10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number: 001-37537

Houlihan Lokey, Inc.
(Exact name of registrant as specified in its charter)
Delaware	95-2770395
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

10250 Constellation Blvd.

5th Floor

Los Angeles, California 90067

(Address of principal executive offices) (Zip Code)

(310) 788-5200

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001	HLI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    x  No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of February 4, 2022, the registrant had 50,643,089 shares of Class A common stock, $0.001 par value per share, and 16,724,964 shares of Class B common stock, $0.001 par value per share, outstanding.

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Changes in Stockholders' Equity	3
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	39
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data and par value)	December 31, 2021		March 31, 2021
Assets
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash	373		373
Investment securities	39,829		208,618
Accounts receivable, net of allowance for credit losses of $12,431 and $8,262, respectively	195,912		108,409
Unbilled work in progress, net of allowance for credit losses of $2,914 and $3,520, respectively	86,504		118,115
Deferred income taxes	39,575		28,332
Property and equipment, net	51,750		46,370
Operating lease right-of-use assets	161,997		152,031
Goodwill	1,082,934		671,065
Other intangible assets, net	263,493		195,156
Other assets	64,792		50,747
Total assets	$	3,045,762	$	2,426,067
Liabilities and Stockholders' Equity
Liabilities:
Accrued salaries and bonuses	$	986,043	$	648,399
Accounts payable and accrued expenses	123,395		67,468
Deferred income	27,319		27,868
Income taxes payable	57,617		68,339
Deferred income taxes	1,159		52
Loans payable to former shareholders	539		818
Operating lease liabilities	187,264		174,516
Other liabilities	133,010		55,046
Total liabilities	1,516,346		1,042,506
Commitments and contingencies (Note 17)
Stockholders' equity:
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 50,924,798 and 51,245,442 shares, respectively	51		51
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 16,727,176 and 16,951,696 shares, respectively	17		17
Additional paid-in capital	668,765		803,573
Retained earnings	886,995		600,096
Accumulated other comprehensive loss	(26,412)		(20,176)
Total stockholders' equity	1,529,416		1,383,561
Total liabilities and stockholders' equity	$	3,045,762	$	2,426,067

See accompanying Notes to Consolidated Financial Statements

1

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended December 31,				Nine Months Ended December 31,
(In thousands, except share and per share data)	2021		2020		2021		2020
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748
Operating expenses:
Employee compensation and benefits	549,376		339,743		1,115,054		654,113
Travel, meals, and entertainment	11,090		1,338		17,464		4,416
Rent	14,352		10,086		33,627		30,010
Depreciation and amortization	20,074		3,949		28,589		11,291
Information technology and communications	12,398		9,281		28,217		22,532
Professional fees	14,372		6,188		27,988		16,422
Other operating expenses	17,876		8,875		33,598		18,083
Total operating expenses	639,538		379,460		1,284,537		756,867
Operating income	249,260		158,416		514,255		267,881
Other (income)/expense, net	253		(187)		1,005		(1,544)
Income before provision for income taxes	249,007		158,603		513,250		269,425
Provision for income taxes	74,699		40,088		140,099		56,020
Net income	174,308		118,515		373,151		213,405
Net income attributable to noncontrolling interest	(573)		—		(573)		—
Net income attributable to Houlihan Lokey, Inc.	173,735		118,515		372,578		213,405
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(1,824)		14,037		(6,236)		22,407
Comprehensive income attributable to Houlihan Lokey, Inc.	$	171,911	$	132,552	$	366,342	$	235,812
Attributable to Houlihan Lokey, Inc. common stockholders:
Weighted average shares of common stock outstanding:
Basic	64,914,373		66,547,587		65,259,927		65,680,516
Fully diluted	68,279,939		69,356,347		68,520,849		68,596,503
Earnings per share (Note 13)
Basic	$	2.68	$	1.78	$	5.71	$	3.25
Fully diluted	$	2.54	$	1.71	$	5.44	$	3.11

See accompanying Notes to Consolidated Financial Statements

2

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

	Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In thousands, except share data)	Shares	$		Shares	$		$		$		$		$
Balances – October 1, 2021	50,927,005	$	51	17,348,305	$	17	$	720,579	$	741,678	$	(24,588)	$	1,437,737
Shares issued	—	—		34,064	—		—		—		—		—
Stock compensation vesting (Note 14)	—	—		—	—		17,778		—		—		17,778
Dividends	—	—		—	—		—		(28,418)		—		(28,418)
Conversion of Class B to Class A shares	642,693	—		(642,693)	—		—		—		—		—
Other shares repurchased/forfeited	(644,900)	—		(12,500)	—		(69,592)		—		—		(69,592)
Net income	—	—		—	—		—		173,735		—		173,735
Change in unrealized translation	—	—		—	—		—		—		(1,824)		(1,824)
Total comprehensive income	—	—		—	—		—		173,735		(1,824)		171,911
Balances – December 31, 2021	50,924,798	$	51	16,727,176	$	17	$	668,765	$	886,995	$	(26,412)	$	1,529,416

	Class A Common Stock			Class B Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In thousands, except share data)	Shares	$		Shares	$		Shares	$		$		$		$		$
Balances – October 1, 2020	51,506,192	$	52	18,255,244	$	18	(392,673)	$	(22,711)	$	880,370	$	427,621	$	(34,738)	$	1,250,612
Shares issued	—	—		31,153	—		—	—		1,701		—		—		1,701
Stock compensation vesting (Note 14)	—	—		—	—		—	—		10,694		—		—		10,694
Dividends	—	—		—	—		—	—		—		(22,682)		—		(22,682)
Conversion of Class B to Class A shares	790,025	1		(790,025)	(1)		—	—		—		—		—		—
Shares issued to non-employee directors (Note 14)	3,174	—		—	—		—	—		—		—		—		—
Other shares repurchased/forfeited	(675,708)	(1)		(23,780)	—		392,673	22,711		(41,321)		—		—		(18,611)
Net income	—	—		—	—		—	—		—		118,515		—		118,515
Change in unrealized translation	—	—		—	—		—	—		—		—		14,037		14,037
Total comprehensive income	—	—		—	—		—	—		—		118,515		14,037		132,552
Balances – December 31, 2020	51,623,683	$	52	17,472,592	$	17	—	$	—	$	851,444	$	523,454	$	(20,701)	$	1,354,266

See accompanying Notes to Consolidated Financial Statements

3

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

	Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In thousands, except share data)	Shares	$		Shares	$		$		$		$		$
Balances – April 1, 2021	51,245,442	$	51	16,951,696	$	17	$	803,573	$	600,096	$	(20,176)	$	1,383,561
Shares issued	—	—		2,048,574	2		14,638		—		—		14,640
Stock compensation vesting (Note 14)	—	—		—	—		66,792		—		—		66,792
Dividends	—	—		—	—		—		(85,679)		—		(85,679)
Conversion of Class B to Class A shares	1,745,778	2		(1,745,778)	(2)		—		—		—		—
Shares issued to non-employee directors (Note 14)	6,512	—		—	—		—		—		—		—
Other shares repurchased/forfeited	(2,072,934)	(2)		(527,316)	—		(216,238)		—		—		(216,240)
Net income	—	—		—	—		—		372,578		—		372,578
Change in unrealized translation	—	—		—	—		—		—		(6,236)		(6,236)
Total comprehensive income	—	—		—	—		—		372,578		(6,236)		366,342
Balances – December 31, 2021	50,924,798	$	51	16,727,176	$	17	$	668,765	$	886,995	$	(26,412)	$	1,529,416

	Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In thousands, except share data)	Shares	$		Shares	$		$		$		$		$
Balances – April 1, 2020	46,178,633	$	46	19,345,277	$	19	$	649,954	$	377,471	$	(43,108)	$	984,382
Cumulative effect of the change in accounting principle related to credit losses, net of tax	—	—		—	—		—		(682)		—		(682)
Shares issued	3,000,000	3		1,596,243	2		223,168		—		—		223,173
Stock compensation vesting (Note 14)	—	—		—	—		37,601		—		—		37,601
Dividends	—	—		—	—		—		(66,740)		—		(66,740)
Conversion of Class B to Class A shares	3,121,294	3		(3,121,294)	(3)		—		—		—		—
Shares issued to non-employee directors (Note 14)	8,751	—		—	—		333		—		—		333
Other shares repurchased/forfeited	(684,995)	—		(347,634)	(1)		(59,612)		—		—		(59,613)
Net income	—	—		—	—		—		213,405		—		213,405
Change in unrealized translation	—	—		—	—		—		—		22,407		22,407
Total comprehensive income	—	—		—	—		—		213,405		22,407		235,812
Balances – December 31, 2020	51,623,683	$	52	17,472,592	$	17	$	851,444	$	523,454	$	(20,701)	$	1,354,266

See accompanying Notes to Consolidated Financial Statements

4

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended December 31,
(In thousands)	2021		2020
Cash flows from operating activities:
Net income	$	373,151	$	213,405
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	(13,341)		(1,997)
Provision for bad debts, net	4,626		4,829
Unrealized (gains)/losses on investment securities	2,464		(593)
Non-cash lease expense	24,179		17,023
Depreciation and amortization	28,589		11,291
Contingent consideration valuation	60		—
Compensation expense – equity and liability classified share awards (Note 14)	72,398		46,779
Changes in operating assets and liabilities:
Accounts receivable	(38,663)		(1,064)
Unbilled work in progress	36,283		(13,485)
Other assets	7,751		(12,444)
Accrued salaries and bonuses	185,065		18,101
Accounts payable and accrued expenses and other	8,231		(9,223)
Deferred income	(627)		10,131
Income taxes (payable)/receivable	(18,031)		24,431
Net cash provided by operating activities	672,135		307,184
Cash flows from investing activities:
Purchases of investment securities	(28,087)		(294,196)
Sales or maturities of investment securities	194,926		195,601
Acquisition of business, net of cash acquired	(305,637)		(12,470)
Purchase of property and equipment, net	(7,554)		(11,002)
Net cash used in investing activities	(146,352)		(122,067)
Cash flows from financing activities:
Dividends paid	(87,359)		(70,302)
Share repurchases	(183,197)		(41,814)
Payments to settle employee tax obligations on share-based awards	(33,700)		(17,810)
Proceeds from issuance of Class A shares	—		189,060
Earnouts paid	(5,917)		—
Loans payable to former shareholders redeemed	(280)		(386)
Repayments of loans to non-affiliates	—		(1,900)
Other financing activities	477		333
Net cash provided by/(used in) financing activities	(309,976)		57,181
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(4,055)		10,988
Net increase in cash, cash equivalents, and restricted cash	211,752		253,286
Cash, cash equivalents, and restricted cash – beginning of period	847,224		380,746
Cash, cash equivalents, and restricted cash – end of period	$	1,058,976	$	634,032
Supplemental disclosures of non-cash activities:
Shares issued via vesting of liability classified awards	$	4,270	$	7,511
Fully amortized intangibles written off	2,000		—
Cash acquired through acquisitions	$	241,835	$	88
Cash paid during the period:
Interest	$	528	$	744
Taxes, net of refunds	171,229		33,692

See accompanying Notes to Consolidated Financial Statements

5

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 1 — Background

Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries:

•Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and a member of Financial Industry Regulatory Authority, Inc.

•Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly owned direct subsidiary of HL, Inc.

•HL Finance, LLC ("HL Finance"), a syndicated leveraged finance platform established to arrange senior secured leveraged loans for financial sponsor-backed, privately-held, and public corporate entities. HL Finance acts as an arranger on syndicated loan transactions and has entered into an agreement with an unaffiliated third party investor that may provide commitments with respect to certain syndicated loans arranged by HL Finance.

•Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K.").

The Company offers financial services and financial advice to a broad clientele located throughout the United States of America, Europe, the Middle East, and the Asia-Pacific region. The Company has U.S. offices in Los Angeles, San Francisco, Chicago, New York City, Minneapolis, McLean (Virginia), Boston, Dallas, Houston, Miami, and Atlanta as well as foreign offices in London, Paris, Frankfurt, Milan, Madrid, Amsterdam, Dubai, Sydney, Tokyo, Hong Kong, Beijing, Singapore, Birmingham, Lausanne, Manchester, Munich, Stockholm, Tel Aviv, Zurich, Fukuoka, Ho Chi Minh City, Kyoto, Mumbai, Nagoya, New Delhi, Osaka, and Shanghai. Together, the Company and its subsidiaries form an organization that provides financial services to meet a wide variety of client needs. The Company concentrates its efforts toward the earning of professional fees with focused services across the following three business segments:

•Corporate Finance ("CF") provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement ("Completion Fees"). A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the fees paid at the time an engagement letter is signed ("Retainer Fees") and in some cases fees paid during the course of the engagement ("Progress Fees") that may have been received.

•Financial Restructuring ("FR") provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

6

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

•Financial and Valuation Advisory ("FVA") primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the nine months ended December 31, 2021 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2022. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (the "2021 Annual Report").

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income, shareholders' equity or cash flows as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

The Company’s equity method investments include variable interest entities (VIEs), which are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary, and is generally the entity with (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

Our involvement with VIEs arises from our variable interest related to a recently sponsored special purpose acquisition company. The Company's exposure to loss from such VIEs is not material to our operating results and financial position.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, valuation of acquired intangibles and goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

7

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contracts. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling the contracts for such services. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event, which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

8

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Operating Expenses

The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses.

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of December 31, 2021, we had one foreign currency forward contract outstanding between the pound sterling and the euro with a notional balance of €4.1 million. The change in fair value of this contracts represented a net gain included in Other operating expenses of $11 during the three months ended December 31, 2021. We did not have any outstanding foreign currency forward contracts as of December 31, 2020.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement:

•Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

•Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available, and may incorporate management's own assumptions or involve a significant degree of judgment.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

•Corporate debt securities: All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

•U.S. treasury securities: Fair values for U.S. treasury securities are based on quoted prices from recent trading activity of identical or similar securities. All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

9

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the instrument.

The fair values of the financial instruments represent the amounts that would be received to sell assets or that would be paid to transfer liabilities in an orderly transaction between market participants as of a specified date. Fair value measurements maximize the use of observable inputs; however, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, as well as available observable and unobservable inputs.

The carrying value of Cash and cash equivalents, Restricted cash, Accounts receivable, Unbilled work in progress, Accounts payable and accrued expenses, and Deferred income approximates fair value due to the short maturity of these instruments.

The carrying value of the loans to employees included in Other assets, Loans payable to former shareholders, and an unsecured loan which is included in Loan payable to non-affiliate approximates fair value due to the variable interest rate borne by those instruments.

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of December 31, 2021 and March 31, 2021, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	1,058,976	$	847,224

(1)Restricted cash as of December 31, 2021 and March 31, 2021 consisted of a cash secured letter of credit issued for our Frankfurt office.

Investment Securities

Investment securities consist primarily of corporate debt and U.S. treasury securities with original maturities over 90 days. The Company classifies its corporate debt and U.S. treasury securities as trading and measures them at fair value in the Consolidated Balance Sheets. Unrealized holding gains and losses for trading securities are included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income.     

Allowance for Credit Losses

The allowance for credit losses on accounts receivable and unbilled work in progress reflects management’s best estimate of expected losses using the Company's internal current expected credit losses model. This model analyzes expected losses based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that could potentially affect the collectibility of the reported amounts. This is recorded through provision for bad debts, which is included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income. Amounts deemed to be uncollectible are written off against the allowance for credit losses.

Property and Equipment

Property and equipment are stated at cost. Repair and maintenance charges are expensed as incurred and costs of renewals or improvements are capitalized at cost. Depreciation on furniture and office equipment is recognized on a straight-line basis over the estimated useful lives of the respective assets.

10

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Income Taxes

The Company files consolidated federal income tax returns, as well as consolidated and separate returns in state and local jurisdictions, and the Company reports income tax expense on this basis.

We account for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The measurement of the deferred items is based on enacted tax laws and applicable tax rates. A valuation allowance related to a deferred tax asset is recorded if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company utilized a comprehensive model to recognize, measure, present, and disclose in its financial statements any uncertain tax positions that have been taken or are expected to be taken on a tax return. The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense and penalties related to income taxes are included in the provision for income taxes in the accompanying Consolidated Statements of Comprehensive Income.

The Global Intangible Low-Taxed Income tax (“GILTI inclusion”) can be recognized in the financial statements through an accounting policy election by either recording a period cost (permanent item) or providing deferred income taxes stemming from certain basis differences that are expected to result in GILTI inclusion. The Company has elected to account for the tax impacts of the GILTI inclusion as a period cost.

Leases

We assess whether an arrangement is or contains a lease at the inception of the agreement. Right-of-use ("ROU") assets represent our right to use underlying assets for the lease term and lease liabilities represent our obligation to make lease payments arising from leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease terms utilizing the discount rate implicit in the leases. If the discount rate implicit in the leases is not readily determinable, the present value of future lease payments is calculated utilizing the Company’s incremental borrowing rate, which approximates the interest that the Company would have to pay on a secured loan. The Company elected to utilize a portfolio approach and applies the rates to a portfolio of leases with similar terms and economic environments. The terms of our leases used to determine the ROU asset and lease liability account for options to extend when it is reasonably certain that we will exercise those options, if applicable. ROU assets and lease liabilities are subject to adjustment in the event of modification to lease terms, changes in probability that an option to extend or terminate a lease would be exercised and other factors. In addition, ROU assets are periodically reviewed for impairment.

Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.

The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

Goodwill and Intangible Assets

Goodwill represents an acquired company’s acquisition cost over the fair value of acquired net tangible and intangible assets. Goodwill is the net asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets identified and accounted for include tradenames and marks, backlog, developed technologies, and customer relationships. Those intangible assets with finite lives, including backlog and customer relationships, are amortized over their estimated useful lives.

11

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Goodwill is reviewed annually for impairment and more frequently if potential impairment indicators exist. Goodwill is reviewed for impairment in accordance with Accounting Standards Update ("ASU") No. 2011-08, Testing Goodwill for Impairment, which permits management to make a qualitative assessment of whether it is more likely than not that one of its reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If management concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then management would not be required to perform the two-step impairment test for that reporting unit. If the assessment indicates that it is more likely than not that the reporting unit’s fair value is less than its carrying value, management must test further for impairment utilizing a two-step progress. Step 1 compares the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying value of the reporting unit exceeds the estimated fair value, an impairment exists and is measured in Step 2 as the excess of the recorded amount of goodwill over the implied fair value of goodwill resulting from the valuation of the reporting unit. Impairment testing of goodwill requires a significant amount of judgment in assessing qualitative factors and estimating the fair value of the reporting unit, if necessary. The fair value is determined using an estimated market value approach, which considers estimates of future after tax cash flows, including a terminal value based on market earnings multiples, discounted at an appropriate market rate. As of December 31, 2021, management concluded that it was not more likely than not that the Company’s reporting units’ fair value was less than their carrying amount and no further impairment testing had been considered necessary.

Indefinite-lived intangible assets are reviewed annually for impairment in accordance with ASU 2012-02, Testing Indefinite-lived Intangible Assets for Impairment, which provides management the option to perform a qualitative assessment. If it is more likely than not that the asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment expense. As of December 31, 2021, management concluded that it was not more likely than not that the fair values were less than the carrying values.

Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group (inclusive of other long-lived assets) be tested for possible impairment, management first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of December 31, 2021, no events or changes in circumstances were identified that indicated that the carrying amount of the finite-lived intangible assets were not recoverable.

Business Combinations

Accounting for business combinations requires management to make significant estimates and assumptions. We allocate the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date, with the consideration in excess recorded a goodwill. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, expected asset lives, geographic risk premiums, discount rates, and more. The amounts and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.

Recent Accounting Pronouncements

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020.

Note 3 — Revenue Recognition

Disaggregation of Revenues

The Company has disclosed disaggregated revenues based on its business segment and geographical area, which provides a reasonable representation of how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See Note 18 for additional information.

12

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred income (contract liability) until the performance obligations are satisfied.

Costs incurred in fulfilling advisory contracts with point-in-time revenue recognition are recorded as a contract asset when the costs (i) relate directly to a contract, (ii) generate or enhance resources of the Company that will be used in satisfying performance obligations, and (iii) are expected to be recovered. The Company amortizes the contract asset costs related to fulfilling a contract based on recognition of fee revenues for the corresponding contract.

Costs incurred in fulfilling an advisory contract with over-time revenue recognition are expensed as incurred.

The change in the Company’s contract assets and liabilities during the period primarily reflects the timing difference between the Company’s performance and the customer’s payment. The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2021		Increase/(Decrease)		December 31, 2021
Receivables (1)	$	103,987	$	88,401	$	192,388
Unbilled work in progress, net of allowance for credit losses	118,115		(31,611)		86,504
Contract Assets (1)	4,422		(898)		3,524
Contract Liabilities (2)	27,868		(549)		27,319

(1)Included within Accounts receivable, net of allowance for credit losses in the December 31, 2021 Consolidated Balance Sheet.

(2)Included within Deferred income in the December 31, 2021 Consolidated Balance Sheet.

During the three and nine months ended December 31, 2021, $3 million and $19 million of Revenues, respectively, were recognized that were included in the Deferred income balance at the beginning of the period.

