Houlihan Lokey (2HL) Risk Analysis
Risk Overview Q2, 2026
Source: the company's latest filing for the period ended Jun 30, 2026, filed Jul 31, 2026
Risk Change Over Time
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 28
- Share Price & Shareholder Rights - Risk 1The dual class structure of our common stock and the ownership of our Class B common stock by the HL Holders through the HL Voting Trust have the effect of concentrating voting control with the HL Voting Trust, which limits the ability of our Class A common stockholders to influence corporate matters. We are controlled by the HL Voting Trust, whose interests may differ from those of our Class A common stockholders.
Each share of our Class B common stock is entitled to ten votes per share, and each share of our Class A common stock is entitled to one vote per share. As of March 31, 2026, the HL Holders through the HL Voting Trust beneficially owned 15,266,333 shares of common stock representing approximately 22% of the economic interest, and controlled approximately 74% of the voting power of our outstanding capital stock. The HL Voting Trust has significant influence over our corporate management and affairs and is able to control virtually all matters requiring stockholder approval. The HL Voting Trust is able to elect a majority of the members of our board of directors and control actions to be taken by us and our board of directors, including amendments to our amended and restated certificate of incorporation and bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets. The directors so elected will have the authority, subject to the terms of our indebtedness and applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions. This concentrated control will limit the ability of holders of our Class A common stock to influence corporate matters for the foreseeable future and may materially adversely affect the market price of our Class A common stock. It is possible that the interests of the HL Voting Trust may in some circumstances conflict with our interests and the interests of our other stockholders. For example, the HL Voting Trust may have different tax positions or other differing incentives from other stockholders that could influence their decisions regarding whether and when to cause us to dispose of assets, incur new or refinance existing indebtedness or take other actions. Additionally, the holders of our Class B common stock may cause us to make strategic decisions or pursue acquisitions that could involve risks to holders of our Class A common stock or may not be in the best interests of holders of our Class A common stock. The holders of our Class B common stock will also be entitled to a separate vote in the event we seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our common stock or in a manner that alters or changes the powers, preferences, or special rights of the Class B common stock in a manner that affects its holders adversely. Future transfers by holders of Class B common stock will generally result in those shares converting on a one-for-one basis to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares over the long-term.
- Share Price & Shareholder Rights - Risk 2We are a "controlled company" within the meaning of the New York Stock Exchange listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. Holders of Class A common stock do not have the same protections afforded to stockholders of companies that are subject to such requirements.
The HL Voting Trust controls a majority of the voting power of our outstanding common stock. As a result, we qualify as a "controlled company" within the meaning of the corporate governance standards of the NYSE. Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of the board of directors consist of independent directors, the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors, and the requirement that we have a compensation committee that is composed entirely of independent directors. We intend to continue to rely on some or all of these exemptions. While at the present time, a majority of our board of directors consists of independent directors and our compensation and nominating and corporate governance committees consist entirely of independent directors, that may not continue to be the case. Accordingly, our stockholders do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.
- Share Price & Shareholder Rights - Risk 3If the Final Conversion Date occurs, the voting power of shares of our common stock controlled by the HL Voting Trust would significantly decline and the voting power of shares held by our other holders of Class A common stock would significantly increase, which could affect our status as a "controlled company", change the holders of the voting power of our common stock and ultimately affect the market price of our Class A common stock in ways we cannot anticipate.
Our amended and restated certificate of incorporation set out certain triggers for a defined "Final Conversion Date" whereupon all shares of our outstanding Class B common stock (which are entitled to ten votes per share) will automatically convert into the corresponding number of shares of our Class A common stock (which are entitled to one vote per share). One such trigger is if the percentage of the shares held by the HL Voting Trust or other defined holders collectively represent less than 20% of the number of shares of Common Stock then outstanding. As of March 31, 2026, we estimate the shares held by the HL Voting Trust and such other defined holders collectively represented approximately 22% of the number of shares of common stock then outstanding. This percentage fluctuates and we cannot predict if, or when, it will fall below 20% and trigger a Final Conversion Date. If a Final Conversion Date occurs, the conversion of our Class B common stock into Class A common stock would significantly reduce the voting power of the shares controlled by the HL Voting Trust and significantly increase the voting power held by our other holders of Class A common stock. By way of illustration, if the Final Conversion Date had occurred on March 31, 2026, the voting power in our company held by the HL Voting Trust would have gone from approximately 74% to approximately 22% and the voting power in our company held by the other Class A stockholders would have gone from approximately 26% to approximately 78%. If a Final Conversion Date were to occur, we expect we would cease to be a "controlled company" under NYSE rules. In addition, if a Final Conversion Date and the resulting shift in the voting power of our company were to occur, it could lead to numerous outcomes that cannot be predicted, including possible changes in our management, board composition, or strategic direction, the possible increase in our vulnerability to hostile takeovers or activist investors and the possibility of increased market volatility for our Class A common stock. We cannot anticipate with certainty if, or when, a Final Conversion Date could occur or any impact that could have on the value of our Class A common stock.
