enough interested parties, we can get deals done.
Okay, and finally restructuring you mentioned.
Faster acceleration or pickup in.
Europe , and Asia and the U S.
Can you tie any of that to kind of the GCI transaction, where you're just having 1 billion bigger business over there and sort of cross sell opportunities from existing bankers or is it too soon to draw that conclusion.
Yeah.
Clearly we have achieved more results on all three of our.
Primary business segments, including the restructuring from the advent of having.
Incrementally much bigger and broader staff in Europe , and in Asia, and with the skills that they brought on the technology space et cetera, but I'd say most of the new dialog and activity that we're seeing in restructuring is coming from the marketplace changes and not necessarily because we dramatically changed our <unk>.
Head count and skills, that's clearly helpful. But it's I would say at this point, it's more market driven than something unique to houlihan lokey.
Versus other firms.
Okay. Thank you.
Thanks, Yeah. Thanks Chuck.
And it appears there are no further questions at this time I'd now like to turn the conference to Scott Beiser for any additional or closing remarks.
I wanted to thank you all for participating in our first quarter fiscal year 2023 earnings call and we look forward to updating everyone on our progress when we discuss our second quarter results for fiscal 2023, this coming fall.
And so this concludes today's call. Thank you for your participation.
You may now disconnect.
Okay.
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