As a practical expedient, the Company does not disclose information about remaining performance obligations pertaining to (i) contracts that have an original expected duration of one year or less, and/or (ii) contracts where the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that is or forms part of a single performance obligation. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at December 31, 2021.

Note 4 — Related Party Transactions

Other assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $14,763 and $16,657 as of December 31, 2021 and March 31, 2021, respectively.

13

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 5 — Fair Value Measurements

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	December 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	30,121	$	—	$	30,121
U.S. treasury securities	—		4,866		—		4,866
Certificates of Deposit	—		516		—		516
Total asset measured at fair value (1)	$	—	$	35,503	$	—	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	178,659	$	—	$	178,659
U.S. treasury securities	—		24,083		—		24,083
Total asset measured at fair value (1)	$	—	$	202,742	$	—	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

The Company had no transfers between fair value levels during the nine months ended December 31, 2021.

14

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 6 — Investment Securities

The amortized cost and gross unrealized gains (losses) of marketable investment securities accounted under the fair value method were as follows:

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	30,409	$	36	$	(324)	$	30,121
U.S. treasury securities	4,883		33		(50)		4,866
Certificates of Deposit	516		—		—		516
Total securities with unrealized gains/(losses)	$	35,808	$	69	$	(374)	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	178,384	$	389	$	(114)	$	178,659
U.S. treasury securities	23,761		322		—		24,083
Total securities with unrealized gains/(losses)	$	202,145	$	711	$	(114)	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

Scheduled maturities of the debt securities held by the Company included within the investment securities portfolio were as follows:

	December 31, 2021				March 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	2,576	$	2,576	$	172,747	$	172,798
Due within years two through five	33,232		32,927		29,398		29,944
Total debt within the investment securities portfolio	$	35,808	$	35,503	$	202,145	$	202,742

Note 7 — Allowance for Credit Losses

The following table presents information about the Company's allowance for credit losses:

	December 31, 2021
Beginning balance	$	11,782
Provision for bad debt, net	4,626
Recovery/(write-off) of uncollectible accounts, net	(1,063)
Ending balance	$	15,345

15

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 8 — Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	December 31, 2021		March 31, 2021
Equipment	$	9,238	8,795
Furniture and fixtures	25,879		21,493
Leasehold improvements	56,505		52,561
Computers and software	14,060		10,772
Other	7,429		7,056
Total cost	113,111		100,677
Less: accumulated depreciation	(61,361)		(54,307)
Total net book value	$	51,750	$	46,370

Additions to property and equipment during the nine months ended December 31, 2021 were primarily related to leasehold improvement costs incurred.

Depreciation expense of $4,621 and $2,756 was recognized for the three months ended December 31, 2021 and 2020, respectively, and $10,460 and $8,212 for the nine months ended December 31, 2021 and 2020, respectively.

16

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 9 — Goodwill and Other Intangible Assets

The following table provides a reconciliation of Goodwill and other intangibles, net reported on the Consolidated Balance Sheets.

	Useful Lives	December 31, 2021		March 31, 2021
Goodwill	Indefinite	$	1,082,934	$	671,065
Tradename-Houlihan Lokey	Indefinite	192,210		192,210
Other intangible assets	Varies	93,264		6,809
Total cost		1,368,408		870,084
Less: accumulated amortization		(21,981)		(3,863)
Goodwill and other intangibles, net		$	1,346,427	$	866,221

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2021		Change (1)		December 31, 2021
Corporate Finance	$	416,535	$	411,869	$	828,404
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	671,065	$	411,869	$	1,082,934

(1)Changes pertain primarily to the acquisition of GCA Corporation. See Note 19 for additional information.

Amortization expense of approximately $15,454 and $1,193 was recognized for the three months ended December 31, 2021 and 2020, respectively, and $18,130 and $3,079 for the nine months ended December 31, 2021 and 2020, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five years and thereafter are as follows:

	Year Ended March 31,
Remainder of 2022	$	15,796
2023	45,120
2024	8,091
2025	1,877
2026 and thereafter	97

Note 10 — Loans Payable

On August 23, 2019, the Company entered into a syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto (the “2019 Line of Credit”), which allows for borrowings of up to $100.0 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200.0 million) and matures on August 23, 2022 (or if such date is not a business day, the immediately preceding business day). The agreement governing the 2019 Line of Credit provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. As of December 31, 2021 and March 31, 2021, no principal was outstanding under the 2019 Line of Credit.

Prior to our initial public offering in August 2015 of 12,075,000 shares of Houlihan Lokey, Inc. Class A common stock (the "IPO"), Fram Holdings, Inc., a Delaware corporation and, prior to our IPO, our indirect parent company, maintained certain loans payable to former shareholders consisting of unsecured notes payable which were transferred to the Company in conjunction with the IPO. The average interest rate on the individual notes was 1.38% and 1.46% as of December 31, 2021 and 2020, respectively, and the maturity dates range from 2020 to 2027. The Company incurred interest expense on these notes of $2 and $5 for the three months ended December 31, 2021 and 2020, respectively, and $8 and $18 for the nine months ended December 31, 2021 and 2020, respectively.

17

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

In April 2018, the Company acquired Quayle Munro Limited. Total consideration included non-interest bearing unsecured convertible loans totaling GBP 10.5 million payable on May 31, 2022, which is included in Other liabilities in the accompanying Consolidated Balance Sheets. Under certain circumstances, the notes may be exchanged for Company Class B common stock over a three-year period in equal annual installments starting on May 31, 2020. The Company incurred imputed interest expense on these notes of $34 and $68 for the three months ended December 31, 2021 and 2020, respectively, and $128 and $218 for the nine months ended December 31, 2021 and 2020, respectively.

In May 2018, the Company acquired BearTooth Advisors. Total consideration included an unsecured note of $2.8 million bearing interest at an annual rate of 2.88% and payable on May 21, 2048. This note was subsequently assigned by the seller to the former BearTooth principals (who became employees of the Company), and, under certain circumstances, is convertible into Company Class B common stock after the fifth anniversary of the closing of the transaction. The Company incurred interest expense on this note of $26 for each of the three months ended December 31, 2021 and 2020 and $79 for each of the nine months ended December 31, 2021 and 2020.

In December 2019, the Company acquired Freeman & Co. Total consideration included an unsecured note of $4.0 million bearing interest at an annual rate of 2.75% and payable on December 16, 2049. The note issued by the Company to the seller was distributed to the former principals of Freeman & Co. (who became employees of the Company). Under certain circumstances, the note may be exchanged by each principal for Company stock over a four-year period in equal annual installments starting in December 2020. The Company incurred interest expense on this note of $20 and $28 for the three months ended December 31, 2021 and 2020, respectively, and $59 and $83 for the nine months ended December 31, 2021, and 2020, respectively.

In August 2020, the Company acquired MVP Capital, LLC (“MVP”). Total consideration included an unsecured non-interest bearing note of $4.5 million payable August 14, 2050. The note was issued by the Company to the former principals and sellers of MVP (who became employees of the Company). Under certain circumstances, the note may be exchanged by each seller for a combination of cash and Company stock over a three-year period in equal annual installments starting in August 2021. Contingent consideration was also issued in connection with the acquisition of MVP, which had a carrying value of $12.7 million as of December 31, 2021 and March 31, 2021, which is included in Other liabilities in our Consolidated Balance Sheets.

In July 2021, the Company acquired Baylor Klein, Ltd (“BK”). Contingent consideration was issued in connection with the acquisition of BK, which had a carrying value of $18.7 million as of December 31, 2021, which is included in Other Liabilities in our Consolidated Balance Sheet.

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheet on a fiscal year-end basis as of December 31, 2021 are as follows:

Remaining 2022 (1)	$	71,466
2023	28,020
2024	7,260
2025	15,863
2026	713
2027 and thereafter	10,227
Total	$	133,549

(1) Includes $57.7 million for the acquisition of GCA Corporation shares not purchased through the tender offer, included within Other liabilities. See Note 19 and Note 20 for additional information.

18

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 11 — Accumulated Other Comprehensive (Loss)

Accumulated other comprehensive (loss) is comprised of Foreign currency translation adjustments of $(1,824) and $14,037 for the three months ended December 31, 2021 and 2020, respectively, and $(6,236) and $22,407 for the nine months ended December 31, 2021, and 2020, respectively. We do not expect the change in foreign currency translation to have a material impact on our operating results and financial position.

Accumulated other comprehensive (loss) as of December 31, 2021 was comprised of the following:

Balance, April 1, 2021	$	(20,176)
Foreign currency translation adjustment	(6,236)
Balance, December 31, 2021	$	(26,412)

Note 12 — Income Taxes

The Company’s provision for income taxes was $74,699 and $40,088 for the three months ended December 31, 2021 and 2020, respectively, and $140,099 and $56,020 for the nine months ended December 31, 2021, and 2020, respectively. These represent effective tax rates of 30.0% and 25.3% for the three months ended December 31, 2021 and 2020, respectively, and 27.3% and 20.8% for the nine months ended December 31, 2021, and 2020, respectively.

Note 13 — Earnings Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Numerator:
Net income attributable Houlihan Lokey, Inc.	$	173,735	$	118,515	$	372,578	$	213,405
Denominator:
Weighted average shares of common stock outstanding — basic	64,914,373		66,547,587		65,259,927		65,680,516
Weighted average number of incremental shares pertaining to unvested restricted stock and issuable in respect of unvested restricted stock units, as calculated using the treasury stock method	3,365,566		2,808,760		3,260,922		2,915,987
Weighted average shares of common stock outstanding — diluted	68,279,939		69,356,347		68,520,849		68,596,503
Basic earnings per share	$	2.68	$	1.78	$	5.71	$	3.25
Diluted earnings per share	$	2.54	$	1.71	$	5.44	$	3.11

19

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 14 — Employee Benefit Plans

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution savings plan for its domestic employees and defined contribution retirement plans for its international employees. The Company contributed approximately $2,556 and $2,327 to these plans during the three months ended December 31, 2021 and 2020, respectively, and $5,304 and $4,368 during the nine months ended December 31, 2021 and 2020, respectively.

Share-Based Incentive Plans

Following the IPO, additional awards of restricted shares and restricted stock units have been and will be made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the "2016 Incentive Plan"), which became effective in August 2015 and was amended in October 2017. Under the 2016 Incentive Plan, it is anticipated that the Company will continue to grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent necessary to operate the Company's business. Equity-based incentive awards issued under the 2016 Incentive Plan generally vest over a four-year period. Restricted shares of Class A common stock were granted under the 2016 Incentive Plan to (i) four independent directors in the first quarter of fiscal 2021 at $60.60 per share, (ii) two independent directors in the third quarter of fiscal 2021 at $63.01 per share, and (iii) six independent directors in the first quarter of fiscal 2022 at $73.19 per share.

No excess tax benefit was recognized during the three months ended December 31, 2021 or 2020. An excess tax benefit of $6,922 and $13,408 was recognized during the nine months ended December 31, 2021 and 2020, respectively, as a component of the provision for income taxes and an operating activity on the Consolidated Statements of Cash Flows. The excess tax benefits recognized during the nine months ended December 31, 2021 and 2020 were related to shares vested in April and May 2021 and 2020, respectively.

The share awards are classified as equity awards at the time of grant unless the number of shares granted is unknown. Awards that are settleable in shares based upon a future determinable stock price are classified as liabilities until the price is established and the resulting number of shares is known, at which time they are re-classified from liabilities to equity awards. Activity in equity classified share awards which relate to the Company's 2016 Incentive Plan during the nine months ended December 31, 2021 and 2020 is as follows:

Unvested Share Awards	Shares	Weighted Average Grant Date Fair Value
Balance, April 1, 2021	2,744,605	$	51.37
Granted	1,640,456	73.19
Vested	(1,039,535)	47.80
Forfeited/Repurchased	(71,914)	60.95
Balance, December 31, 2021	3,273,612	$	63.22
Balance, April 1, 2020	3,539,047	$	39.13
Granted	1,044,741	60.60
Vested	(1,770,294)	32.36
Forfeited/Repurchased	(60,904)	50.69
Balance, December 31, 2020	2,752,590	$	51.37

20

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Activity in liability classified share awards during the nine months ended December 31, 2021 and 2020 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2021	$	16,950
Offer to grant	2,076
Share price determined-converted to cash payments	(2,676)
Share price determined-transferred to equity grants	(4,269)
Forfeited	—
Balance, December 31, 2021	$	12,081
Balance, April 1, 2020	$	21,676
Offer to grant	6,410
Share price determined-converted to cash payments	(52)
Share price determined-transferred to equity grants	(6,457)
Forfeited	(274)
Balance, December 31, 2020	$	21,303

Compensation expenses for the Company associated with both equity and liability classified awards totaled $19,152 and $12,642 for the three months ended December 31, 2021 and 2020, respectively, and $72,398 and $46,779 for the nine months ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, there was $159,084 and $143,660, respectively, of total unrecognized compensation cost related to unvested share awards granted under the 2016 Incentive Plan. These costs are recognized over a weighted average period of 1.5 years and 1.4 years, as of December 31, 2021 and 2020, respectively.

On October 19, 2017, our board of directors approved an amendment (the “Amendment”) to the 2016 Incentive Plan reducing the number of shares of common stock available for issuance under the 2016 Incentive Plan by approximately 12.2 million shares. Under the Amendment, the aggregate number of shares of common stock that are available for issuance under awards granted pursuant to the 2016 Incentive Plan is equal to the sum of (i) 8.0 million and (ii) any shares of our Class B common stock that are subject to awards under our 2006 Incentive Plan that terminate, expire or lapse for any reason after October 19, 2017.

The number of shares available for issuance increases annually beginning on April 1, 2018 and ending on April 1, 2025, by an amount equal to the lowest of:

•6,540,659 shares of our Class A common stock and Class B common stock;

•Six percent of the shares of Class A common stock and Class B common stock outstanding on the final day of the immediately preceding fiscal year; and

•such smaller number of shares as determined by our board of directors.

Note 15 — Stockholders' Equity

There are two classes of authorized HL, Inc. common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions.

21

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Class A Common Stock

During the three months ended December 31, 2021 and 2020, 0 and 3,174 shares were issued to non-employee directors, respectively, and 642,693 and 790,025 shares were converted from Class B to Class A, respectively. During the nine months ended December 31, 2021 and 2020, 6,512 and 8,751 shares were issued to non-employee directors, respectively, and 1,745,778 and 3,121,294 shares were converted from Class B to Class A, respectively.

As of December 31, 2021, there were 50,870,525 Class A shares held by the public and 54,273 Class A shares held by non-employee directors. As of December 31, 2020, there were 51,578,208 Class A shares held by the public and 45,475 Class A shares held by non-employee directors.

Class B Common Stock

As of December 31, 2021 and 2020, there were 16,727,176 and 17,472,592, respectively, Class B shares held by the HL Voting Trust.

Dividends

Previously declared dividends related to unvested shares of $7,894 and $5,846 were unpaid as of December 31, 2021 and 2020, respectively.

Stock Subscriptions Receivable

Employees of the Company periodically issued notes receivable to the Company documenting loans made by the Company to such employees for the purchase of restricted shares of the Company.

Share Repurchases

In July 2021, the board of directors authorized an increase to the existing January 2021 share repurchase program to a new aggregate amount of up to $250 million of the Company's Class A common stock and Class B common stock.

During the three months ended December 31, 2021 and 2020, the Company repurchased 0 and 295 shares, respectively, of Class B common stock, to satisfy $0 and $19 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the three months ended December 31, 2021, the Company repurchased an additional 644,900 shares of its outstanding Class A common stock at a weighted average price of $108.90 per share, excluding commissions, for an aggregate purchase price of $70,232. During the three months ended December 31, 2020, the Company repurchased an additional 283,035 shares of its outstanding Class A common stock at a weighted average price of $65.69 per share, excluding commissions, for an aggregate purchase price of $18,593.

During the nine months ended December 31, 2021 and 2020, the Company repurchased 455,402 and 286,730 shares, respectively, of Class B common stock, to satisfy $33,700 and $17,810 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the nine months ended December 31, 2021 the Company repurchased an additional 2,072,934 shares of its outstanding Class A common stock at a weighted average price of $88.35 per share, excluding commissions, for an aggregate purchase price of $183,136. During the nine months ended December 31, 2020, the Company repurchased an additional 684,995 shares of its outstanding Class A common stock at a weighted average price of $65.69 per share, excluding commissions, for an aggregate purchase price of $18,593.

22

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 16 — Leases

Lessee Arrangements

Operating Leases

We lease real estate and equipment used in operations from third parties. As of December 31, 2021, the remaining term of our operating leases ranged from 1 to 15 years with various automatic extensions.

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of December 31, 2021.

Maturity of Operating Leases

	Operating Leases
Remaining 2022	$	8,997
2023	32,830
2024	26,598
2025	26,486
2026	23,704
Thereafter	95,638
Total	214,253
Less: present value discount	(26,989)
Operating lease liabilities	$	187,264

As of December 31, 2021, the Company has entered into operating leases for additional office space that have not yet commenced for approximately $131 million. These operating leases will commence between fiscal year 2022 and fiscal year 2024 with lease terms of 3 years to 10 years.

Lease costs

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Operating lease expense	$	14,705	$	7,169	$	28,379	$	21,967
Variable lease expense (1)	(398)		2,913		5,131		8,040
Short-term lease expense	44		57		134		157
Less: Sublease income	—		(53)		(18)		(154)
Total lease costs	$	14,351	$	10,086	$	33,626	$	30,010

(1)Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.

Weighted-average details

	December 31,
	2021		2020
Weighted-average remaining lease term (years)	8		9
Weighted-average discount rate	3.5	%	3.8	%

23

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Supplemental cash flow information related to leases:

	Nine Months Ended December 31,
	2021		2020
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	24,275	$	23,658
Non-cash activity:
Operating lease right-of-use assets obtained in exchange of Operating lease liabilities	$	7,736	$	30,246
Change in Operating lease right-of-use assets due to remeasurement	(7,760)		(1,208)

Note 17 — Commitments and Contingencies

The Company has been named in various legal actions arising in the normal course of business. In the opinion of the Company, in consultation with legal counsel, the final resolutions of these matters are not expected to have a material adverse effect on the Company’s financial condition, operations and cash flows.

The Company also provides routine indemnifications relating to certain real estate (office) lease agreements under which it may be required to indemnify property owners for claims and other liabilities arising from the Company’s use of the applicable premises. In addition, the Company guarantees the performance of its subsidiaries under certain office lease agreements. The terms of these obligations vary, and because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the maximum amount that it could be obligated to pay under such contracts. Based on historical experience and evaluation of specific indemnities, management believes that judgments, if any, against the Company related to such matters are not likely to have a material effect on the consolidated financial statements. Accordingly, the Company has not recorded any liability for these obligations as of December 31, 2021 or March 31, 2021.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2021 Annual Report.

24

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 18 — Segment and Geographical Information

The Company’s reportable segments are described in Note 1 and each are individually managed and provide separate services that require specialized expertise for the provision of those services. Revenues by segment represent fees earned on the various services offered within each segment. Segment profit consists of segment revenues, less (1) direct expenses including compensation, travel, meals and entertainment, professional fees, and bad debt and (2) expenses allocated by headcount such as communications, rent, depreciation and amortization, and office expense. The corporate expense category includes costs not allocated to individual segments, including charges related to incentive compensation and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and compliance and legal. The following tables present information about revenues, profit and assets by segment and geography.    

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by segment
Corporate Finance	$	715,663	$	306,171	$	1,314,064	$	502,191
Financial Restructuring	89,273		177,995		271,232		392,006
Financial and Valuation Advisory	83,862		53,710		213,496		130,551
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748
Segment profit (1)
Corporate Finance	$	277,546	$	96,431	$	513,880	$	143,167
Financial Restructuring	15,310		78,855		61,485		169,832
Financial and Valuation Advisory	28,127		13,901		68,703		33,213
Total segment profit	320,983		189,187		644,068		346,212
Corporate expenses (2)	71,723		30,771		129,813		78,331
Other (income)/expense, net	253		(187)		1,005		(1,544)
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2)Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	December 31, 2021		March 31, 2021
Assets by segment
Corporate Finance	$	996,830	$	575,241
Financial Restructuring	188,796		181,239
Financial and Valuation Advisory	152,888		136,761
Total segment assets	1,338,514		893,241
Corporate assets	1,707,248		1,532,826
Total assets	$	3,045,762	$	2,426,067

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Income before provision for income taxes by geography
United States	$	196,322	$	123,774	$	407,563	$	210,580
International	52,685		34,829		105,687		58,845
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

25

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by geography
United States	$	646,301	$	414,891	$	1,390,754	$	815,904
International	242,497		122,985		408,038		208,844
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748

	December 31, 2021		March 31, 2021
Assets by geography
United States	2,034,207		1,837,332
International	1,011,555		588,735
Total assets	$	3,045,762	$	2,426,067

Note 19 — Business Combinations

On October 4, 2021 ("the Acquisition Date"), the Company completed a tender offer process resulting in the Company's acquisition of approximately 90% of GCA Corporation's (“GCA”) common stock for cash consideration of $531.9 million. The Company then acquired the GCA shares not purchased through the tender offer by way of a second-step transaction, which occurred on November 5, 2021 for $57.7 million (included within Other liabilities in the December 31, 2021 Consolidated Balance Sheet). The consideration for these shares was paid on January 20, 2022, subsequent to the period ended December 31, 2021. This all-cash transaction was valued at approximately $589.6 million, based on the consideration of ¥1,398 per share of GCA. Total GCA related transaction costs included in non-compensation expenses were $(5,436) and $(6,513) for the three and nine months ended December 31, 2021, respectively.

