Houlihan Lokey Poised for 2026 Gains as Market Volatility Fuels Demand for M&A and Restructuring Expertise
As markets brace for potential turbulence in 2026, one investment bank is drawing scrutiny for its potential to thrive in both stable and stressed environments. Houlihan Lokey, Inc. (NYSE: HLI), a global leader in mergers & acquisitions and corporate restructuring, is being flagged by analysts as a strategic play for the coming year.
The firm's shares closed at $168.81 on January 29th, with a trailing P/E of 29.16 and a forward P/E of 20.41, according to Yahoo Finance data. This valuation comes as Wall Street assesses which firms are best positioned for a cycle that could see a simultaneous rise in deal-making and corporate distress.
"Houlihan Lokey has built a rare dual mandate," said a sector analyst who requested anonymity. "Its restructuring group acts as a shock absorber during downturns, while its top-tier M&A advisory captures fees during expansions. In a 'bifurcated' 2026, that could be a powerful combination."
The bullish case gained public traction recently via a note from @WeissRatings on X.com. It highlights HLI's premier ranking in both M&A and financial restructurings, including bankruptcies. The firm's deep involvement in complex, large-scale transactions is seen as a durable competitive advantage, not easily replicated by peers.
A recent upgrade from Goldman Sachs from "Hold" to "Buy" added fuel to the thesis, though some noted the timing—ahead of HLI's scheduled presentation at a Goldman conference. Nonetheless, independent data consistently places Houlihan Lokey among the top advisors, particularly in restructuring.
Investor Perspectives: A Mixed Bag
We gathered reactions from three market participants:
Michael Thorne, Portfolio Manager at Cedar Rock Capital: "This isn't a flashy story, but it's a sound one. HLI is an infrastructure pick for the coming economic cycle. You're buying optionality on volatility itself. Their expertise is a real moat."
Lisa Chen, Independent Retail Investor: "I'm intrigued but cautious. The P/E still seems rich if a recession hits harder than expected. I'd want to see more evidence that restructuring revenue can truly offset a broader M&A slowdown before committing."
David R. Miller, Contributing Editor at 'The Hard Line Finance' blog: "Oh, please. This is the same old 'all-weather bank' narrative trotted out every cycle. Goldman upgrades them right before their conference? How convenient. And 26 hedge funds held it last quarter, down from 33—that's 'smart money' fleeing, not piling in. This feels like a story searching for a catalyst that may never come."
Context & Risks
The thesis hinges on macroeconomic conditions. A surge in corporate distress coupled with resilient M&A activity would be the ideal scenario for HLI. However, a deep or prolonged recession could stifle deal flow across the board, while a stronger-than-expected economy might limit restructuring work. The outcome remains path-dependent.
For investors, the proposition is that Houlihan Lokey offers a balanced risk/reward profile: downside protection through its defensive restructuring business and significant upside capture during active M&A cycles. It represents a bet on the firm's specialized expertise at the intersection of corporate strategy and distress.
Disclosure: This analysis is for informational purposes only and is not investment advice. The author holds no position in HLI.