The 30-year-old obsessive networker who is dominating a wildly profitable niche on Wall Street known as ‘directs’

Houlihan Lokey acquired Triago, led by Matt Swain, for reportedly over $100 million, significantly expanding its footprint in the rapidly growing "directs" market, which facilitates direct investments in private companies for family offices and institutional investors. Swain, a key figure in this sector, has championed a model offering higher returns and faster deal cycles than traditional private equity, with the directs market projected to reach $200 billion this year. This strategic acquisition enhances Houlihan Lokey's capabilities in direct investments, continuation vehicles, and co-investments, leveraging Swain's network to drive substantial cross-selling opportunities and position the firm for future growth as institutional capital increasingly flows into bespoke private market deals.

Analysis

Houlihan Lokey (HLI) has made a highly strategic acquisition of Triago, led by Matt Swain, for over $100 million, significantly expanding its footprint in the rapidly growing "directs" market. This move integrates Swain's proven model, which facilitates direct investments for family offices and institutional investors, offering superior returns (3x+) and faster deal cycles (8-9 weeks) compared to traditional private equity. The "directs" market is projected to reach $200 billion this year, underscoring its substantial growth trajectory.

The acquisition positions HLI, a top-performing investment bank with 26.4% annual shareholder returns over the past decade, as a leader in this evolving private market segment. Swain's newly co-headed equity capital solutions group generates $400-$500 million annually, contributing significantly to HLI's revenue and demonstrating the segment's profitability. HLI now commands approximately 10% market share in directs alone, with combined directs areas raising over $5 billion annually.

The integration has already yielded substantial cross-selling opportunities, with Swain's extensive network driving new mandates for HLI's M&A, debt financing, and valuation services. While increased competition could pressure future profit margins in the directs space, HLI's strategic expansion into continuation vehicles and co-investments, coupled with growing institutional interest from pension funds like the Texas Municipal Retirement System, provides a strong growth outlook. This move is particularly timely given the extended holding periods and liquidity demands in traditional private equity.

Key Decisions for Investors

• Consider Houlihan Lokey (HLI) for its strategic positioning in the high-growth "directs" market, which is attracting increasing institutional capital and offers significant cross-selling synergies.
• Evaluate opportunities within the broader private markets, particularly in direct investments, continuation vehicles, and co-investments, as these segments demonstrate potential for higher returns and liquidity compared to traditional private equity.
• Monitor the competitive landscape in the "directs" sector, as rising participation could lead to increased deal valuations and potentially compress future profit margins for market participants.