GCA is a global technology-focused investment bank providing M&A advisory and capital markets advisory services in Europe, Japan/Asia, and the United States. The addition of GCA significantly increases the Company's position in the technology sector, which is critical to meeting the needs of our clients as technology increasingly touches every business sector. GCA also increases the depth and breadth of our UK and European operations and this significant increase in scale has a direct impact on our ability to better serve our clients, both corporate and private equity, and meaningfully expands our geographic footprint in the UK and Europe. GCA also creates a significant platform for us to build from in the Asia Pacific region, meaningfully increasing our presence there and allowing us to begin to reach for scale in this rapidly growing part of the world.

Acquisition Consideration
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date	49,382,808
Cash consideration per share	¥	1,398
Cash consideration for tendered common shares	$	531,883
Cash consideration for remaining shares purchased	57,686
Total cash consideration	$	589,569

The Company financed the acquisition with cash on hand.

26

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

Purchase Price Allocation

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as part of the GCA acquisition. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. The intangible assets subject to amortization will be amortized on a straight-line basis over their estimated useful lives as of the acquisition date.

	Fair Value		Weighted-Average Amortization Period
Assets acquired:
Cash and cash equivalents	$	226,550
Investment securities	515
Accounts receivable	53,431
Unbilled work in progress	4,672
Property and equipment	8,727
Operating lease right-of-use assets	27,383
Receivable from affiliates	1,288
Other assets	20,503
Intangible assets other than goodwill
Backlog	42,000		1.2 years
Trade name	17,100		2.0 years
Customer relationships	15,200		1.0 year
Total intangible assets acquired	74,300		1.3 years
Total assets	417,369
Liabilities assumed:
Accrued salaries and bonuses	152,409
Accounts payable and accrued expenses	22,627
Payable to affiliates	15
Deferred income	78
Income taxes payable	5,857
Deferred income taxes	3,199
Operating lease liabilities	27,527
Other liabilities	19,897
Total liabilities	231,609
Net identifiable assets acquired	185,760
Goodwill	403,809
Total GCA equity value	$	589,569

We applied the acquisition method of accounting in accordance with Financial Accounting Standards Board ("FASB") ASC Topic 805, Business Combinations ("ASC 805"). Goodwill of $403.8 million was recognized as a result of the transaction and relates to (i) the value of assets that do not meet the definition of an identifiable intangible asset under ASC 805, but that do contribute to the value of the acquired business, including the assembled workforce and relationships with customers that are not tracked; (ii) the assemblage value associated with acquiring an on-going business whose value is worth more than simply the sum of its parts; and (iii) the expected synergies associated with combining global operations. None of the goodwill recognized is expected to be deductible for income tax purposes. The goodwill recognized is attributable to our CF business segment.

27

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(In thousands, except share data or as otherwise stated)

The results of operations for GCA have been included in the Company's Consolidated Financial Statements since the acquisition date. GCA contributed $210.5 million and $12.1 million, to Revenue and Net income, respectively, for the period from the Acquisition Date to December 31, 2021.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of GCA on the Company as if it had occurred on April 1, 2020, the first day of the Company's fiscal year-end 2021, and is not necessarily indicative of either future results of operations or results that may have been achieved had the acquisition been consummated as of this date. The below unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on April 1, 2020, including the following:

•Elimination of transaction costs incurred by the Company directly attributable to the GCA acquisition of $(5,436) and $(6,513) for the three and nine months ended December 31, 2021, respectively.

•An increase/(decrease) of amortization expense of $(12,117) and $14,688 for the three months ended December 31, 2021 and 2020, respectively, and $(437) and $43,589 for the nine months ended December 31, 2021 and 2020, respectively, directly attributable to the GCA acquisition. This amortization was recognized as a result of the allocation of purchase consideration to the definite-lived intangible assets subject to amortization, noted above.

•Resulting tax impact of above adjustments of $5,266 and $(3,716), for the three months ended December 31, 2021 and 2020, respectively, and $1,897 and $(9,067) for the nine months ended December 31, 2020 and 2021, respectively.

	(Unaudited)
	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenue	$	888,798	$	625,791	$	2,047,030	$	1,198,360
Net income	186,595		110,913		397,285		187,270

Note 20 — Subsequent Events

On January 20, 2022, the Company completed its final payment of $57.7 million for the remaining shares of GCA. See Note 19 for additional information.

On January 26, 2022, the Company's board of directors declared a quarterly cash dividend of $0.43 per share of Class A and Class B common stock, payable on March 15, 2022, to shareholders of record on March 2, 2022.

28

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion should be read together with our consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. We make statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “intends,” “predicts,” “potential” or “continue,” the negative of these terms or other similar expressions. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to, the factors listed under the heading “Cautionary Note Regarding Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended March 31, 2021 (the "2021 Annual Report"). Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements speak only as of the date of this filing. You should not rely upon forward-looking statements as a prediction of future events. We are under no duty to and we do not undertake any obligation to update or review any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations whether as a result of new information, future developments or otherwise.

Key Financial Measures

Revenues

Revenues include fee revenues and reimbursements of expenses (see Note 2 and Note 3 to our unaudited consolidated financial statements in this Form 10-Q for additional information). Revenues reflect revenues from our Corporate Finance (“CF”), Financial Restructuring (“FR”), and Financial and Valuation Advisory (“FVA”) business segments that substantially consist of fees for advisory services.

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement. In general, advisory fees are paid at the time an engagement letter is signed (“Retainer Fees”), during the course of the engagement (“Progress Fees”), or upon the successful completion of a transaction or engagement (“Completion Fees”).

CF provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of Completion Fees. A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to Retainer Fees and in some cases Progress Fees that may have been received.

FR provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

FVA primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

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Operating Expenses

Our operating expenses are classified as employee compensation and benefits expense and non-compensation expense; revenue and headcount are the primary drivers of our operating expenses. Reimbursements of certain out-of-pocket deal expenses are recorded on a gross basis and are therefore included in both Revenues and Operating expenses on the Consolidated Statements of Comprehensive Income.

Employee Compensation and Benefits Expense. Our employee compensation and benefits expense, which accounts for the majority of our operating expenses, is determined by management based on revenues earned, headcount, the competitiveness of the prevailing labor market, and anticipated compensation expectations of our employees. These factors may fluctuate, and as a result, our employee compensation and benefits expense may fluctuate materially in any particular period. Accordingly, the amount of employee compensation and benefits expense recognized in any particular period may not be consistent with prior periods or indicative of future periods.

Our employee compensation and benefits expense consists of base salary, payroll taxes, benefits, annual incentive compensation payable as cash bonus awards, deferred cash bonus awards, and the amortization of equity-based bonus awards. Base salary and benefits are paid ratably throughout the year. Our annual equity-based bonus awards include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. These equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each fiscal year; accordingly, expenses are amortized over the stated vesting period. In most circumstances, the unvested portion of these awards is subject to forfeiture should the employee depart from the Company. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performance, and are generally paid in the first fiscal quarter of each fiscal year with respect to prior year performance. Generally, a portion of the cash bonus is deferred and paid in the third quarter of the fiscal year in which the bonus is awarded. Annual bonuses paid to employees of GCA Corporation (“GCA”) were historically paid in the first calendar quarter of each year and we will maintain that schedule for calendar year 2022 and pay all GCA bonuses in the first calendar quarter of 2022 with respect to calendar year 2021 performance. Bonuses paid to GCA employees in 2022 will include both cash and Houlihan Lokey Class B common stock awards subject to vesting similar to what is described above. After the first calendar quarter 2022 payment, GCA will be on the same bonus schedule as Houlihan Lokey referred to above. We refer to the ratio of our employee compensation and benefits expenses to our revenues as our "Compensation Ratio."

Non-Compensation Expense. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, and other operating expenses. We refer to all of these expenses as non-compensation expenses. A portion of our non-compensation expenses fluctuates in response to changes in headcount.

Other Income/(Expense), Net

Other (income)/expense, net includes (i) interest income earned on non-marketable and investment securities, cash and cash equivalents, loans receivable from affiliates, employee loans, and commercial paper, (ii) interest expense and fees on our 2019 Line of Credit (defined herein), (iii) interest expense on the loan payable to affiliate, loans payable to former shareholders, and the loan payable to non-affiliates, (iv) equity income and/or gains or losses from funds and partnership interests where we have more than a minor ownership interest or more than minor influence over operations, but do not have a controlling interest and are not the primary beneficiary, and (v) gains and/or losses associated with the reduction/increase of earnout liabilities.

Results of Consolidated Operations

The following is a discussion of our results of operations for the nine months ended December 31, 2021 and 2020. As described in Note 19 of Part I, Item 1 of this Form 10-Q, on October 4, 2021 ("the Acquisition Date"), the Company completed step one of a two step the acquisition of GCA. Our results of consolidated operations include those of GCA from the Acquisition Date through December 31, 2021. For a more detailed discussion of the factors that affected the revenues and the operating expenses of our CF, FR, and FVA business segments in these periods, see Part I, Item 2 of this Form 10-Q under the heading “Business Segments” below.

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	Three Months Ended December 31,						Nine Months Ended December 31,
($ in thousands)	2021		2020		Change		2021		2020		Change
Revenues	$	888,798	$	537,876	65	%	$	1,798,792	$	1,024,748	76	%
Operating expenses:
Employee compensation and benefits	549,376		339,743		62	%	1,115,054		654,113		70	%
Non-compensation	90,162		39,717		127	%	169,483		102,754		65	%
Total operating expenses	639,538		379,460		69	%	1,284,537		756,867		70	%
Operating income	249,260		158,416		57	%	514,255		267,881		92	%
Other (income)/expense, net	253		(187)		(235)	%	1,005		(1,544)		(165)	%
Income before provision for income taxes	249,007		158,603		57	%	513,250		269,425		90	%
Provision for income taxes	74,699		40,088		86	%	140,099		56,020		150	%
Net income	$	174,308	$	118,515	47	%	$	373,151	$	213,405	75	%
Net income attributable to noncontrolling interest	$	(573)	$	—	100	%	$	(573)	$	—	100	%
Net income attributable to Houlihan Lokey, Inc.	$	173,735	$	118,515	47	%	$	372,578	$	213,405	75	%

Three Months Ended December 31, 2021 versus December 31, 2020

Revenues were $888.8 million for the three months ended December 31, 2021, compared with $537.9 million for the three months ended December 31, 2020, representing an increase of 65%. Revenues increased primarily as a result of (i) the completion of our acquisition of GCA during the third quarter ended December 31, 2021, resulting in the consolidation of their operating results and (ii) a significant increase in the number of closed transactions and the average transaction fee on closed transactions for our CF business segment. For the quarter, CF revenues increased 134%, FR revenues decreased (50)%, and FVA revenues increased 56% when compared with the three months ended December 31, 2020. All revenues associated with GCA for the third quarter ended December 31, 2021 are included in our CF business segment.

Operating expenses were $639.5 million for the three months ended December 31, 2021, compared with $379.5 million for the three months ended December 31, 2020, representing an increase of 69%. Employee compensation and benefits expense, as a component of operating expenses, was $549.4 million for the three months ended December 31, 2021, compared with $339.7 million for the three months ended December 31, 2020, representing an increase of 62%. The increase in employee compensation and benefits expense was primarily a result of an increase in revenues for the quarter when compared with the same quarter last year. The Compensation Ratio was 61.8% for the three months ended December 31, 2021, compared with 63.2% for the three months ended December 31, 2020. Non-compensation expense, as a component of operating expenses, was $90.2 million for the three months ended December 31, 2021, compared with $39.7 million for the three months ended December 31, 2020, representing an increase of 127%. The increase in non-compensation expense was primarily a result of non-compensation expenses attributable to GCA, amortization of intangible assets recognized in connection with the acquisition of GCA, integration and acquisition related costs associated with our acquisition of GCA and an increase in travel, meals, and entertainment expenses and other operating expenses.

Other (income)/expense, net decreased (235)% to $0.3 million for the three months ended December 31, 2021, compared with $(0.2) million for the three months ended December 31, 2020, primarily due to a loss recognized on an equity method investment.

The provision for income taxes for the three months ended December 31, 2021 was $74.7 million, which reflected an effective tax rate of 30.0%. The provision for income taxes for the three months ended December 31, 2020 was $40.1 million which reflected an effective tax rate of 25.3%. The increase in the Company’s tax rate during the third quarter ended December 31, 2021 relative to the same period in 2020 was primarily a result of increased state taxes, increased non-deductible expenses and increased foreign taxes.

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Nine Months Ended December 31, 2021 versus December 31, 2020

Revenues were $1,798.8 million for the nine months ended December 31, 2021, compared with $1,024.7 million for the nine months ended December 31, 2020, representing an increase of 76%. Revenues increased primarily as a result of (i) the completion of our acquisition of GCA during the third quarter ended December 31, 2021, resulting in the consolidation of their operating results and (ii) a significant increase in the number of closed transactions and the average transaction fee on closed transactions for our CF business segment. For the nine months ended December 31, 2021, CF revenues increased 162%, FR revenues decreased (31)%, and FVA revenues increased 64% when compared with the nine months ended December 31, 2020.

Operating expenses were $1,284.5 million for the nine months ended December 31, 2021, compared with $756.9 million for the nine months ended December 31, 2020, an increase of 70%. Employee compensation and benefits expense, as a component of operating expenses, was $1,115.1 million for the nine months ended December 31, 2021, compared with $654.1 million for the nine months ended December 31, 2020, an increase of 70%. The increase in employee compensation and benefits expense was primarily a result of higher revenues when compared with the same period last year. The Compensation Ratio was 62.0% for the nine months ended December 31, 2021, compared with 63.8% for the nine months ended December 31, 2020. Non-compensation expense, as a component of operating expenses, was $169.5 million for the nine months ended December 31, 2021, compared with $102.8 million for the nine months ended December 31, 2020, an increase of 65%. The increase in non-compensation expense was primarily a result of non-compensation expenses attributable to GCA, amortization of intangible assets recognized in connection with the acquisition of GCA, integration and acquisition related costs associated with our acquisition of GCA and an increase in travel, meals, and entertainment expenses and other operating expenses.

Other (income)/expense, net decreased (165)% to $1.0 million for the nine months ended December 31, 2021, compared with $(1.5) million for the nine months ended December 31, 2020, primarily due to a loss recognized on an equity method investment.

The provision for income taxes for the nine months ended December 31, 2021 was $140.1 million, which reflected an effective tax rate of 27.3%. The provision for income taxes for the nine months ended December 31, 2020 was $56.0 million, which reflected an effective tax rate of 20.8%. The increase in the Company's tax rate during the nine months ended December 31, 2021 relative to the same period in 2020 was primarily a result of increased state taxes, increased foreign taxes and decreased stock compensation deductions.

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Business Segments

The following table presents revenues, expenses and contributions from our continuing operations by business segment. The revenues by segment represents each segment’s revenues, and the profit by segment represents profit for each segment before corporate expenses, other (income)/expense, net, and income taxes.

	Three Months Ended December 31,						Nine Months Ended December 31,
($ in thousands)	2021		2020		Change		2021		2020		Change
Revenues by Segment
Corporate Finance	$	715,663	$	306,171	134	%	$	1,314,064	$	502,191	162	%
Financial Restructuring	89,273		177,995		(50)	%	271,232		392,006		(31)	%
Financial and Valuation Advisory	83,862		53,710		56	%	213,496		130,551		64	%
Revenues	$	888,798	$	537,876	65	%	$	1,798,792	$	1,024,748	76	%
Segment Profit (1)
Corporate Finance	$	277,546	$	96,431	188	%	$	513,880	$	143,167	259	%
Financial Restructuring	15,310		78,855		(81)	%	61,485		169,832		(64)	%
Financial and Valuation Advisory	28,127		13,901		102	%	68,703		33,213		107	%
Total Segment Profit	320,983		189,187		70	%	644,068		346,212		86	%
Corporate Expenses (2)	71,723		30,771		133	%	129,813		78,331		66	%
Other (income)/expense, net	253		(187)		(235)	%	1,005		(1,544)		(165)	%
Income before provision for income taxes	$	249,007	$	158,603	57	%	$	513,250	$	269,425	90	%
Segment Metrics
Number of Managing Directors
Corporate Finance	198		123		61	%	198		123		61	%
Financial Restructuring	52		47		11	%	52		47		11	%
Financial and Valuation Advisory	34		31		10	%	34		31		10	%
Number of Closed Transactions/Fee Events (3)
Corporate Finance	238		121		97	%	456		209		118	%
Financial Restructuring	21		44		(52)	%	65		103		(37)	%
Financial and Valuation Advisory	901		639		41	%	1,673		1,134		48	%

(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment Profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2)Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

(3)Fee Events applicable to FVA only; a Fee Event includes any engagement that involves revenue activity during the measurement period with a revenue minimum of one thousand dollars. References to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in Note 2 of our Consolidated Financial Statements.

Corporate Finance

Three Months Ended December 31, 2021 versus December 31, 2020

Revenues for CF were $715.7 million for the three months ended December 31, 2021, compared with $306.2 million for the three months ended December 31, 2020, representing an increase of 134%. Revenues increased primarily due to (i) the completion of our acquisition of GCA during the third quarter ended December 31, 2021, resulting in the consolidation of their revenues into our CF business segment and (ii) a significant increase in the number of closed transactions and the average transaction fee on closed transactions.

Segment profit for CF was $277.5 million for the three months ended December 31, 2021, compared with $96.4 million for the three months ended December 31, 2020, representing an increase of 188%. Profitability increased primarily as a result of an increase in revenues and a decrease in compensation expenses as a percentage of revenues when compared to the same quarter last year.

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Nine Months Ended December 31, 2021 versus December 31, 2020

Revenues for CF were $1,314.1 million for the nine months ended December 31, 2021, compared with $502.2 million for the nine months ended December 31, 2020, representing an increase of 162%. Revenues increased primarily due to a significant increase in the number of closed transactions and an increase in the average transaction fee on closed transactions when compared to the same period last year. Revenues also increased for the nine months ended December 31, 2021 due to the completion of our acquisition of GCA during the third quarter ended December 31, 2021, resulting in the consolidation of their revenues into our CF business segment.

Segment profit for CF was $513.9 million for the nine months ended December 31, 2021, compared with $143.2 million for the nine months ended December 31, 2020, representing an increase of 259%. Profitability increased primarily as a result of an increase in revenues and a decrease in compensation and non-compensation expenses as a percentage of revenues when compared to the same period last year.

Financial Restructuring

Three Months Ended December 31, 2021 versus December 31, 2020

Revenues for FR were $89.3 million for the three months ended December 31, 2021, compared with $178.0 million for the three months ended December 31, 2020, representing a decrease of (50)%. Revenues decreased primarily due to a decrease in the number of closed transactions when compared to the same quarter last year.

Segment profit for FR was $15.3 million for the three months ended December 31, 2021, compared with $78.9 million for the three months ended December 31, 2020, a decrease of (81)%. Profitability decreased primarily as a result of lower revenues and an increase in compensation expenses as a percentage of revenues when compared to the same quarter last year.

Nine Months Ended December 31, 2021 versus December 31, 2020

Revenues for FR were $271.2 million for the nine months ended December 31, 2021, compared with $392.0 million for the nine months ended December 31, 2020, representing a decrease of (31)%. The decrease in revenues was primarily a result of a decrease in the number of closed transactions when compared to the same period last year.

Segment profit for FR was $61.5 million for the nine months ended December 31, 2021, compared with $169.8 million for the nine months ended December 31, 2020, a decrease of (64)%. Profitability decreased primarily as a result of lower revenues and an increase in compensation expenses as a percentage of revenues when compared to the same period last year.

Financial and Valuation Advisory

Three Months Ended December 31, 2021 versus December 31, 2020

Revenues for FVA were $83.9 million for the three months ended December 31, 2021, compared with $53.7 million for the three months ended December 31, 2020, representing an increase of 56%. Revenues increased primarily as a result of an increase in the number of Fee Events when compared to the same quarter last year.

Segment profit for FVA was $28.1 million for the three months ended December 31, 2021, compared with $13.9 million for the three months ended December 31, 2020, an increase of 102%. Profitability increased primarily as a result of an increase in revenues when compared to the same quarter last year.

Nine Months Ended December 31, 2021 versus December 31, 2020

Revenues for FVA were $213.5 million for the nine months ended December 31, 2021, compared with $130.6 million for the nine months ended December 31, 2020, representing an increase of 64%. The increase in revenues was primarily a result of an increase in the number of Fee Events when compared to the same period last year.

