Houlihan Lokey (HLI) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Changing market conditions can adversely affect our business in many ways, including by reducing the volume and/or size of the transactions we advise on, which could materially reduce our revenue
2. 02In addition to recruiting and organic expansion, we have grown, and intend to continue to grow, our core businesses through acquisitions and strategic investments
3. 03Goodwill and other intangible assets represent a significant portion of our assets, and an impairment of these assets could have a material adverse effect on our financial condition and results of operations
4. 04Our international operations are subject to certain risks, which may affect our revenue
5. 05Fluctuations in foreign currency exchange rates could adversely affect our results
6. 06The cost of compliance with broker-dealer, employment, labor, benefits, and tax regulations may adversely affect our business and hamper our ability to expand internationally
7. 07Our ability to retain our Managing Directors and our other senior professionals, as well as our ability to successfully identify, recruit and develop talent, is critical to the success of our business
8. 08We are subject to reputational and legal risk arising from, among other things, actual or alleged employee misconduct, conflicts of interest, failure to meet client expectations or other operational failures
9. 09We may be unable to execute on our growth initiatives, business strategies, or operating plans
10. 10We are subject to risks relating to our operations, including our information and technology, which could harm our business
11. 11Our clients may be unable to pay us for our services
12. 12We may not be able to generate sufficient cash in the future to service any future indebtedness
13. 13We may be adversely affected by the effects of inflation
14. 14We may enter into new lines of business, which may result in additional risks and uncertainties in our business

Risks Related to our Industry

1. 15We face substantial litigation risks
2. 16As a participant in the financial services industry, we are subject to extensive regulation in the United States and internationally. We are subject to regulation by governmental and self-regulatory organizations in many of the jurisdictions in which we operate

Risks Related to Our Organizational Structure

1. 17Our 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
2. 18The 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

Risks Related to Our Class A Common Stock

1. 19Our share price may decline due to the large number of shares eligible for future sale
2. 20While we currently pay a quarterly cash dividend to our stockholders, we may change our dividend policy at any time and we may not continue to declare cash dividends
3. 21The 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
4. 22We 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