- Share Price & Shareholder Rights - Risk 4Our anti-takeover provisions could prevent or delay a change in control of our Company, even if such change in control would be beneficial to our stockholders.
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law could discourage, delay or prevent a merger, acquisition or other change in control of our company, even if such change in control would be beneficial to our stockholders. Certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws that could prevent or delay a change in control of our company include: - the ability to issue "blank check" preferred stock, which could increase the number of outstanding shares and thwart a takeover attempt;- a classified board of directors so that not all members of our board of directors are elected at one time;- the ability to remove directors only for cause;- no use of cumulative voting for the election of directors;- no ability of stockholders to call special meetings;- supermajority voting provisions for stockholder approval of amendments to our certificate of incorporation and by-laws;- the requirement that, to the fullest extent permitted by law and unless we agree otherwise, certain proceedings against or involving us or our directors, officers or employees be brought exclusively in the Court of Chancery in the State of Delaware;- the ability of stockholders to take action by written consent; and - advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings. These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and cause us to take other corporate actions they desire. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. In addition, the General Corporation Law of the State of Delaware (the "DGCL"), to which we are subject, prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of our common stock.
- Share Price & Shareholder Rights - Risk 5The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors, officers and stockholders.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction in the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware, unless we agree otherwise. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors, officers and stockholders.
- Share Price & Shareholder Rights - Risk 6Our share price may decline due to the large number of shares eligible for future sale.
The market price of our Class A common stock could decline as a result of sales of a large number of shares of Class A common stock available for sale upon conversion of Class B common stock or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of March 31, 2026, 15,266,333 shares of our Class A common stock issuable upon conversion of outstanding Class B common stock (including restricted stock units) are eligible for sale, subject to certain restrictions under the Securities Act of 1933, as amended (the "Securities Act").
- Share Price & Shareholder Rights - Risk 7The trading price of our Class A common stock may be volatile or may decline regardless of our operating performance, which could cause the value of our Class A common stock to decline.
The market price for our Class A common stock is volatile, in part because of the limited number of shares of Class A common stock outstanding, and the limited trading history of the Class A common stock. In addition, the market price of our Class A common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: - our operating and financial performance and prospects;- our quarterly or annual earnings or those of other companies in our industry;- the public's reaction to our press releases, our other public announcements and our filings with the SEC;- quarterly variations in our operating results compared to market expectations;- changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common shares or the stock of other companies in our industry;- adverse publicity about us, the industries we participate in or individual scandals;- announcements of new offerings by us or our competitors;- stock price performance of our competitors;- changes in the evaluations of our Class A common stock by research analysts;- fluctuations in stock market prices and volumes;- default on our indebtedness;- actions by competitors;- changes in senior management or key personnel;- changes in financial estimates by securities analysts;- our status as a "controlled company";- negative earnings or other announcements by us or other financial services companies;- publication of negative or inaccurate research reports about us or our industry or the failure of securities analysts to provide adequate coverage of the Class A common stock in the future;- downgrades in our credit ratings or the credit ratings of our competitors;- incurrence of indebtedness or issuances of capital stock;- global economic, legal and regulatory factors unrelated to our performance; and - the other factors listed in this "Risk Factors" section. In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies in our industry. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.
- Share Price & Shareholder Rights - Risk 8We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock. Our board of directors has the authority to determine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discourage bids for our Class A common stock at a premium to the market price, and materially and adversely affect the market price and the voting and other rights of the holders of our Class A common stock.
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