Segment profit for FVA was $68.7 million for the nine months ended December 31, 2021, compared with $33.2 million for the nine months ended December 31, 2020, an increase of 107%. Profitability increased primarily as a result of an increase in revenues when compared to the same period last year.

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Corporate Expenses

Three Months Ended December 31, 2021 versus December 31, 2020

Corporate expenses were $71.7 million for the three months ended December 31, 2021, compared with $30.8 million for the three months ended December 31, 2020. This 133% increase was primarily driven by corporate expenses attributable to GCA, integration and acquisition related costs associated with our acquisition of GCA and amortization and depreciation.

Nine Months Ended December 31, 2021 versus December 31, 2020

Corporate expenses were $129.8 million for the nine months ended December 31, 2021, compared with $78.3 million for the nine months ended December 31, 2020. This 66% increase was primarily driven by the aforementioned integration and acquisition related costs associated with our acquisition of GCA and amortization and depreciation.

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Liquidity and Capital Resources

Our current assets comprise cash and cash equivalents, investment securities, receivables from affiliates, accounts receivable, and unbilled work in progress related to fees earned from providing advisory services. Our current liabilities include deferred income, accounts payable and accrued expenses, accrued salaries and bonuses, income taxes payable, and current portion of loan obligations.

Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. As of December 31, 2021 and March 31, 2021, we had $508 million and $283 million of cash in foreign subsidiaries, respectively. Our excess cash may be invested from time to time in short term investments, including treasury securities, commercial paper, certificates of deposit, and investment grade corporate debt securities, and special purpose acquisition companies. Please refer to Note 6 for further detail.

As of December 31, 2021 and March 31, 2021, our restricted cash, cash and cash equivalents, and investment securities were as follows:

(In thousands)	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Investment securities	39,829		208,618
Total unrestricted cash and cash equivalents, including investment securities	1,098,432		1,055,469
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash, including investment securities	$	1,098,805	$	1,055,842

(1)Represents a deposit in support of a letter of credit issued for our Frankfurt office.

Our liquidity is highly dependent upon cash receipts from clients that are generally dependent upon the successful completion of transactions, as well as the timing of receivables collections, which typically occur within 60 days of billing. As of December 31, 2021, accounts receivable, net of credit losses was $195.9 million. As of December 31, 2021, unbilled work in progress, net of credit losses was $86.5 million.

On August 23, 2019, the Company entered into a syndicated revolving line of credit with the Bank of America, N.A. and certain other financial institutions party thereto, which allows for borrowings of up to $100 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200 million) and matures on August 23, 2022 (the "2019 Line of Credit"). As of December 31, 2021, no principal was outstanding under the 2019 Line of Credit. The agreement governing this facility provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. The loan agreement requires compliance with certain loan covenants including but not limited to the maintenance of minimum consolidated earnings before interest, taxes, depreciation and amortization of no less than $150 million as of the end of any quarterly 12-month period and certain leverage ratios including a consolidated leverage ratio of less than 2.00 to 1.00. As of December 31, 2021, we were, and expect to continue to be, in compliance with such covenants.

The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligations relating to notes payable and contingent consideration issued in connection with businesses previously acquired (see Note 10 included in Part I, Item 1 of this Form 10-Q).

In connection with certain acquisitions, certain employees may be entitled to deferred consideration, primarily in the form of retention payments, should certain service and/or performance conditions be met in the future. As a result of these conditions, such deferred consideration would be expensed as compensation in current and future periods and has been accrued as liabilities on the Consolidated Balance Sheets as of December 31, 2021 and March 31, 2021.

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Cash Flows

Our operating cash flows are primarily influenced by the amount and timing of receipt of advisory fees and the payment of operating expenses, including payments of incentive compensation to our employees. We pay a significant portion of our incentive compensation during the first and third quarters of each fiscal year. A summary of our operating, investing, and financing cash flows is as follows:

	Nine Months Ended December 31,
(In thousands)	2021		2020		Change
Operating activities:
Net income	$	373,151	$	213,405	75	%
Non-cash charges	118,975		77,332		54	%
Other operating activities	180,009		16,447		994	%
Net cash provided by operating activities	672,135		307,184		119	%
Net cash used in investing activities	(146,352)		(122,067)		20	%
Net cash provided by/(used in) financing activities	(309,976)		57,181		(642)	%
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(4,055)		10,988		(137)	%
Net increase in cash, cash equivalents, and restricted cash	211,752		253,286		(16)	%
Cash, cash equivalents, and restricted cash — beginning of period	847,224		380,746		123	%
Cash, cash equivalents, and restricted cash — end of period	$	1,058,976	$	634,032	67	%

Nine Months Ended December 31, 2021

Operating activities resulted in a net inflow of $672.1 million, primarily attributable to strong performance across the Company. Investing activities resulted in a net outflow of $(146.4) million, primarily attributable to the acquisition of GCA, as described in Note 19. Financing activities resulted in a net outflow of $(310.0) million, primarily attributable to share repurchases, dividend payments, and payments to settle employee tax obligations on share-based awards.

Nine Months Ended December 31, 2020

Operating activities resulted in a net inflow of $307.2 million primarily attributable to strong performance across the Company. Investing activities resulted in a net outflow of $(122.1) million primarily attributable to purchases of investment securities, partially offset by sales or maturities of investment securities. Financing activities resulted in a net inflow of $57.2 million primarily attributable to proceeds from the Company's May 2020 offering, partially offset by dividends paid and share repurchases.

Contractual Obligations

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2021 Annual Report.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period for which they are determined to be necessary.

Business Combinations

Accounting for business combinations requires management to make significant estimates and assumptions. We allocate the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date, with the consideration in excess recorded a goodwill. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, expected asset lives, geographic risk premiums, discount rates, and more. The amounts and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.

For additional information on critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in the MD&A of the 2021 Annual Report.

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Recent Accounting Developments

For information on recently issued accounting developments and their impact or potential impact on our consolidated financial statements, see Note 2 to our unaudited consolidated financial statements in this Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Market Risk and Credit Risk

Our business is not capital intensive and we generally do not issue debt or invest in derivative instruments, other than for foreign currency hedging purposes. As a result, we are not subject to significant market risk (including interest rate risk) or credit risk (except in relation to receivables). We maintain our cash and cash equivalents with financial institutions with high credit ratings. Although these deposits are generally not insured, management believes we are not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Our cash and cash equivalents are denominated primarily in U.S. dollars, pound sterling and euros, and we face foreign currency risk in our cash balances and other assets and liabilities held in accounts outside the U.S. due to potential currency movements and the associated foreign currency translation accounting requirements.

We regularly review our accounts receivable and allowance for credit losses by considering factors such as historical experience, credit quality, age of the accounts receivable and recoverable expense balances, and the current economic conditions that may affect a customer’s ability to pay such amounts owed to us. We maintain an allowance for credit losses that, in our opinion, provides for an adequate reserve to cover losses that may be incurred.

Risks Related to Cash and Short Term Investments

Our cash is maintained in U.S. and non-U.S. bank accounts. We have exposure to foreign exchange risks through all of our international affiliates. However, we believe our cash is not subject to any material interest rate risk, equity price risk, credit risk or other market risk. Consistent with our past practice, we expect to maintain our cash in bank accounts or highly liquid securities.

Exchange Rate Risk

The exchange rate of the U.S. dollar relative to the currencies in the non-U.S. countries in which we operate may have an effect on the reported value of our non-U.S. dollar denominated or based assets and liabilities and, therefore, be reflected as a change in other comprehensive income. Our non-U.S. assets and liabilities that are sensitive to exchange rates consist primarily of trade payables and receivables, work in progress, and cash. The net impact of the fluctuation of foreign currencies in other comprehensive income within the Consolidated Statements of Comprehensive Income was $(1,824) and $14,037 during the three months ended December 31, 2021 and 2020, respectively, and $(6,236) and $22,407 during the nine months ended December 31, 2021 and 2020, respectively.

In addition, the reported amounts of our revenues and expenses may be affected by movements in the rate of exchange between the currencies in the non-U.S. countries in which we operate and the U.S. dollar, affecting our operating results. We have analyzed our potential exposure to changes in the value of the U.S. dollar relative to the pound sterling and euro, the primary currencies of our European operations, by performing a sensitivity analysis on our net income, and determined that while our earnings are subject to fluctuations from changes in foreign currency rates, at this time we do not believe we face any material risk in this respect.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of December 31, 2021, we had one foreign currency forward contract outstanding between the pound sterling and the euro with a notional balance of €4.1 million. The change in fair value of this contracts represented a net gain included in Other operating expenses of $11 during the three months ended December 31, 2021. We did not have any outstanding foreign currency forward contracts as of December 31, 2020.

In summary, we have been impacted by changes in exchange rates and the potential impact of future currency fluctuation will increase as our international expansion continues. The magnitude of this impact will depend on the timing and volume of revenues and expenses of, and the amounts of assets and liabilities in, our foreign subsidiaries along with the timing of changes in the relative value of the U.S. dollar to the currencies of the non-U.S. countries in which we operate.

38

Item 4.        Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management, including the chief executive officer and chief financial officer, recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2021.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control over financial reporting performed during the fiscal quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. There has been no material change in the nature of our legal proceedings from the descriptions contained in our 2021 Annual Report.

Item 1A.    Risk Factors

There have been no material changes to the risk factors disclosed in our 2021 Annual Report.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

On October 22, 2021, the Company issued 31,954 shares of Class B common stock to certain former employees of a business acquired in 2020. The Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering and received no proceeds in connection with this issuance.

The following table summarizes all of the repurchases of Houlihan Lokey, Inc. equity securities during the quarter ended December 31, 2021:

Period	Total Number of Shares Purchased	Average Price Paid Per  Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2021 - October 31, 2021	—	$	—	—	$	239,252,908
November 1, 2021 - November 30, 2021	300,000	115.81		300,000	204,510,321
December 1, 2021 - December 31, 2021	344,900	102.90		344,900	169,021,404
Total	644,900	$	108.90	644,900	$	169,021,404

(1)The shares of Class A common stock repurchased through this program have been retired. In July 2021, the Company’s board of directors authorized an increase to the existing January 2021 share repurchase program, which provides for share repurchases of a new aggregate amount of up to $250 million of the Company's Class A common stock and Class B common stock.

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Item 3.    Defaults upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.

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Item 6.    Exhibits

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed / Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of Houlihan Lokey, Inc., dated August 18, 2015.	8-K	333-205610	3.1	8/21/15
3.2	Amended and Restated Bylaws of the Company, dated August 18, 2015.	8-K	333-205610	3.2	8/21/15
10.1	Transaction Agreement, dated as of August 3, 2021, by and among the Company and GCA Corporation.					*
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.					*
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.					*
32.1	Section 1350 Certification of Chief Executive Officer.					**
32.2	Section 1350 Certification of Chief Financial Officer.					**
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					*
104.1	Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.					*

*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOULIHAN LOKEY, INC.
Date:	February 8, 2022	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)
Date:	February 8, 2022	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-10.1

Exhibit 10.1

EXECUTION VERSION

TRANSACTION AGREEMENT

This TRANSACTION AGREEMENT (this “Agreement”) is made and entered into as of August 3, 2021 (the “Effective Date”), by and between GCA Corporation, a corporation organized under the laws of Japan (the “Company”), andHoulihan Lokey, Inc., a corporation organized under the laws of the State of Delaware (“Buyer”). Buyer and Company are also sometimes referred to collectively as the “Parties” and individually as a “Party”.

RECITALS

WHEREAS, Company operates a mergers and acquisitions advisory business;

WHEREAS, Buyer intends to acquire all of the issued and outstanding shares of common stock of the Company (the “Shares”) and Stock Options (together with Shares, “Company Securities”) through (a) an all-cash tender offer bid (such tender offer bid, including any amendments thereto or extensions thereof made in accordance with the terms of this Agreement and applicable Law, the “TOB”), and (b) a subsequent Squeeze-Out;

WHEREAS, the Company intends to support the TOB and the Squeeze-out; and

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.01    Definitions. As used in this Agreement, the following terms have the respective meanings set forth below:

“Acquisition Proposal” means any offer or proposal concerning any (a) merger, consolidation, other business combination or similar transaction involving the Company or any Company’s Subsidiaries, (b) sale, lease or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets of the Company (including Equity Interests of a Company’s Subsidiaries) or any Company Subsidiary representing 10% or more of the consolidated assets, revenues or net income of the Company and the Company Subsidiaries, (c) issuance or sale or other disposition (including by way of merger, consolidation, business combination, share exchange, joint venture or similar transaction) of Equity Interests representing 10% or more of the voting power of the Company, (d) transaction in which any Person would acquire beneficial ownership or the right to acquire beneficial ownership, or any group has been formed which beneficially owns or has the right to acquire beneficial ownership of, Equity Interests

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representing10% or more of the voting power of the Company, or (e) any combination of the foregoing (in each case, other than the TOB and the Squeeze-Out).

“Action” shall mean any claim, action, suit, arbitration, mediation, proceeding or investigation, whether civil, criminal or administrative, by or before any Governmental Authority or arbitral body.

“Agreement” has the meaning set forth in the opening sentence of this Agreement.

“Alternative Acquisition Agreement” has the meaning set forth in Section 2.02(d)(i).

“Anti-Social Force” shall mean (a) a Person who falls within any of the following criminal or anti-social classifications: (i) criminal syndicate (boryokudan), (ii) criminal syndicate (boryokudan) member or a Person who was a criminal syndicate (boryokudan) member at any time within the most recent five years, (iii) criminal syndicate (boryokudan) associate, (iv) criminal syndicate (boryokudan)-related company, (v) racketeer (sokaiya), social/political movement racketeer, or special intelligence violence group, (vi) any group or individual, other than those listed in the foregoing items, that should receive the same treatment under Japanese criminal laws as those listed in the foregoing items ((i) through (vi) collectively referred to as a “Criminal Association” (boryokudan tou)), (vii) any Person who has a relationship with and whose management is under the Control of a Criminal Association, (viii) any Person who has a relationship with a Criminal Association that is substantially involved in such Person’s management, (ix) any Person who has a relationship with a Criminal Association and takes advantage of such relationship to obtain unfair profits or to damage a third party, (x) any Person who has a relationship with a Criminal Association and provides such Criminal Association with money, support or other resources, and (xi) any Person whose associates, Representatives or others who substantially Control such Person’s management have a socially condemnable relationship (shakai teki ni hinan sareru beki kankei) with a Criminal Association, (b) a Person which is engaged in or promotes any of the following criminal activities: (i) the making of demands through violent acts, (ii) the making of unjust demands that go beyond another Person’s legal responsibilities, (iii) the use of threatening behavior, including verbal threats or the use of physical violence, in relation to a transaction, (iv) damaging public confidence in another Person or hindering the business operations of another Person by spreading rumors, using deceptive measures or using unjust power, and (v) any act, other than those listed in the foregoing items, that should receive the same treatment under Japanese criminal laws as those listed in the foregoing items or (c) any Person which conducts a Special Adult Entertainment Business (sei fuzoku kanren tokusyu eigyo) as defined in Article 2, Paragraph 5 of the Law Regarding Regulation on Adult Entertainment Business, etc. (fuzoku eigyo tou no kisei oyobi gyoumu no tekiseika tou ni kansuru houritsu) (Law No. 122 of 1948, as amended) of Japan, or any member of such entity.

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“Breakup Fee” has the meaning set forth in Section 5.03(b).

“Business Day” shall mean any day other than a Saturday, a Sunday, or any other day on which commercial banks in Tokyo, Japan are authorized or required by applicable Law to close.

“Buyer” has the meaning set forth in the opening sentence of this Agreement.

“Change of Position Statements”has the meaning set forth in Section 2.02(a).

“Company” has the meaning set forth in the Recitals of this Agreement.

“Company Group” shall mean the Company and Company’s Subsidiaries.

“Company Securities” has the meaning set forth in the Recitals of this Agreement.

“Company Knowledge Persons” means Akihiro Watanabe, Todd J. Carter, Geoffrey D. Baldwin, Phil Adams, Sascha Pfeiffer, Alexander M. Grünwald, Ritsuko Nonomiya, John F. Lambros, Akikazu Ida, Hiroyuki Okuyama, Aaron Cohen, Neil Myers and Gemma Hardy.

“Company’s Knowledge” shall mean with respect to any matter in question, (a) the actual knowledge of any of the Company Knowledge Persons of that matter, (b) the knowledge that any of the Company Knowledge Persons, commensurate with her or his position, should reasonably be expected to have, or (c) the knowledge that any of the Company Knowledge Persons should have after due inquiry to the management of the Company.

“Conditions for Withdrawal” has the meaning set forth in Section 2.01(a)(v).

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“Confidential Information” means (a) all information, in any form or format, furnished or made available directly or indirectly by a Party hereto (“Disclosing Party”) to the other Party hereto (“Recipient”) in connection with the Transactions; and (b) all information concerning the operations, affairs and businesses of Disclosing Party, the financial affairs of Disclosing Party, and the relations of Disclosing Party with its customers, vendors, employees and service providers (including business plans, information relating to finances, records, personnel, information systems, or customer matters and information which under the circumstances should be considered confidential), and shall include all financial and credit information, documents, schedules, reports, know-how, ideas, data, research, methodology, and/or any other intellectual property or information that may be furnished or disclosed by Disclosing Party, or acquired by Recipient directly or indirectly from Disclosing Party, including as a result of any discussions or negotiations between the Parties, as well as all memoranda, notes, reports, documents, and other media containing Confidential Information, as well as any copies, summaries, analyses and extracts of Confidential Information prepared by or for the benefit of Recipient; provided, however, that Confidential Information does not include information that: (i) is already known to Recipient at the time of its disclosure; (ii) is or becomes publicly known through no wrongful act of Recipient; (iii) is received by Recipient from a third party which is not known by Recipient to be subject to a duty of confidentiality; (iv) is independently developed by Recipient without the use of Confidential Information; or (v) subject to the conditions set forth in Section 4.04(b), is required to be disclosed by Recipient pursuant to applicable Law or any Governmental Authority.

“Contract” shall mean any contract, agreement, instrument, undertaking, indenture, commitment, loan, license or other legally binding obligation, whether oral or written.

“Control” and its derivative words mean the possession, direct or indirect, of the power to direct or cause the direction of the decisions, management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the ability to elect the majority of the directors or the members of a similar governing body of a Person.

“Disclosing Party” has the meaning set forth in the definition of “Confidential Information” in this Section 1.01.

“Effective Date” has the meaning set forth in the opening sentence of this Agreement.

“Equity Interests” means any share, capital stock, partnership, member or similar interest in any Person, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable thereto or therefor.

“FCA” means the UK Financial Conduct Authority.

4

“FIEL” shall mean the Financial Instruments and Exchange Law (kinyuu-shohin-torihiki-ho) (Law No. 25 of 1948, as amended) of Japan.

“Financial Statements Date” has the meaning set forth in Section 3.01(j).

“FINRA” means the US Financial Industry Regulatory Authority.

“GAAP” shall mean Japanese generally accepted accounting principles in effect from time to time.

“Governmental Authority” shall mean any domestic, foreign or supranational government, governmental authority, court, tribunal, agency or other regulatory, administrative or judicial agency, commission or organization (including self-regulatory organizations), tribunal or arbitral body, stock exchange, and any subdivision, branch or department of any of the foregoing.

“HSR” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Launch Date” has the meaning set forth in Section 2.01(a).

“Law” shall mean, with respect to any Person, any law, statute or ordinance, or any rule, regulation, standard, judgment, order, writ, injunction, ruling, decree, arbitration award, agency requirement, license or permit of any Governmental Authority that is legally binding on such Person.

“Lien” shall mean a lien, charge, option, mortgage, pledge, security interest, claim, deed of trust, hypothecation or encumbrance of any kind.

“Material Adverse Effect” shall mean any fact, event, circumstance, occurrence, change or effect that (a) is, or would reasonably be expected to be, materially adverse to the business, financial condition, assets, debt, operations, cash flow, or results of operations of the Company Group, taken as a whole, or (b) would reasonably be expected to materially impair or delay the ability of Company to perform its material obligations under this Agreement or to consummate the Transactions; provided,however,that the term “Material Adverse Effect” shall not include facts, events, circumstances, occurrences, changes or effects to the extent they result from or are consequences of (i) changes in general financial, securities and economic conditions, (ii) changes in Law, or changes in the interpretation thereof, by any Governmental Authority or changes in regulatory conditions, (iii) any “act of God” including natural disasters and earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions, (iv) changes in accounting standards, principles or interpretations, (v) changes in general economic or political conditions arising from the effects of the COVID-19 pandemic, (vi) events or changes that are consequences of the execution, delivery, consummation or pendency of this Agreement, the TOB or the Transactions or any action by Company or any member of the Company

5

Group contemplated by or required by this Agreement, or (vii) actions taken or not taken by Buyer or any of its Subsidiaries, or actions taken or not taken at the request of Buyer or with Buyer’s consent. With respect to items (i) through (v), the exclusion shall not apply to the extent such matter has a materially disproportionate adverse effect on any member of the Company Group relative to other comparable Persons operating in the markets and/or industries in which the Company Group operates.

“Material Inside Information” has the meaning set forth in Section 2.01(b)(vi).

“Minimum Number of Shares to be Purchased” has the meaning set forth in Section 2.01(a)(iii).

“Notice Period”has the meaning set forth in Section 2.02(d)(i).

“Number of Tendered Securities” has the meaning set forth in Section 2.01(e).

“Order” shall mean any order, injunction, judgment, decree, ruling, assessment, judicial or administrative order, award or determination of any Governmental Authority or arbitrator.

“Organizational Documents” shall mean the articles of incorporation, rules of the board of directors, share handling regulations, partnership agreement, limited liability company agreement, operating agreement or other similar governing instruments, in each case as amended from time to time, of a Person.

“Party” has the meaning set forth in the opening sentence of this Agreement.

“Person” shall mean any natural person, general or limited partnership, limited liability company, limited liability partnership, corporation, joint stock company, trust, unincorporated association, joint venture, Governmental Authority, or other entity, whether acting in an individual, fiduciary or other capacity.

“Position Statements” has the meaning set forth in Section 2.01(b)(iii).

“Recipient” has the meaning set forth in the definition of “Confidential Information” in this Section 1.01.

“Referral Notice” has the meaning set forth in Section 6.02(a).

“Referring Party” has the meaning set forth in Section 6.02(a).

“Regulatory Approvals” means any and all authorizations, consents, Orders and approvals of Governmental Authorities that may be required in order to consummate the Transactions under any applicable Laws, including of FINRA, HSR and the FCA.

6

“Related Agreements” means (a) this Agreement and (b) the Tender Offer Support Agreements executed by and between Buyer and each of Akihiro Watanabe, Todd J. Carter, Geoffrey D. Baldwin, Phil Adams, Sascha Pfeiffer, Alexander M. Grünwald, Ritsuko Nonomiya, John F. Lambros and Akikazu Ida.

“Representative” means, with respect to any Person, any officer, director, principal, attorney, financial advisor, accountant, agent, employee or other representative of such Person.

“Responding Party” has the meaning set forth in Section 6.02(a).

“Restricted Stock” means the 3,937,500 shares of common stock of the Company which were granted on April 6, 2020 pursuant to the Restricted Stock Plan (jyoto seigen tsuki kabushiki hoshu seido), the transfer of which is restricted from April 6, 2021 through April 6, 2025.For the avoidance of doubt, any reference in this Agreement to the Shares shall be deemed to include Restricted Stock.

“RSUs” means, collectively, (i) the stock options (shinkabu yoyakuken) designated as the “RSU-1 Stock Options” which were granted on March 9, 2016; (ii) the stock options designated as the “RSU-3 Stock Options” which were granted on October 11, 2016; (iii) the stock options designated as the “RSU-4 Stock Options” which were granted on May 29, 2017; and (iv) the stock options designated as the “RSU-5 Stock Options” which were granted on July 3, 2018.

“Securities Reports” has the meaning set forth in Section 3.01(i).

“Shares” has the meaning set forth in the Recitals of this Agreement.

“Squeeze-Out” shall mean the procedures required to make Buyer become the sole shareholder of the Company following the Tender Offer Closing.

“Stock Options” means, collectively, (i) the stock options (shinkabu yoyakuken) designated as the “Series 7 Stock Options” which were granted on May 20, 2013; (ii) the stock options designated as the “Series 8 Stock Options” which were granted on May 16, 2013; (iii) the stock options designated as the “Series 9 Stock Options” which were granted on March 7, 2014; (iv) the stock options designated as the “Series 10 Stock Options” which were granted on March 7, 2014; and (v) the RSUs.

“Subsidiary” means, with respect to any specified Person: (a) any corporation, limited liability company or other business entity of which more than 50% of the total voting power of shares of capital stock or member interests entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or shareholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, limited liability company or other business entity is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole general partner or the managing general partner of which

7

is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“Superior Proposal” means a bona fide written Acquisition Proposal (except that the references therein to “10%” shall be replaced by “50.1%”) made by a third party which was not solicited by the Company, any Company’s Subsidiary, or any Company Representative and which, in the good faith judgment of the board of directors of Company (after consultation with its financial advisor and outside counsel), taking into account the various legal, financial and regulatory aspects of the proposal, including the anticipated impact on the Company’s stakeholders, the financing terms thereof, and the Person making such proposal, (a) if accepted, is reasonably likely to be consummated, and (b) if consummated would, based upon the written opinion of the Company’s financial advisor, result in a transaction that is more favorable to the Company’s corporate value than the TOB and the Squeeze-Out (after giving effect to all adjustments to the terms thereof which may be offered by Buyer, including pursuant to Section 2.02(d)(ii)).

“Tax Returns” shall mean any return, declaration, report, claim for refund, or information return or statement filed or required to be filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxes” shall mean all taxes, charges, fees, levies or other assessments, including income, capital, gross receipts, excise, property, stamp, registrations, sales, license, payroll, consumption, withholding and franchise taxes, escheat obligation, and any secondary tax liability, imposed by Japan or any other country or any local government or taxing authority or political subdivision or agency thereof or therein, and such term shall include any interest, penalties or additions attributable to such taxes, charges, fees, levies or other assessments.

“Tender Offer Closing” shall mean the time at which the settlement of the TOB is completed in accordance with the terms of this Agreement.

“Tender Offer Closing Date” shall mean the date on which the Tender Offer Closing occurs.

“Tender Offer Registration Statement” has the meaning set forth in Section 2.01(c).

“TOB” has the meaning set forth in the Recitals of this Agreement.

“TOB Documents” has the meaning set forth in Section 2.01(c).

“TOB Period” has the meaning set forth in Section 2.01(a)(i).

“Transactions” means the transactions contemplated by this Agreement.

8

Section 1.02    Interpretation. Unless otherwise indicated to the contrary in this Agreement by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole and not to any particular section or paragraph of this Agreement; (b) references to articles, sections or paragraphs refer to articles, sections or paragraphs of this Agreement; (c) headings are provided for convenience only and should not affect the construction or interpretation of this Agreement; (d) words importing the masculine gender shall also include the feminine and neutral genders, and vice versa; (e) words importing the singular shall also include the plural, and vice versa; (f) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (g) any reference to a statute refers to such statute as it may have been or may be amended from time to time, or to such statute’s successor, and shall be deemed also to refer to all rules and regulations promulgated thereunder; (h) any reference to a Contract or other document as of a given date means the Contract or other document as amended, supplemented and modified from time to time through such date; (i) “or” shall include the meanings “either” or “both”; and (j) the symbols “JPY” or “¥” shall refer to the lawful currency of Japan.

ARTICLE II

TENDER OFFER; SQUEEZE-OUT

Section 2.01    Obligations of Buyer Relating to the TOB.

(a)    Commencement of the TOB. Subject to satisfaction of the conditions set forth in Section 2.01(b) below, Buyer shall commence the TOB for the Company Securities on August 4, 2021 (the “Launch Date”) under the following terms and conditions; provided, however that, at any time hereafter and even after the commencement of the TOB, Buyer may amend such terms and conditions to the extent permitted under applicable Law:

9

(i)    TOB Period:	August 4, 2021 – September 27, 2021 (both inclusive) (as may be extended) (such period, the “TOB Period”).
(ii)    TOB Price:	1.    Shares: JPY 1,380 per Share 2.    Stock Options: a.    JPY 155 per Series 7 Stock Option; b.    JPY 155 per Series 8 Stock Option; c.    JPY 565 per Series 9 Stock Option; d.    JPY 532 per Series 10 Stock Option; e.    JPY 137,900 per RSU-1 Stock Option; f.    JPY 137,900 per RSU-3 Stock Option; g.    JPY 1,379 per RSU-4 Stock Option; and h.    JPY 1,379 per RSU-5 Stock Option.
(iii)    Minimum Number of Shares to be Purchased:	As set forth in the Tender Offer Registration Statement (the “Minimum Number of Shares to be Purchased”).
(iv)    Maximum Number of Shares to be Purchased:	No maximum number.
(v)    Conditions for Withdrawal:	The conditions set out by Buyer in the Tender Offer Registration Statement (as defined below), within the scope permitted by Article 27-11, Paragraph 1 of the FIEL and other applicable Laws and regulations (the “Conditions for Withdrawal”). For the avoidance of doubt, the Conditions for Withdrawal shall include the circumstance that Buyer is unable to obtain the Regulatory Approvals by the end of TOB Period.

(b)    Conditions to the Commencement of the TOB. Buyer’s obligation to commence the TOB is subject to the satisfaction (or waiver in writing by Buyer in its sole discretion) of each of the following conditions on the Launch Date:

10

(i)    the representations and warranties of Company set forth in Section 3.01 shall be true and correct in all material respects;

(ii)    Company shall have duly performed its obligations required to be performed by it prior to the Launch Date under this Agreement in all material respects;

(iii)    the board of directors of the Company shall have: (1) adopted a resolution unanimously approved by all the disinterested directors of the Company expressing its opinion endorsing the TOB and recommending that holders of Company Securities tender their Company Securities in the TOB; (2) publicly announced such resolution in a form of position statements (ikenhyomei hokokusho) (“Position Statements”); and (3) not adopted any other resolution that is inconsistent with such resolution;

(iv)    all the Related Agreements shall have been duly made and entered into by and between the parties thereto, and shall not have been terminated;

(v)    no temporary restraining order, preliminary or permanent injunction or other Order preventing all or any part of the Transactions shall be in effect, and no Law shall have been enacted or shall be deemed applicable to all or any part of the Transactions which makes the consummation of all or any part of the Transactions illegal; and

(vi)    Buyer shall have received confirmation from the Company that there exists no undisclosed material non-public information, including juyojijitsu,kokaikaitsuke-tou no jisshi ni kansuru jijitsu, kokaikaitsuke-tou no chushi ni kansuru jijitsu as provided in Sections 166 (2) and 167 (2) of the FIEL, in relation to the Company (“Material Inside Information”).

(c)    Publication and Filing. Concurrently with the commencement of the TOB, Buyer shall publish a tender offer public notice and shall file a tender offer registration statement (the “Tender Offer Registration Statement”) with the Kanto Local Finance Bureau, each in accordance with the terms and conditions set forth in this Section 2.01 and Article 27-3 of the FIEL. Buyer shall file with the relevant Governmental Authorities, publish and/or mail to holders of the Company Securities as required by Law (i) a copy of the Tender Offer Registration Statement, (ii) a tender offer explanatory statement, and (iii) each other document required under applicable Law to be so filed, published or mailed by it in connection with the TOB (collectively, the “TOB Documents”).

(d)    Settlement of the TOB. Unless the TOB has been withdrawn by Buyer in accordance with terms of this Agreement, Buyer shall pay in full for all Shares and Stock Options validly tendered (and not withdrawn) under the TOB through the tender offer agent in immediately available funds on the fifth Business Day following the last day of the TOB Period.

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(e)    If Minimum Condition Not Met. If the total number of tendered Shares and Shares issuable upon exercise of tendered Stock Options (such total number, the “Number ofTendered Securities”) falls below the Minimum Number of Shares to be Purchased, Buyer may elect in its sole discretion to waive the Minimum Number of Shares to be Purchased to the extent permitted under the FIEL, and proceed with purchasing all Shares and Stock Options tendered in the TOB; provided, however, that Buyer may not, as a result of such waiver of the Minimum Number of Shares to be Purchased, elect to purchase tendered Company Securities that represent less than one-half of the total number of issued and outstanding Shares and Shares issuable upon exercise of all issued and outstanding Stock Options; provided, further, that if Buyer waives the Minimum Number of Shares to be Purchased, the board of directors of Company will consider all of the facts and circumstances of the situation and may, if it determines in good faith, after consultation with outside counsel, that such action is necessary to comply with its fiduciary duties to the shareholders of the Company under applicable Law, effect a Change of Position Statements (as defined below).

Section 2.02    No Talk; Fiduciary Out.

(a)    Subject to Section 2.02(b), from and after the date hereof until the completion of Squeeze-Out or, if earlier, the termination of this Agreement in accordance with ARTICLE V, the Company shall not, and shall cause the Company’s Subsidiaries and the Company Representatives not to, directly or indirectly: (i) initiate, solicit or knowingly encourage (including by way of providing information) the submission of any inquiries, proposals or offers or any other efforts or attempts that constitute, or may reasonably be expected to lead to, any Acquisition Proposal, or engage in any discussions or negotiations with respect thereto or otherwise cooperate with or assist or participate in or facilitate any such inquiries, proposals, offers, discussions or negotiations, (ii) approve or endorse, or publicly propose to approve or endorse, an Acquisition Proposal, (iii) withdraw, change, amend, modify or qualify, or propose publicly to withdraw, change, amend, modify or qualify, in a manner adverse to Buyer, or otherwise make any statement or proposal inconsistent with, the endorsement contained in the Position Statements, (iv) enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar agreement relating to an Acquisition Proposal or enter into any agreement or agreement in principle requiring the Company to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder, or (v) resolve, propose or agree to do any of the foregoing (any action or failure to act set forth in the foregoing clauses (ii), (iii) or (v) (to the extent related to the foregoing clauses (ii) or (iii)), a “Change of Position Statements”). The Company shall immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any Persons conducted theretofore by the Company, the Company’s Subsidiaries or any of the Company Representatives with respect to any Acquisition Proposal and cause to be returned or destroyed all confidential information provided by or on behalf of the Company or any Company Subsidiary to such Person.

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(b)    Notwithstanding anything to the contrary contained in Section 2.02(a), if at any time following the date hereof and prior to the Tender Offer Closing Date, (i) the Company has received a bona fide written Acquisition Proposal from a third party, (ii) the Company has not breached this Section 2.02, (iii) the board of directors of the Company determines in good faith, after consultation with its financial advisors and outside counsel, that such Acquisition Proposal constitutes or is reasonably likely to result in a Superior Proposal, and (iv) after consultation with its outside counsel, the board of directors of the Company determines in good faith that such action is necessary to comply with its fiduciary duties to the shareholders of the Company under applicable Law, then the Company may (A) furnish information with respect to the Company and the Company’s Subsidiaries to the Person making such Acquisition Proposal and (B) participate in discussions or negotiations with the Person making such Acquisition Proposal regarding such Acquisition Proposal; provided, that the Company shall promptly provide to Buyer any information concerning the Company or the Company’s Subsidiaries that is provided to such other Person and was not previously provided to Buyer.

(c)    The Company shall promptly (and in any event within 24 hours) notify Buyer in the event that the Company, any Company’s Subsidiaries or any Company Representative receives (i) any Acquisition Proposal or indication by any Person that it is considering making an Acquisition Proposal or (ii) any inquiry or request for discussions or negotiations regarding any Acquisition Proposal. The Company shall notify Buyer promptly (and in any event within 24 hours) with the identity of such Person and a reasonably detailed description of such Acquisition Proposal, indication, inquiry or request, including any modifications thereto. The Company shall keep Buyer reasonably informed (orally and in writing) on a timely basis (and in any event at Buyer’s request and otherwise promptly after the occurrence of any material changes, developments, discussions or negotiations) of the status of any Acquisition Proposal, indication, inquiry or request and any material developments, discussions and negotiations. Without limiting the foregoing, the Company shall promptly (and in any event within 24 hours) notify Buyer orally or in writing if it determines to begin providing information or to engage in substantive discussions or negotiations concerning an Acquisition Proposal pursuant to Section 2.02(b). The Company shall not, and shall cause the Company’s Subsidiaries not to, enter into any confidentiality agreement with any Person subsequent to the date of this Agreement that would prohibit Company from complying with its obligation ins this Section 2.02(c), and neither the Company nor any of the Company’s Subsidiaries is party to any agreement, that prohibits the Company from providing such information to Buyer.

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(d)    Notwithstanding anything to the contrary contained in Section 2.02(a), if the Company receives an Acquisition Proposal which the board of directors of Company concludes in good faith, after consultation with outside counsel and its financial advisors, constitutes a Superior Proposal, after giving effect to all of the adjustments to the terms of this Agreement which may be offered by Buyer (including pursuant to Section 2.02(d)(ii) below), the board of directors of Company may at any time prior to the Tender Offer Closing Date, if it determines in good faith, after consultation with outside counsel, that such action is necessary to comply with its fiduciary duties to the shareholders of the Company under applicable Law, (x) effect a Change of Position Statements with respect to such Superior Proposal and/or (y) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal; provided, however, that the Company shall not terminate this Agreement pursuant to the foregoing clause (y), and any purported termination pursuant to the foregoing clause (y) shall be void and of no force or effect, unless in advance of or concurrently with such termination the Company pays the Breakup Fee and otherwise complies with the provisions of Section 5.01(b)(iii) and Section 5.03; and provided, further, that the board of directors of the Company shall not withdraw their endorsement of the TOB as the result of a competing Acquisition Proposal, even if such Acquisition Proposal is a Superior Proposal, if such Acquisition Proposal is for Equity Interests representing less than 100% of the voting power of the Company; and provided, further, that the board of directors of the Company may not withdraw, modify or amend the Position Statements in a manner adverse to Buyer pursuant to the foregoing clause (x) or terminate this Agreement pursuant to the foregoing clause (y) unless (A) the Company shall not have breached this Section 2.02 and (B):

(i)    the Company shall have provided prior written notice to Buyer, at least five Business Days in advance (the “Notice Period”), of its intention to take such action with respect to such Superior Proposal, which notice shall specify the material terms and conditions of such Superior Proposal (including the identity of the party making such Superior Proposal), and shall have contemporaneously provided a copy of, or summary of the key terms of, the relevant proposed transaction agreements with the party making such Superior Proposal and other material documents, including the definitive agreement with respect to such Superior Proposal (the “Alternative Acquisition Agreement”); and

(ii)    prior to effecting such Change of Position Statements or terminating this Agreement to enter into a definitive agreement with respect to such Superior Proposal, and during the Notice Period, the Company shall, and shall cause the Company’s Representatives to, negotiate with Buyer in good faith (to the extent Buyer desires to negotiate) to make such adjustments in the terms and conditions of this Agreement so that such Acquisition Proposal ceases to constitute a Superior Proposal.

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(iii)    In the event of any material revisions to the Superior Proposal, the Company shall be required to deliver a new written notice to Buyer and to comply with the requirements of this Section 2.02(d)with respect to such new written notice.

(e)    The Company agrees that any violation of the restrictions set forth in this Section 2.02 by any of the Company Representatives shall be deemed to be a material breach of this Agreement (including this Section 2.02) by the Company.

Section 2.03    Obligations of Company relating to the TOB.

(a)    TOB Documents. Prior to the Effective Date, the Company has furnished to the Buyer all information concerning the Company as required by applicable Laws or reasonably requested by the Buyer for inclusion in the TOB Documents. The Company shall provide such assistance as the Buyer shall reasonably request in connection with the TOB. The Company agrees to promptly correct and/or amend any information provided by it to the Buyer for use in the TOB Documents if any such information becomes false or misleading or inaccurate due to a subsequent change of circumstance regarding material information included in the TOB Documents. Company shall cooperate in good faith with Buyer to prepare for, and inform Buyer of the results of, its separate discussions with the Kanto Local Finance Bureau, the Financial Services Agency, and the Tokyo Stock Exchange.

(b)    Material Inside Information. The Company shall, if the Company determines that any Material Inside Information that constitutes juyojijitsu as provided in Section 166 of the FIEL exists, either (i) take such actions as may be feasible to cause the facts or circumstances giving rise to such Material Inside Information to cease to exist, if possible to do so, or (ii) publicly disclose such Material Inside Information immediately by the measures provided under Article 166, Paragraph 4 of the FIEL and Article 30, Paragraph 1, Item 2 of the Cabinet Order of the Financial Instruments and Exchange Law (Cabinet Order No. 321 of 1965, as amended).

(c)    Support for Tender Offers.

(i)    Company shall, as the Buyer may reasonably request, promptly prepare lists of its holders of Shares, and Stock Option holders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Company Securities, and lists of securities positions of any Company Securities held in stock depositories, in each case true and correct as of the most recent practicable date, and shall also prepare such additional information (including updated lists of shareholders, mailing labels and lists of securities positions) and such other assistance as the Buyer may reasonably request in connection with the TOB, and shall cooperate with the Buyer so that the Buyer can solicit the holders of the Company Securities to tender to the TOB. Any reasonable costs or expenses incurred by the Company in relation to the preparation, assistance or cooperation under this Section

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2.03(c)(i) shall be reimbursed, compensated or borne by the Buyer; provided, that the Company shall obtain the prior consent of the Buyer for any individual expense that exceeds JPY 500,000.

(ii)    The Company shall cooperate with all holders of Stock Options who wish to: (i) exercise their Stock Options and sell the resulting Shares in the TOB, in the stock exchange market or in the Squeeze-Out, or (ii) tender their Stock Options in the TOB, and in each case shall cooperate with the tender offer agent to accomplish these objectives.

(iii)    If requested by any holder of Stock Options, the Company shall agree to amend the relevant stock option allotment agreement such that Stock Option holder is permitted to tender his/her Stock Options in the TOB, and approve the transfer of his/her Stock Options pursuant to the relevant provisions of the Companies Act (Law No. 86 of 2005, as amended) in order to tender such Stock Options in the relevant TOB.

(iv)    If requested by any holder of Restricted Stock, the Company shall agree to amend the relevant share subscription agreement such that shareholder is permitted to tender his/her Restricted Stock in the TOB.

Section 2.04    Squeeze-Out.

(a)    As soon as practicably possible after the settlement of the TOB, (i) the Company shall take all actions required to consummate the Squeeze-Out, including convening and holding an extraordinary general shareholders’ meeting to implement the Squeeze-Out in accordance with the plan described in the Tender Offer Registration Statement, including through (1) implementation of a reverse stock split (kabushiki heigo), and (2) adopting a resolution of the board of directors of the Company to exempt Buyer from the requirements and conditions (including without limitation performance requirements, employment requirements and vesting conditions) for the exercise of Stock Options that were tendered in the TOB, and (ii) Buyer shall take all the actions required to consummate the Squeeze-Out, including the exercise of the voting rights in favor of the proposal at such extraordinary general shareholders’ meeting, in each case if Buyer acquires a Number of Tendered Securities at least equal to the Minimum Number of Shares to be Purchased.

(b)    Company and Buyer shall each use their reasonable best efforts and mutually cooperate to cause the completion of the Squeeze-Out to occur as soon as practicable following the Tender Offer Closing Date.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01    Representations and Warranties of Company. Company hereby represents and warrants to Buyer that the following representations and warranties are true and correct as of the Effective Date, the Launch Date and the Tender Offer Closing Date (or, if made as of a specified date, as of such specified date only).

(a)    Incorporation and Valid Legal Existence. Each of the Company Group is a legal entity duly organized, validly existing and where applicable, in good standing (to the extent such concept or a comparable status is recognized) under the Laws of the jurisdiction of its organization. Each of the Company Group has all requisite power and authority to carry on its business as currently conducted and as currently contemplated to be conducted.

(b)    Execution of and Performance under this Agreement. Company has all requisite power and authority to enter into this Agreement and consummate the Transactions. The execution, delivery and performance of this Agreement, and the consummation of the Transactions, have been duly and validly authorized, or prior to the execution thereof, will be duly and validly authorized, by all necessary action on the part of such Company, that is party hereto or thereto.

(c)    Validity and Enforceability of this Agreement. This Agreement has been duly and validly executed and delivered by Company and, assuming the due and valid execution and delivery hereof by Buyer, constitutes the valid and legally binding obligation of Company enforceable against it in accordance with its terms.

(d)    No Default, Breach and Violation. The execution, delivery and performance of this Agreement by Company will not (i) violate any applicable Law as its relates to any member of the Company Group, (ii) violate any Order against, or binding upon any member of the Company Group, or (iii) result in the creation of any Lien on any material properties or assets of any member of the Company Group (except any Lien created by or at the request of Buyer).

(e)    Government Approvals. No consents or approvals of, or filings, declarations or registrations with, any Governmental Authority by Company are necessary for the execution and delivery of this Agreement by Company and the consummation by Company of the Transactions, other than FINRA, HSR and FCA approval.

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(f)    Capitalization. All of the Shares and Stock Options have been duly authorized and validly issued, are fully paid and nonassessable, and were not issued in violation of any preemptive or subscription rights. The Company has no treasury stock. There are no outstanding options, warrants or other rights to purchase or acquire any shares of capital stock; no outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of capital stock of any member of the Company Group and no other equity securities of any member of the Company Group, except the Stock Options. No member of the Company Group is a party to any Contract by which any member of the Company Group is bound to issue any additional shares of capital stock or other equity securities, or repurchase, redeem or otherwise acquire any equity securities of any member of the Company Group.

(g)    Compliance with Laws. No member of the Company Group is in violation of, or has violated during the three (3) year period prior to the date of representation, any applicable Law in any material respect. No member of the Company Group is involved, or has been involved during the three (3) year period prior to the date of representation, in any fraudulent, mischaracterized or similar transactions (including any circular transactions, round-trip transactions, misleading or mis-accounting type trading) by which the revenue or profitability of any member of the Company Group is or has been artificially inflated or otherwise misreported in any material respect. During the past three (3) years prior to the date of representation, no member of the Company Group has received any written notice of any violation of any applicable Law or, is or has been under investigation by any Governmental Authority with respect to or has been threatened to be charged with the violation of any applicable Laws.

(h)    Actions and Proceedings. There are no (i) outstanding Orders against or involving any member of the Company Group or (ii) Actions pending, or, to Company’s Knowledge, threatened against or involving any member of the Company Group or their assets or properties.

(i)    Securities Reports. During the past three (3) years prior to the date of representation, the Company has (a) duly filed in a timely manner with the Kanto Local Finance Bureau all required securities reports (yuka-shoken-hokokusho) and quarterly securities reports (shihanki-hokokusho) (and any required amendments to the foregoing) (“Securities Reports”) and (b) disclosed all material information which the Company has a duty to disclose pursuant to the rules of the Tokyo Stock Exchange. The Securities Reports (including the financial statements contained therein) comply with the requirements of the FIEL and other applicable Laws and GAAP, and fairly present in all material respects the financial condition and results of operation of the Company Group as of their respective filing dates or for their respective periods, except as otherwise described therein. No Securities Report or any other information disclosed by the Company pursuant to the rules of the Tokyo Stock Exchange contains any untrue statement of a material fact or omits to state a material fact necessary to make any of the statements made therein, in light of the circumstances in which they were made, not misleading.

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(j)    Absence of Material Adverse Effect. Since December 31, 2020 (the “Financial Statements Date”), there has not been any event or circumstances that have resulted in or would reasonably be expected to result in a Material Adverse Effect.

(k)    Undisclosed Liabilities. No member of the Company Group has any liabilities, accrued, contingent or otherwise, that would be required under GAAP to be reflected in the liabilities column of a balance sheet of any member of the Company Group, other than (i) liabilities disclosed in a Securities Report, and (ii) liabilities arising in the ordinary course of business after the Financial Statements Date. No member of the Company Group has any obligation to pay any fee or commission to any broker, finder or agent in connection with the Transactions.

(l)    Taxes and Tax Returns. To the actual knowledge of the board of directors of the Company, or any individual member thereof, all material Tax Returns required to be filed by the Company prior to the Effective Date have been filed by the Company in a timely manner with the appropriate authorities, and the Company has duly and timely paid or withheld all the Taxes required to be paid or withheld by it pursuant to applicable Law, in each case in all material respects.

(m)    Labor Related Matters. To the actual knowledge of the board of directors of the Company, or any individual member thereof, (i) The Company Group has no material liabilities for unpaid wages to employees, (ii) there are no material disputes, and there are no specific facts or circumstances which would lead to any dispute, between any member of the Company Group and its employees or labor unions, and (iii) there is no material existing or pending or threatened strike, picketing, work stoppage, work slowdown with respect to the employees of any member of the Company Group.

(n)    Anti-Social Forces. No member of the Company Group is, and none of them has been, involved in illicit donations, intimidating actions or organized crime. No member of the Company Group has been subject to any search or investigation by any Governmental Authority in connection with any Anti-Social Force. No member of the Company Group is related financially or otherwise (directly or indirectly) to any Anti-Social Force. No member of the Company Group has funded any Anti-Social Force.

(o)    No Material Inside Information. There exists no Material Inside Information as of the Launch Date.

(p)    Position Statements. As of the Launch Date, the board of directors of the Company has (1) adopted a resolution unanimously approved by all the disinterested directors of the Company expressing its opinion endorsing the TOB and recommending that holders of Company Securities tender their Company Securities in the TOB; (2) publicly announced Position Statements; and (3) not adopted any other resolution that is inconsistent with such resolution.

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(q)    Compliance with Organizational Documents. No member of the Company Group is in violation of any provision of its Organizational Documents in any material respect.

Section 3.02    Representations and Warranties of Buyer. Buyer hereby represents and warrants to Company that the following representations and warranties are true and correct as of the Effective Date, the Launch Date and the Tender Offer Closing Date (or, if made as of a specified date, as of such specified date only).

(a)    Incorporation and Valid Legal Existence. Buyeris a corporation, duly and validly formed, and duly and validly existing, under the laws of the State of Delaware, and has the requisite corporate power to conduct its business as is currently conducted.

(b)    Execution of and Performance under this Agreement. Buyer has all necessary power and authority to execute and deliver this Agreement, to perform fully its obligations hereunder, and to consummate the Transactions. The execution and delivery of this Agreement by Buyer and the performance of the obligations of Buyer hereunder have been duly and validly authorized by the appropriate corporate actions of Buyer, no such authorizations have been rescinded or modified, all such authorizations remain in full force and effect, and no other corporate action on the part of Buyer is necessary to authorize the execution, delivery and performance by Buyer of this Agreement and the Transactions.

(c)    Validity and Enforceability of this Agreement. This Agreement has been duly and validly executed and delivered by Buyer and, assuming the due and valid execution and delivery hereof by Company, constitutes the valid and legally binding obligation of Buyer enforceable against it in accordance with its terms.

(d)    No Default, Breach and Violation. The execution, delivery and performance of this Agreement by Buyer, and the consummation by Buyer of the Transactions (i) do not and will not violate any provision of the Organizational Documents of Buyer; (ii) do not and will not violate, result in a breach of, or constitute (or, with notice or lapse of time or both, would constitute) a default under, or accelerate or otherwise change any obligations under, any material Contract to which Buyer is a party; and (iii) do not and will not (1) violate any applicable Law currently in effect as it relates to Buyer, or (2) violate any Order against, or binding upon Buyer.

(e)    Government Approvals. No consents or approvals of, or filings, declarations or registrations with, any Governmental Authority by Buyer are necessary for the execution and delivery of this Agreement by Buyer and the consummation by Buyer of the Transactions, other than those (i) required under the FIEL in connection with the TOB, including the Tender Offer Registration Statement and the tender offer public notice, and (ii) the HSR and FCA approvals.

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(f)    Sufficient Funds. Buyer will have all of the funds available as and when needed that are necessary to consummate the TOB and the Squeeze-Out and to perform its obligations under this Agreement.

ARTICLE IV

COVENANTS OF THE PARTIES

Section 4.01    Ordinary Course of Business in the Company’s Operations prior to the Squeeze-Out. From and after the Effective Date, except as contemplated by this Agreement, necessary to effectuate the Transactions, required by applicable Law, or with the prior written consent of Buyer, Company shall, and shall cause the Company’s Subsidiaries to, (A) operate in the ordinary course of business consistent with past practices, and (B) not take any of the following actions:

(a)    (i) issue, sell, grant, pledge, dispose of, transfer or encumber any shares of its capital stock of any class or other securities (including stock options (shinkabu yoyakuken) or convertible bonds (shinkabu yoyakuken tsuki shasai)), except the issuance of Shares upon exercise of Stock Options; (ii) cancel, redeem or repurchase any of its outstanding shares of capital stock, (iii) split, combine, subdivide or reclassify any of its capital stock, (iv) effect any recapitalization, reclassification or like change in its capitalization, or (v) enter into negotiations with any Person with respect to any of the foregoing;

(b)    declare or pay any cash dividend or return any capital, declare or pay any stock dividend or change its dividend policy; provided, however, that, the Company’s declaration and payment of an interim dividend to shareholders as of June 30, 2021 in an amount per share not to exceed JPY 17.5 per share shall not require the prior written consent of Buyer;

(c)    engage in any merger, demerger, stock transfer (kabushiki iten), stock exchange (kabushiki koukan), liquidation, dissolution, consolidation, restructuring or other business combination;

(d)    amend, modify or waive in any material respect any provisions of its Organizational Documents;

(e)    acquire, sell, transfer, lease, pledge, encumber or otherwise dispose of assets in any transaction or series of related transactions with a fair market value in excess of JPY 125 million individually or JPY 250 million in the aggregate, except in the ordinary course of business;

(f)    make or commit to make any material capital expenditure exceeding JPY 250 million in the aggregate that is not included in the budgets of the Company Group approved by the relevant boards of directors, except in the ordinary course of business;

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(g)    incur any indebtedness or enter into any indemnities, financial commitments or guarantees in excess of JPY 125 million individually or JPY 250 million in the aggregate, except in the ordinary course of business;

(h)    change its material accounting policies or procedures;

(i)    make, change or rescind any material election relating to Taxes, materially change any method of Tax accounting, surrender any right to claim a material refund of Taxes, consent to any material extension or waiver of any statute of limitations with respect to Taxes, file any material amendment to any Tax Return, enter into any material Tax allocation agreement, Tax sharing agreement or closing agreement relating to any Tax, settle any claim or assessment or proceeding or other action relating to any material amount of Taxes or consent to any extension or waiver of the limitation period applicable to any claim or assessment for a material amount of Taxes;

(j)    change the work rules of any member of the Company Group in any material respect, or, prior to February 1, 2022, determine, commit to, or pay any bonus, incentive or other similar benefit (including the grant of any newly issued equity of the Company) that is material, either individually or in the aggregate, to any director, officer or employee of any member of the Company Group; provided that this Section 4.01(j) shall not apply in respect of each Company Group worker entitled to a cash bonus payment: (1) under the US SPIF (Incentive Bonus) Policy, as in effect as of the Effective Date (any such incentive bonus, calculated based on cumulative single count SPIF eligible revenue, not to exceed (i) 5%, up to US$2 million of cumulative single count revenue, (ii) 7.5%, from US$2 million to US$5 million of cumulative single count revenue, and (iii) 10%, over US$5 million of cumulative single count revenue, in each case with such percentage applied to each managing director’s proportional share of SPIF eligible revenue); (2) as part of his or her signing-on conditions (in accordance with a legally binding offer letter or similar arrangement in effect as of the Effective Date); or (3) by virtue of being a member of the Company Group’s UK deal origination team as at the Effective Date and thereby being entitled to that team’s discretionary transaction introduction bonus arrangements which are in effect as at the Effective Date (any such individual’s award being at the discretion of UK management and not to exceed 7% of the Company Group’s fees arising from any such transaction);

(k)    waive, release, assign, settle or compromise any material claims, or any material litigation or arbitration; or

(l)    to agree, conditionally or otherwise, to do any actions prohibited pursuant to the foregoing.

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Section 4.02    Further Assurances. Subject to the terms and conditions hereof, each Party covenants and agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, in good faith, all things applicable to it that are necessary, proper, desirable, or advisable under applicable Law to carry out the provisions contained in this Agreement and the Transactions, including, if requested by Buyer, to facilitate the election of Buyer’s nominees to the Company’s board of directors after the Tender Offer Closing Date.

Section 4.03    Notifications. Each Party shall give prompt notice to the other Party (and subsequently keep the other Party informed on a current basis) upon its becoming aware of (a) any Actions commenced or threatened in writing against, relating to, involving, or otherwise affecting such Party or any of its Subsidiaries which relate to the TOB or any of the other Transactions, or (b) the occurrence of any fact, event or circumstance after the date hereof that (i) has caused or constituted, or would reasonably be expected to cause or constitute, a material breach of any of its covenants, agreements or representations and warranties contained herein in any material respect, or (ii) would materially impair or delay the completion of the TOB; provided, however, that the delivery of any notice pursuant to this Section 4.03 shall not (1) cure any breach of, or non-compliance with, any other provision of this Agreement or (2) limit the remedies available to the Party receiving such notice.

Section 4.04    Confidentiality. For two (2)years after the Effective Date, each Party will hold and treat in confidence, and will not use, and will cause its Subsidiaries to hold and treat in confidence and not use, all Confidential Information, except for the purpose of performing its obligations under this Agreement. Each Party shall limit and restrict access to the Confidential Information to Representatives who need such access in connection with the Transactions. Each Party shall advise each of the Representatives to whom it provides access to any of the Confidential Information pursuant to the terms of this Agreement of the confidential nature of the Confidential Information, and shall be responsible for any breach of the terms of this Agreement by any such Representatives. Nothing contained in this Agreement shall be construed as granting any ownership rights, by license or otherwise, in any Confidential Information disclosed by either Party, and all Confidential Information disclosed pursuant to this Agreement is and shall remain the property of Disclosing Party. Notwithstanding the foregoing:

(a)    Buyer and its Subsidiaries may use and disclose Confidential Information to its lenders including its potential lenders to the extent necessary for the execution or performance of this Agreement;

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(b)    in the event that Recipient or any Representative to which it transmits Confidential Information pursuant to this Agreement becomes compelled by applicable Law, legal process or regulatory authority to disclose any Confidential Information, it shall, to the extent legally permitted and practicable, provide prompt written notice to Disclosing Party so that Disclosing Party may seek a protective order or other appropriate remedy. In the event that such a protective order or other remedy is not obtained, Recipient shall furnish only that portion of the Confidential Information which it is advised by written opinion of counsel to be legally required to do so and shall exercise its reasonable best efforts to obtain reliable assurances that confidential treatment will be accorded to that portion of the Confidential Information so disclosed;

(c)    in the event that this Agreement is terminated pursuant to Section 5.01, all Confidential Information shall be returned to Disclosing Party promptly upon the written request by Disclosing Party except for Confidential Information which the Recipient is required to retain in order to satisfy the requirements of any applicable Law or the rules and regulations of any recognized stock exchange on which the securities of Disclosing Party or Recipient, as applicable, are listed or quoted (provided that Recipient’s obligations hereunder shall remain in full force and effect); and

(d)    following the completion of the Squeeze-Out which results in Buyer’s owning all the Shares, Buyer shall be released from all the obligations set forth in this Section 4.04.

Section 4.05    Public Announcement. Notwithstanding Section 4.04 but subject to Section 4.06, neither Party may, without the written consent of the other Party, make public announcements regarding this Agreement or the Transactions, including the TOB Documents. Neither Party shall, and shall cause or permit any of its Subsidiaries to, communicate with any news media in respect of this Agreement or the Transactions without the prior written consent of the other Party.

Section 4.06    Securities Filings. For the avoidance of doubt, the prohibitions in Section 4.04 and Section 4.05 shall not apply to any public announcement required by applicable Law or the rules and regulations of any recognized stock exchange on which the securities of Buyer or Company, as applicable, are listed or quoted; provided, however that so far as it is lawful and practical to do so prior to making such public announcement, Buyer and Company, as applicable, shall notify the other Party and provide the other Party the opportunity to review and comment on any such announcement.

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Section 4.07    Engagements and Conflicts. After the Tender Offer Closing Date, to the extent consistent with applicable Laws, Company shall, and shall cause the Company’s Subsidiaries to, use their respective reasonable best efforts to coordinate its conflict clearance and “best horse” processes with respect to any new prospective client engagements with Buyer, including by (a) sharing the identity of the prospective client and a summary of the proposed transaction, including the counterparty or counterparties thereto, (b) discussing in good faith the merits and demerits of the prospective engagement, including any conflicts arising with existing or prospective engagements of Buyer, and (c) considering in good faith any commercially reasonable requests of Buyer with respect thereto. For the avoidance of doubt, any confidential information exchanged between Buyer and the Company pursuant to this Section 4.07 shall be deemed Confidential Information for purposes of this Agreement.

ARTICLE V

TERMINATION

Section 5.01    Termination. This Agreement may be terminated:

(a)    by Buyer:

(i)    if all of the following conditions have been satisfied: (A) there has been a breach by Company of any of its material obligations or covenants set out in this Agreement, or a material breach of any representation or warranty of Company made pursuant to Section 3.01, (B) such breach remains uncured uncured for ten (10) Business Days after Buyer delivers written notice of such breach to Company, and (C) the TOB has not yet commenced;

(ii)    if the conditions to the commencement of the TOB set forth in Section 2.01(b) have not been satisfied or waived on the Launch Date;

(iii)    if any fact, event or circumstance that triggers any of the Conditions for Withdrawal has occurred and Buyer withdraws the TOB;

(iv)    if the Minimum Number of Shares to be Purchasedis not tendered in the TOB; or

25

(v)    if (i) a Change of Position Statements (or any action by any committee of the board of directors of the Company which, if taken by the full board of directors, would be a Change of Position Statements) shall have occurred (whether or not in compliance with Section 2.02), (ii) the Company or the board of directors of the Company (or any committee thereof) shall (A) approve, adopt or recommend any Acquisition Proposal or (B) approve or recommend, or enter into or allow the Company or any of the Company’s Subsidiaries to enter into, a letter of intent, agreement in principle or definitive agreement relating to an Acquisition Proposal, (iii) within five (5) Business Days of the date any Acquisition Proposal or any material modification thereto is first published, sent or given to the shareholders of the Company, or otherwise within five (5) Business Days following Buyer’s written request, the Company fails to issue a press release that expressly reaffirms the Position Statements, (iv) if any tender offer or exchange offer is commenced that, if successful, would result in any Person or group becoming the beneficial owner of twenty percent (20%) or more of the outstanding Shares, the board of directors of Company shall not have recommended that the Company’s shareholders reject such tender offer or exchange offer and not tender their Shares into such tender offer or exchange offer within ten (10) Business Days after commencement of such tender offer or exchange offer, (v) the Company shall have breached any of its obligations under Section 2.02, (vi) the Company shall have failed to file the Position Statements in compliance with the FIEL or to permit Buyer to include the Position Statements in the TOB Documents, or (vii) the Company or the board of directors of Company (or any committee thereof) shall authorize or publicly propose to do any of the foregoing; and

(b)    by Company:

(i)    if all of the following conditions have been satisfied: (A) there has been a breach by Buyer of any of its material obligations or covenants set out in this Agreement, or a material breach of any representation or warranty of Buyer made pursuant to Section 3.02 and (B) such breach remains uncured for ten (10) Business Days after Company delivers written notice of such breach to Buyer;

(ii)    if any fact, event or circumstance arises such that (A) any of the Conditions for Withdrawal has occurred and Buyer withdraws the TOB, or (B) the Tender Offer Closing ultimately does not occur despite Buyer’s having commenced the TOB; or

26

(iii)    if the board of directors of Company determines to accept a Superior Proposal, but only if the Company has complied in all respects with its obligations under Section 2.02 with respect to such Superior Proposal (and any Acquisition Proposal that was a precursor thereto) and is otherwise permitted to accept such Superior Proposal pursuant to Section 2.02(d); provided, however, that the Company shall simultaneously with such termination enter into the Alternative Acquisition Agreement and pay the Breakup Fee to Buyer.

Section 5.02    Notice of Termination. Any Party desiring to terminate this Agreement pursuant to Section 5.01 shall give written notice of such termination to the other Party.

Section 5.03    Effect of Termination.

(a)    In the event of the termination of this Agreement as provided in Section 5.01, this Agreement shall forthwith become void and there shall be no liability on the part of any Party except for any willful breach of this Agreement by such Party. This sentence and Section 4.04, Section 4.05, this Section 5.03 and ARTICLE VI shall survive any termination of this Agreement.

(b)    In the event that this Agreement is terminated pursuant to Section 5.01(a)(v) or Section 5.01(b)(iii), then the Company shall pay to Buyer immediately prior to such termination, (i) a termination fee of JPY 866,800,000 (the “Breakup Fee”). Payment of the Breakup Fee shall be made by wire transfer of immediately available funds to an account designated in writing by Buyer.

(c)    The Parties acknowledge that (i) the agreements contained in this Section 5.03 are an integral part of Transactions, (ii) without these agreements, Buyer and the Company would not enter into this Agreement and (iii) the Breakup Fee is nota penalty, but rather is liquidated damages in a reasonable amount that will compensate Buyer in the circumstances in which such Breakup Fee is payable.

(d)    In the event that the Company shall fail to pay the Breakup Fee when due in breach of this Agreement, the Company shall reimburse Buyer for all reasonable costs and expenses actually incurred or accrued by Buyer (including reasonable expenses of counsel) in connection with the collection of the Breakup Fee under, and enforcement of, this Section 5.03, in addition to paying the Breakup Fee.

ARTICLE VI

MISCELLANEOUS

Section 6.01    Governing Law. The construction, validity and performance of this Agreement shall be governed in all respects by the laws of Japan.

27

Section 6.02    Dispute Resolution.

(a)    Without in any way limiting the right of any Party hereto to seek injunctive relief pursuant to Section 6.03 in respect of any breach or threatened breach hereof, if any dispute, difference or question relating to the performance, interpretation or construction of this Agreement shall arise at any time, at the request of any Party, the Parties shall meet to discuss in good faith a resolution to such dispute, difference or question for a period of sixty (60) days from the date of such request. If the Parties are unable to resolve their differences within such sixty (60) day period, the complaining Party (the “Referring Party”) may, by written notice (the “Referral Notice”) to the other Party (the “Responding Party”), refer such dispute, difference or question to arbitration, whereupon the Responding Party (upon receipt of the Referral Notice) and the Referring Party shall be obligated to refer such dispute, difference or question to arbitration proceedings as set forth herein. The Referral Notice shall describe the nature of such dispute, difference or question and request the formation of an arbitral tribunal for the purposes of such arbitration.

(b)    The arbitral tribunal shall consist of three arbitrators, one appointed by the Referring Party and one by the Responding Party (the Party appointing each such arbitrator to notify the other of the name of such arbitrator within ten (10) days of the date of the Referral Notice). The arbitrators so selected shall within twenty (20) days of the date of the Referral Notice agree on a third arbitrator. If any of the arbitrators shall not be appointed within the time limits specified above, such arbitrator shall be appointed by the Japan Commercial Arbitration Association. No more than one arbitrator shall be a Japanese national.

(c)    The arbitration proceedings shall take place in Tokyo, Japan, shall be subject to the commercial arbitration rules of the Japan Commercial Arbitration Association, and shall be conducted in English.

(d)    Notwithstanding the foregoing, either Party shall be entitled to apply, pending arbitration or in lieu of arbitration, to any court of competent jurisdiction for orders of preliminary and permanent injunctive relief, to restrain any actual or threatened conduct in violation of this Agreement.

(e)    The Parties waive any rights to appeal or to review the final arbitration award by any court or tribunal, and such award shall be final and binding. The Parties further undertake to carry out without delay the provisions of any arbitral award or order, and each agrees that any such award or order shall be conclusive and may be enforced in any jurisdiction (and the Parties shall submit to any such jurisdiction) by suit on the arbitral award or by any other manner provided by Law.

(f)    The costs of such arbitration shall be determined by and allocated between the Parties by the arbitral tribunal in its award.

28

Section 6.03    Injunctive Relief. Each Party acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. Accordingly, each Party agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action or proceeding in addition to any other remedy to which it may be entitled under applicable Law.

Section 6.04    Cost and Expenses. Except as otherwise provided in this Agreement, each Party shall bear the costs, expenses and fees (including fees and expenses of attorneys, certified public accountants, tax advisors and other advisors) incurred by such Party in relation to the preparation, execution and performance of this Agreement.

Section 6.05    Assignment. No Party shall assign or transfer or purport to assign or transfer (whether by operation of Law or otherwise) any of its rights, interests or obligations hereunder without the prior written consent of the other Party; provided, however, that Buyer may assign any of its rights or interests hereunder to lenders for purposes of creating a security interest herein or otherwise assigning collateral in respect of the financing for the Transactions. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns.

Section 6.06    Amendments and Waivers. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by an authorized officer of the Party against whom enforcement of the amendment, modification, discharge or waiver is sought. No failure or delay by Buyer or Company in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

Section 6.07    Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to either Party. The Parties shall negotiate in good faith in order to seek to agree on the terms of a mutually satisfactory provision to be substituted for any provision found to be invalid, illegal or unenforceable.

Section 6.08    No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto (and their permitted successors and assigns) and nothing herein expressed or implied shall give, or be construed to give, to any Person, other than the Parties and such permitted successors and assigns, any rights hereunder.

29

Section 6.09    Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile or email pdf format), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 6.10    Entire Agreement. This Agreement (including the Exhibits, Schedules hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereof, and supersedes any and all previous oral or written agreements or understandings between the Parties in relation to the matters dealt with herein. The Exhibits and Schedules referred to in this Agreement are intended to be and hereby are specifically made a part of this Agreement.

Section 6.11    Notices. Any notice or communication under this Agreement shall be sent to the Parties in English at their respective addresses set forth below or such other addresses as may from time to time be notified. Notices may be sent by hand, or by registered mail (internationally recognized courier service if overseas) or by fax or email, and shall be deemed to be received, if sent by hand, fax or email, one normal working hour (at the place of delivery) after delivery or transmission, and if by registered mail the second Business Day after posting (or, in the case of international courier service, on the fifth Business Day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service).

If to Buyer:

Houlihan Lokey, Inc.
10250 Constellation Boulevard, 5th Floor
Los Angeles, CA 90067
Attention:  J. Lindsey Alley, Chief Financial Officer
Tel:  310-788-5237
Email: LAlley@HL.com

with a copy to:

Houlihan Lokey, Inc.
10250 Constellation Boulevard, 5th Floor
Los Angeles, CA 90067
Attention:  Christopher Crain, Esq., General Counsel
Tel:  310-788-5262
Email: CCrain@HL.com

and a copy to:

Latham & Watkins, LLP
10250 Constellation Blvd.
Los Angeles, CA 90067
Attention:  Steven Stokdyk, Esq. 

30

Tel:  434-653-5500
Email: Steven.Stokdyk@lw.com

If to Company:

GCA Corporation
Pacific Century Place Marunouchi
11-1 Marunouchi 1-Chome
Chiyoda-ku, Tokyo 100-6230
Japan
Attention: Ritsuko Nonomiya 
Tel:  +81-3-6212-7243
Email: rnonomiya@gcakk.com

and a copy to:

Morrison & Foerster, LLP
Shin-Marunouchi Building.
5-1, Marunouchi
Chiyoda-ku, Tokyo 100-6529
Japan
Attention:  Jeremy White 
Tel:  +81-3-3214-6878
Email: Jeremy.White@mofo.com

Section 6.12    Language. This Agreement has been prepared and executed in, and shall be construed in accordance with, the English language. Any Japanese translation prepared by any Party shall be for convenience purposes only,and in the event of a dispute as to interpretation of this Agreement, shall have no bearing on such interpretation.

[Signature Pages to Follow]

31

IN WITNESS WHEREOF, the Parties have executed this Transaction Agreement as of the date first above written.

HOULIHAN LOKEY, INC.

By:        /S/ SCOTT L. BEISER    
Name: Scott L. Beiser
Title: Chief Executive Officer

Signature page to Transaction Agreement

GCA CORPORATION

By:        /S/ AKIHIRO WATANABE
Name: Akihiro WatanabeTitle: Representative Director

Signature page to Transaction Agreement

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Scott L. Beiser, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ending December 31, 2021 of Houlihan Lokey, Inc. as filed with the Securities and Exchange Commission on the date hereof;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 8, 2022	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, J. Lindsey Alley, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ending December 31, 2021 of Houlihan Lokey, Inc. as filed with the Securities and Exchange Commission on the date hereof;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 8, 2022	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott L. Beiser, Chief Executive Officer and Director of Houlihan Lokey, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended December 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 8, 2022	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Lindsey Alley, Chief Financial Officer of Houlihan Lokey, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended December 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 8, 2022	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Cover Page - shares	9 Months Ended
	Dec. 31, 2021	Feb. 04, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2021
Document Transition Report	false
Entity File Number	001-37537
Entity Registrant Name	Houlihan Lokey, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	95-2770395
Entity Address, Address Line One	10250 Constellation Blvd.
Entity Address, Address Line Two	5th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90067
City Area Code	(310)
Local Phone Number	788-5200
Title of 12(b) Security	Class A Common Stock, par value $0.001
Trading Symbol	HLI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Entity Central Index Key	0001302215
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		50,643,089
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		16,724,964

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Assets
Cash and cash equivalents	$ 1,058,603	$ 846,851
Restricted cash	373	373
Investment securities	39,829	208,618
Accounts receivable, net of allowance for credit losses of $12,431 and $8,262, respectively	195,912	108,409
Unbilled work in progress, net of allowance for credit losses of $2,914 and $3,520, respectively	86,504	118,115
Deferred income taxes	39,575	28,332
Property and equipment, net	51,750	46,370
Operating lease right-of-use assets	161,997	152,031
Goodwill	1,082,934	671,065
Other Intangible Assets, Net	263,493	195,156
Other intangible assets, net	64,792	50,747
Other assets	3,045,762	2,426,067
Liabilities:	986,043	648,399
Liabilities:
Accounts payable and accrued expenses	123,395	67,468
Deferred income	27,319	27,868
Income taxes payable	57,617	68,339
Deferred income taxes	1,159	52
Loans Payable	539	818
Operating Lease, Liability	187,264	174,516
Other Liabilities	133,010	55,046
Total liabilities	1,516,346	1,042,506
Additional paid-in capital	668,765	803,573
Retained earnings	886,995	600,096
Accumulated other comprehensive loss	(26,412)	(20,176)
Total stockholders' equity	1,529,416	1,383,561
Total liabilities and stockholders' equity	3,045,762	2,426,067
Common Class A
Common stock	51	51
Common Class B
Common stock	$ 17	$ 17

XML

CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 12,431	$ 8,262
Allowance for doubtful accounts, unbilled work in process	$ 2,914	$ 3,520
Common Class A
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	50,924,798	51,245,442
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date	50,924,798	51,245,442
Common Class B
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	16,727,176	16,951,696
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date	16,727,176	16,951,696

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Revenues	$ 888,798	$ 537,876	$ 1,798,792	$ 1,024,748
Operating expenses:
Employee compensation and benefits	549,376	339,743	1,115,054	654,113
Travel, meals, and entertainment	11,090	1,338	17,464	4,416
Rent	14,352	10,086	33,627	30,010
Depreciation and amortization	20,074	3,949	28,589	11,291
Information technology and communications	12,398	9,281	28,217	22,532
Professional fees	14,372	6,188	27,988	16,422
Other operating expenses	17,876	8,875	33,598	18,083
Total operating expenses	639,538	379,460	1,284,537	756,867
Operating income	249,260	158,416	514,255	267,881
Other (income)/expense, net	253	(187)	1,005	(1,544)
Income before provision for income taxes	249,007	158,603	513,250	269,425
Provision for income taxes	74,699	40,088	140,099	56,020
Net income	174,308	118,515	373,151	213,405
Net income attributable to noncontrolling interest	(573)	0	(573)	0
Net income attributable to Houlihan Lokey, Inc.	173,735	118,515	372,578	213,405
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(1,824)	14,037	(6,236)	22,407
Comprehensive income attributable to Houlihan Lokey, Inc.	$ 171,911	$ 132,552	$ 366,342	$ 235,812
Weighted average shares of common stock outstanding:
Basic (in shares)	64,914,373	66,547,587	65,259,927	65,680,516
Fully Diluted (in shares)	68,279,939	69,356,347	68,520,849	68,596,503
Net income per share of common stock
Basic (in dollars per share)	$ 2.68	$ 1.78	$ 5.71	$ 3.25
Fully Diluted (in dollars per share)	$ 2.54	$ 1.71	$ 5.44	$ 3.11

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Class A Common Stock	Class B Common Stock	Total Stockholders' Equity	Total Stockholders' Equity Cumulative Effect, Period Of Adoption, Adjustment	Common stock Class A Common Stock	Common stock Class B Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Retained Earnings Cumulative Effect, Period Of Adoption, Adjustment	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Mar. 31, 2020						46,178,633,000	19,345,277,000
Beginning balance at Mar. 31, 2020				$ 984,382	$ (682)	$ 46	$ 19		$ 649,954	$ 377,471	$ (682)	$ (43,108)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)						3,000,000,000	1,596,243,000
Shares issued				223,173		$ 3	$ 2		223,168
Stock compensation vesting				37,601					37,601
Dividends				(66,740)						(66,740)
Conversion of Class B to Class A shares (in shares)						3,121,294,000	(3,121,294,000)
Conversion of Class B to Class A shares				0		$ 3	$ (3)
Shares issued to non-employee directors (in shares)						8,751,000
Shares issued to non-employee directors				333					333
Other shares repurchased/forfeited (in shares)						(684,995,000)	(347,634,000)
Other shares repurchased/forfeited				(59,613)		$ 0	$ (1)		(59,612)
Net income	$ 213,405			213,405						213,405
Change in unrealized translation				22,407								22,407
Total comprehensive income				235,812						213,405		22,407
Ending balance (in shares) at Dec. 31, 2020						51,623,683,000	17,472,592,000	0
Ending balance at Dec. 31, 2020				1,354,266		$ 52	$ 17	$ 0	851,444	523,454		(20,701)
Beginning balance (in shares) at Sep. 30, 2020						51,506,192,000	18,255,244,000	(392,673,000)
Beginning balance at Sep. 30, 2020				1,250,612		$ 52	$ 18	$ (22,711)	880,370	427,621		(34,738)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)							31,153,000
Shares issued				1,701					1,701
Stock compensation vesting				10,694					10,694
Dividends				(22,682)						(22,682)
Conversion of Class B to Class A shares (in shares)						(790,025,000)	790,025,000
Conversion of Class B to Class A shares				0		$ (1)	$ 1
Shares issued to non-employee directors (in shares)						(3,174,000)	0
Shares issued to non-employee directors				0		$ 0	$ 0
Other shares repurchased/forfeited (in shares)						675,708,000	23,780,000	(392,673,000)
Other shares repurchased/forfeited				18,611		$ 1		$ (22,711)	41,321
Net income	118,515			118,515						118,515
Change in unrealized translation				14,037								14,037
Total comprehensive income				132,552						118,515		14,037
Ending balance (in shares) at Dec. 31, 2020						51,623,683,000	17,472,592,000	0
Ending balance at Dec. 31, 2020				1,354,266		$ 52	$ 17	$ 0	851,444	523,454		(20,701)
Beginning balance (in shares) at Mar. 31, 2021		51,245,442	16,951,696			51,245,442,000	16,951,696,000
Beginning balance at Mar. 31, 2021	1,383,561			1,383,561		$ 51	$ 17		803,573	600,096		(20,176)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)							2,048,574,000
Shares issued				14,640			$ 2		14,638
Stock compensation vesting				66,792					66,792
Dividends				(85,679)						(85,679)
Conversion of Class B to Class A shares (in shares)						1,745,778,000	(1,745,778,000)
Conversion of Class B to Class A shares				0		$ 2	$ (2)
Shares issued to non-employee directors (in shares)						6,512,000
Shares issued to non-employee directors				0
Other shares repurchased/forfeited (in shares)						(2,072,934,000)	(527,316,000)
Other shares repurchased/forfeited				(216,240)		$ (2)	$ 0		(216,238)
Net income	373,151			372,578						372,578
Change in unrealized translation				(6,236)								(6,236)
Total comprehensive income				366,342						372,578		(6,236)
Ending balance (in shares) at Dec. 31, 2021		50,924,798	16,727,176			50,924,798,000	16,727,176,000
Ending balance at Dec. 31, 2021	1,529,416			1,529,416		$ 51	$ 17		668,765	886,995		(26,412)
Beginning balance (in shares) at Sep. 30, 2021						50,927,005,000	17,348,305,000
Beginning balance at Sep. 30, 2021				1,437,737		$ 51	$ 17		720,579	741,678		(24,588)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)							34,064,000
Shares issued				0					0
Stock compensation vesting				17,778					17,778
Dividends				(28,418)						(28,418)
Conversion of Class B to Class A shares (in shares)						642,693,000	(642,693,000)
Conversion of Class B to Class A shares				0
Other shares repurchased/forfeited (in shares)						(644,900,000)	(12,500,000)
Other shares repurchased/forfeited				(69,592)			$ 0		(69,592)
Net income	174,308			173,735						173,735
Change in unrealized translation				(1,824)								(1,824)
Total comprehensive income				171,911						173,735		(1,824)
Ending balance (in shares) at Dec. 31, 2021		50,924,798	16,727,176			50,924,798,000	16,727,176,000
Ending balance at Dec. 31, 2021	$ 1,529,416			$ 1,529,416		$ 51	$ 17		$ 668,765	$ 886,995		$ (26,412)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net income	$ 373,151	$ 213,405
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	(13,341)	(1,997)
Provision for bad debts, net	4,626	4,829
Unrealized (gains)/losses on investment securities	2,464	(593)
Non-cash lease expense	24,179	17,023
Depreciation and amortization	28,589	11,291
Contingent consideration valuation	60	0
Compensation expense – equity and liability classified share awards (Note 14)	72,398	46,779
Changes in operating assets and liabilities:
Accounts receivable	(38,663)	(1,064)
Unbilled work in progress	36,283	(13,485)
Other assets	7,751	(12,444)
Accrued salaries and bonuses	185,065	18,101
Accounts payable and accrued expenses and other	8,231	(9,223)
Deferred income	(627)	10,131
Income taxes (payable)/receivable	(18,031)	24,431
Net cash provided by operating activities	672,135	307,184
Cash flows from investing activities:
Purchases of investment securities	(28,087)	(294,196)
Sales or maturities of investment securities	194,926	195,601
Acquisition of business, net of cash acquired	305,637	12,470
Purchase of property and equipment, net	(7,554)	(11,002)
Net cash used in investing activities	(146,352)	(122,067)
Cash flows from financing activities:
Dividends paid	(87,359)	(70,302)
Share repurchases	(183,197)	(41,814)
Payments to settle employee tax obligations on share-based awards	(33,700)	(17,810)
Proceeds from issuance of Class A shares	0	189,060
Earnouts paid	(5,917)	0
Loans payable to former shareholders redeemed	(280)	(386)
Repayments of loans to non-affiliates	0	(1,900)
Other financing activities	477	333
Net cash provided by/(used in) financing activities	(309,976)	57,181
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	(4,055)	10,988
Net increase in cash, cash equivalents, and restricted cash	211,752	253,286
Cash, cash equivalents, and restricted cash – beginning of period	847,224	380,746
Cash, cash equivalents, and restricted cash – end of period	1,058,976	634,032
Supplemental disclosures of non-cash activities:
Shares issued via vesting of liability classified awards	4,270	7,511
Fully amortized intangibles written off	2,000	0
Cash acquired through acquisitions	241,835	88
Cash paid during the period:
Interest	528	744
Taxes, net of refunds	$ 171,229	$ 33,692

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BACKGROUND

9 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND

Background

Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries:

•Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and a member of Financial Industry Regulatory Authority, Inc.

•Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly owned direct subsidiary of HL, Inc.

•HL Finance, LLC ("HL Finance"), a syndicated leveraged finance platform established to arrange senior secured leveraged loans for financial sponsor-backed, privately-held, and public corporate entities. HL Finance acts as an arranger on syndicated loan transactions and has entered into an agreement with an unaffiliated third party investor that may provide commitments with respect to certain syndicated loans arranged by HL Finance.

•Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K.").

The Company offers financial services and financial advice to a broad clientele located throughout the United States of America, Europe, the Middle East, and the Asia-Pacific region. The Company has U.S. offices in Los Angeles, San Francisco, Chicago, New York City, Minneapolis, McLean (Virginia), Boston, Dallas, Houston, Miami, and Atlanta as well as foreign offices in London, Paris, Frankfurt, Milan, Madrid, Amsterdam, Dubai, Sydney, Tokyo, Hong Kong, Beijing, Singapore, Birmingham, Lausanne, Manchester, Munich, Stockholm, Tel Aviv, Zurich, Fukuoka, Ho Chi Minh City, Kyoto, Mumbai, Nagoya, New Delhi, Osaka, and Shanghai. Together, the Company and its subsidiaries form an organization that provides financial services to meet a wide variety of client needs. The Company concentrates its efforts toward the earning of professional fees with focused services across the following three business segments:

•Corporate Finance ("CF") provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement ("Completion Fees"). A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the fees paid at the time an engagement letter is signed ("Retainer Fees") and in some cases fees paid during the course of the engagement ("Progress Fees") that may have been received.

•Financial Restructuring ("FR") provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

•Financial and Valuation Advisory ("FVA") primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the nine months ended December 31, 2021 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2022. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (the "2021 Annual Report").

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income, shareholders' equity or cash flows as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

The Company’s equity method investments include variable interest entities (VIEs), which are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary, and is generally the entity with (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

Our involvement with VIEs arises from our variable interest related to a recently sponsored special purpose acquisition company. The Company's exposure to loss from such VIEs is not material to our operating results and financial position.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, valuation of acquired intangibles and goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contracts. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling the contracts for such services. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event, which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

Operating Expenses

The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses.

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of December 31, 2021, we had one foreign currency forward contract outstanding between the pound sterling and the euro with a notional balance of €4.1 million. The change in fair value of this contracts represented a net gain included in Other operating expenses of $11 during the three months ended December 31, 2021. We did not have any outstanding foreign currency forward contracts as of December 31, 2020.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement:

•Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

•Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available, and may incorporate management's own assumptions or involve a significant degree of judgment.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

•Corporate debt securities: All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

•U.S. treasury securities: Fair values for U.S. treasury securities are based on quoted prices from recent trading activity of identical or similar securities. All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the instrument.

The fair values of the financial instruments represent the amounts that would be received to sell assets or that would be paid to transfer liabilities in an orderly transaction between market participants as of a specified date. Fair value measurements maximize the use of observable inputs; however, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, as well as available observable and unobservable inputs.

The carrying value of Cash and cash equivalents, Restricted cash, Accounts receivable, Unbilled work in progress, Accounts payable and accrued expenses, and Deferred income approximates fair value due to the short maturity of these instruments.

The carrying value of the loans to employees included in Other assets, Loans payable to former shareholders, and an unsecured loan which is included in Loan payable to non-affiliate approximates fair value due to the variable interest rate borne by those instruments.

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of December 31, 2021 and March 31, 2021, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	1,058,976	$	847,224

(1)Restricted cash as of December 31, 2021 and March 31, 2021 consisted of a cash secured letter of credit issued for our Frankfurt office.

Investment Securities

Investment securities consist primarily of corporate debt and U.S. treasury securities with original maturities over 90 days. The Company classifies its corporate debt and U.S. treasury securities as trading and measures them at fair value in the Consolidated Balance Sheets. Unrealized holding gains and losses for trading securities are included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income.     

Allowance for Credit Losses

The allowance for credit losses on accounts receivable and unbilled work in progress reflects management’s best estimate of expected losses using the Company's internal current expected credit losses model. This model analyzes expected losses based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that could potentially affect the collectibility of the reported amounts. This is recorded through provision for bad debts, which is included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income. Amounts deemed to be uncollectible are written off against the allowance for credit losses.

Property and Equipment

Property and equipment are stated at cost. Repair and maintenance charges are expensed as incurred and costs of renewals or improvements are capitalized at cost. Depreciation on furniture and office equipment is recognized on a straight-line basis over the estimated useful lives of the respective assets.

Income Taxes

The Company files consolidated federal income tax returns, as well as consolidated and separate returns in state and local jurisdictions, and the Company reports income tax expense on this basis.

We account for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The measurement of the deferred items is based on enacted tax laws and applicable tax rates. A valuation allowance related to a deferred tax asset is recorded if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company utilized a comprehensive model to recognize, measure, present, and disclose in its financial statements any uncertain tax positions that have been taken or are expected to be taken on a tax return. The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense and penalties related to income taxes are included in the provision for income taxes in the accompanying Consolidated Statements of Comprehensive Income.

The Global Intangible Low-Taxed Income tax (“GILTI inclusion”) can be recognized in the financial statements through an accounting policy election by either recording a period cost (permanent item) or providing deferred income taxes stemming from certain basis differences that are expected to result in GILTI inclusion. The Company has elected to account for the tax impacts of the GILTI inclusion as a period cost.

Leases

We assess whether an arrangement is or contains a lease at the inception of the agreement. Right-of-use ("ROU") assets represent our right to use underlying assets for the lease term and lease liabilities represent our obligation to make lease payments arising from leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease terms utilizing the discount rate implicit in the leases. If the discount rate implicit in the leases is not readily determinable, the present value of future lease payments is calculated utilizing the Company’s incremental borrowing rate, which approximates the interest that the Company would have to pay on a secured loan. The Company elected to utilize a portfolio approach and applies the rates to a portfolio of leases with similar terms and economic environments. The terms of our leases used to determine the ROU asset and lease liability account for options to extend when it is reasonably certain that we will exercise those options, if applicable. ROU assets and lease liabilities are subject to adjustment in the event of modification to lease terms, changes in probability that an option to extend or terminate a lease would be exercised and other factors. In addition, ROU assets are periodically reviewed for impairment.

Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.

The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

Goodwill and Intangible Assets

Goodwill represents an acquired company’s acquisition cost over the fair value of acquired net tangible and intangible assets. Goodwill is the net asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets identified and accounted for include tradenames and marks, backlog, developed technologies, and customer relationships. Those intangible assets with finite lives, including backlog and customer relationships, are amortized over their estimated useful lives.

Goodwill is reviewed annually for impairment and more frequently if potential impairment indicators exist. Goodwill is reviewed for impairment in accordance with Accounting Standards Update ("ASU") No. 2011-08, Testing Goodwill for Impairment, which permits management to make a qualitative assessment of whether it is more likely than not that one of its reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If management concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then management would not be required to perform the two-step impairment test for that reporting unit. If the assessment indicates that it is more likely than not that the reporting unit’s fair value is less than its carrying value, management must test further for impairment utilizing a two-step progress. Step 1 compares the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying value of the reporting unit exceeds the estimated fair value, an impairment exists and is measured in Step 2 as the excess of the recorded amount of goodwill over the implied fair value of goodwill resulting from the valuation of the reporting unit. Impairment testing of goodwill requires a significant amount of judgment in assessing qualitative factors and estimating the fair value of the reporting unit, if necessary. The fair value is determined using an estimated market value approach, which considers estimates of future after tax cash flows, including a terminal value based on market earnings multiples, discounted at an appropriate market rate. As of December 31, 2021, management concluded that it was not more likely than not that the Company’s reporting units’ fair value was less than their carrying amount and no further impairment testing had been considered necessary.

Indefinite-lived intangible assets are reviewed annually for impairment in accordance with ASU 2012-02, Testing Indefinite-lived Intangible Assets for Impairment, which provides management the option to perform a qualitative assessment. If it is more likely than not that the asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment expense. As of December 31, 2021, management concluded that it was not more likely than not that the fair values were less than the carrying values.

Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group (inclusive of other long-lived assets) be tested for possible impairment, management first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of December 31, 2021, no events or changes in circumstances were identified that indicated that the carrying amount of the finite-lived intangible assets were not recoverable.

Business Combinations

Accounting for business combinations requires management to make significant estimates and assumptions. We allocate the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date, with the consideration in excess recorded a goodwill. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, expected asset lives, geographic risk premiums, discount rates, and more. The amounts and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.

Recent Accounting Pronouncements

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020.

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REVENUE RECOGNITION

3 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Revenue Recognition

Disaggregation of Revenues

The Company has disclosed disaggregated revenues based on its business segment and geographical area, which provides a reasonable representation of how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See Note 18 for additional information.

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred income (contract liability) until the performance obligations are satisfied.

Costs incurred in fulfilling advisory contracts with point-in-time revenue recognition are recorded as a contract asset when the costs (i) relate directly to a contract, (ii) generate or enhance resources of the Company that will be used in satisfying performance obligations, and (iii) are expected to be recovered. The Company amortizes the contract asset costs related to fulfilling a contract based on recognition of fee revenues for the corresponding contract.

Costs incurred in fulfilling an advisory contract with over-time revenue recognition are expensed as incurred.

The change in the Company’s contract assets and liabilities during the period primarily reflects the timing difference between the Company’s performance and the customer’s payment. The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2021		Increase/(Decrease)		December 31, 2021
Receivables (1)	$	103,987	$	88,401	$	192,388
Unbilled work in progress, net of allowance for credit losses	118,115		(31,611)		86,504
Contract Assets (1)	4,422		(898)		3,524
Contract Liabilities (2)	27,868		(549)		27,319

(1)Included within Accounts receivable, net of allowance for credit losses in the December 31, 2021 Consolidated Balance Sheet.

(2)Included within Deferred income in the December 31, 2021 Consolidated Balance Sheet.

During the three and nine months ended December 31, 2021, $3 million and $19 million of Revenues, respectively, were recognized that were included in the Deferred income balance at the beginning of the period.

As a practical expedient, the Company does not disclose information about remaining performance obligations pertaining to (i) contracts that have an original expected duration of one year or less, and/or (ii) contracts where the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that is or forms part of a single performance obligation. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at December 31, 2021.

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RELATED PARTY TRANSACTIONS	9 Months Ended
	Dec. 31, 2021
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	Related Party TransactionsOther assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $14,763 and $16,657 as of December 31, 2021 and March 31, 2021, respectively.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

Fair Value Measurements

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	December 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	30,121	$	—	$	30,121
U.S. treasury securities	—		4,866		—		4,866
Certificates of Deposit	—		516		—		516
Total asset measured at fair value (1)	$	—	$	35,503	$	—	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	178,659	$	—	$	178,659
U.S. treasury securities	—		24,083		—		24,083
Total asset measured at fair value (1)	$	—	$	202,742	$	—	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

The Company had no transfers between fair value levels during the nine months ended December 31, 2021.

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INVESTMENT SECURITIES

9 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

Investment Securities

The amortized cost and gross unrealized gains (losses) of marketable investment securities accounted under the fair value method were as follows:

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	30,409	$	36	$	(324)	$	30,121
U.S. treasury securities	4,883		33		(50)		4,866
Certificates of Deposit	516		—		—		516
Total securities with unrealized gains/(losses)	$	35,808	$	69	$	(374)	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	178,384	$	389	$	(114)	$	178,659
U.S. treasury securities	23,761		322		—		24,083
Total securities with unrealized gains/(losses)	$	202,145	$	711	$	(114)	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

Scheduled maturities of the debt securities held by the Company included within the investment securities portfolio were as follows:

	December 31, 2021				March 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	2,576	$	2,576	$	172,747	$	172,798
Due within years two through five	33,232		32,927		29,398		29,944
Total debt within the investment securities portfolio	$	35,808	$	35,503	$	202,145	$	202,742

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ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Dec. 31, 2021

Receivables [Abstract]

ALLOWANCE FOR CREDIT LOSSES

Allowance for Credit Losses

The following table presents information about the Company's allowance for credit losses:

	December 31, 2021
Beginning balance	$	11,782
Provision for bad debt, net	4,626
Recovery/(write-off) of uncollectible accounts, net	(1,063)
Ending balance	$	15,345

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PROPERTY AND EQUIPMENT

9 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	December 31, 2021		March 31, 2021
Equipment	$	9,238	8,795
Furniture and fixtures	25,879		21,493
Leasehold improvements	56,505		52,561
Computers and software	14,060		10,772
Other	7,429		7,056
Total cost	113,111		100,677
Less: accumulated depreciation	(61,361)		(54,307)
Total net book value	$	51,750	$	46,370

Additions to property and equipment during the nine months ended December 31, 2021 were primarily related to leasehold improvement costs incurred.

Depreciation expense of $4,621 and $2,756 was recognized for the three months ended December 31, 2021 and 2020, respectively, and $10,460 and $8,212 for the nine months ended December 31, 2021 and 2020, respectively

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Other Intangible Assets

The following table provides a reconciliation of Goodwill and other intangibles, net reported on the Consolidated Balance Sheets.

	Useful Lives	December 31, 2021		March 31, 2021
Goodwill	Indefinite	$	1,082,934	$	671,065
Tradename-Houlihan Lokey	Indefinite	192,210		192,210
Other intangible assets	Varies	93,264		6,809
Total cost		1,368,408		870,084
Less: accumulated amortization		(21,981)		(3,863)
Goodwill and other intangibles, net		$	1,346,427	$	866,221

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2021		Change (1)		December 31, 2021
Corporate Finance	$	416,535	$	411,869	$	828,404
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	671,065	$	411,869	$	1,082,934

(1)Changes pertain primarily to the acquisition of GCA Corporation. See Note 19 for additional information.

Amortization expense of approximately $15,454 and $1,193 was recognized for the three months ended December 31, 2021 and 2020, respectively, and $18,130 and $3,079 for the nine months ended December 31, 2021 and 2020, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five years and thereafter are as follows:

	Year Ended March 31,
Remainder of 2022	$	15,796
2023	45,120
2024	8,091
2025	1,877
2026 and thereafter	97

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LOANS PAYABLE

9 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

LOANS PAYABLE

Loans Payable

On August 23, 2019, the Company entered into a syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto (the “2019 Line of Credit”), which allows for borrowings of up to $100.0 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200.0 million) and matures on August 23, 2022 (or if such date is not a business day, the immediately preceding business day). The agreement governing the 2019 Line of Credit provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. As of December 31, 2021 and March 31, 2021, no principal was outstanding under the 2019 Line of Credit.

Prior to our initial public offering in August 2015 of 12,075,000 shares of Houlihan Lokey, Inc. Class A common stock (the "IPO"), Fram Holdings, Inc., a Delaware corporation and, prior to our IPO, our indirect parent company, maintained certain loans payable to former shareholders consisting of unsecured notes payable which were transferred to the Company in conjunction with the IPO. The average interest rate on the individual notes was 1.38% and 1.46% as of December 31, 2021 and 2020, respectively, and the maturity dates range from 2020 to 2027. The Company incurred interest expense on these notes of $2 and $5 for the three months ended December 31, 2021 and 2020, respectively, and $8 and $18 for the nine months ended December 31, 2021 and 2020, respectively.

In April 2018, the Company acquired Quayle Munro Limited. Total consideration included non-interest bearing unsecured convertible loans totaling GBP 10.5 million payable on May 31, 2022, which is included in Other liabilities in the accompanying Consolidated Balance Sheets. Under certain circumstances, the notes may be exchanged for Company Class B common stock over a three-year period in equal annual installments starting on May 31, 2020. The Company incurred imputed interest expense on these notes of $34 and $68 for the three months ended December 31, 2021 and 2020, respectively, and $128 and $218 for the nine months ended December 31, 2021 and 2020, respectively.

In May 2018, the Company acquired BearTooth Advisors. Total consideration included an unsecured note of $2.8 million bearing interest at an annual rate of 2.88% and payable on May 21, 2048. This note was subsequently assigned by the seller to the former BearTooth principals (who became employees of the Company), and, under certain circumstances, is convertible into Company Class B common stock after the fifth anniversary of the closing of the transaction. The Company incurred interest expense on this note of $26 for each of the three months ended December 31, 2021 and 2020 and $79 for each of the nine months ended December 31, 2021 and 2020.

In December 2019, the Company acquired Freeman & Co. Total consideration included an unsecured note of $4.0 million bearing interest at an annual rate of 2.75% and payable on December 16, 2049. The note issued by the Company to the seller was distributed to the former principals of Freeman & Co. (who became employees of the Company). Under certain circumstances, the note may be exchanged by each principal for Company stock over a four-year period in equal annual installments starting in December 2020. The Company incurred interest expense on this note of $20 and $28 for the three months ended December 31, 2021 and 2020, respectively, and $59 and $83 for the nine months ended December 31, 2021, and 2020, respectively.

In August 2020, the Company acquired MVP Capital, LLC (“MVP”). Total consideration included an unsecured non-interest bearing note of $4.5 million payable August 14, 2050. The note was issued by the Company to the former principals and sellers of MVP (who became employees of the Company). Under certain circumstances, the note may be exchanged by each seller for a combination of cash and Company stock over a three-year period in equal annual installments starting in August 2021. Contingent consideration was also issued in connection with the acquisition of MVP, which had a carrying value of $12.7 million as of December 31, 2021 and March 31, 2021, which is included in Other liabilities in our Consolidated Balance Sheets.

In July 2021, the Company acquired Baylor Klein, Ltd (“BK”). Contingent consideration was issued in connection with the acquisition of BK, which had a carrying value of $18.7 million as of December 31, 2021, which is included in Other Liabilities in our Consolidated Balance Sheet.

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheet on a fiscal year-end basis as of December 31, 2021 are as follows:

Remaining 2022 (1)	$	71,466
2023	28,020
2024	7,260
2025	15,863
2026	713
2027 and thereafter	10,227
Total	$	133,549

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ACCUMULATED OTHER COMPREHENSIVE (LOSS)

9 Months Ended

Dec. 31, 2021

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE (LOSS)

Accumulated Other Comprehensive (Loss)

Accumulated other comprehensive (loss) is comprised of Foreign currency translation adjustments of $(1,824) and $14,037 for the three months ended December 31, 2021 and 2020, respectively, and $(6,236) and $22,407 for the nine months ended December 31, 2021, and 2020, respectively. We do not expect the change in foreign currency translation to have a material impact on our operating results and financial position.

Accumulated other comprehensive (loss) as of December 31, 2021 was comprised of the following:

Balance, April 1, 2021	$	(20,176)
Foreign currency translation adjustment	(6,236)
Balance, December 31, 2021	$	(26,412)

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INCOME TAXES	9 Months Ended
	Dec. 31, 2021
Income Tax Disclosure [Abstract]
INCOME TAXES	Income TaxesThe Company’s provision for income taxes was $74,699 and $40,088 for the three months ended December 31, 2021 and 2020, respectively, and $140,099 and $56,020 for the nine months ended December 31, 2021, and 2020, respectively. These represent effective tax rates of 30.0% and 25.3% for the three months ended December 31, 2021 and 2020, respectively

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EARNINGS PER SHARE

9 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Earnings Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Numerator:
Net income attributable Houlihan Lokey, Inc.	$	173,735	$	118,515	$	372,578	$	213,405
Denominator:
Weighted average shares of common stock outstanding — basic	64,914,373		66,547,587		65,259,927		65,680,516
Weighted average number of incremental shares pertaining to unvested restricted stock and issuable in respect of unvested restricted stock units, as calculated using the treasury stock method	3,365,566		2,808,760		3,260,922		2,915,987
Weighted average shares of common stock outstanding — diluted	68,279,939		69,356,347		68,520,849		68,596,503
Basic earnings per share	$	2.68	$	1.78	$	5.71	$	3.25
Diluted earnings per share	$	2.54	$	1.71	$	5.44	$	3.11

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EMPLOYEE BENEFIT PLANS

9 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

EMPLOYEE BENEFIT PLANS

Employee Benefit Plans

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution savings plan for its domestic employees and defined contribution retirement plans for its international employees. The Company contributed approximately $2,556 and $2,327 to these plans during the three months ended December 31, 2021 and 2020, respectively, and $5,304 and $4,368 during the nine months ended December 31, 2021 and 2020, respectively.

Share-Based Incentive Plans

Following the IPO, additional awards of restricted shares and restricted stock units have been and will be made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the "2016 Incentive Plan"), which became effective in August 2015 and was amended in October 2017. Under the 2016 Incentive Plan, it is anticipated that the Company will continue to grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent necessary to operate the Company's business. Equity-based incentive awards issued under the 2016 Incentive Plan generally vest over a four-year period. Restricted shares of Class A common stock were granted under the 2016 Incentive Plan to (i) four independent directors in the first quarter of fiscal 2021 at $60.60 per share, (ii) two independent directors in the third quarter of fiscal 2021 at $63.01 per share, and (iii) six independent directors in the first quarter of fiscal 2022 at $73.19 per share.

No excess tax benefit was recognized during the three months ended December 31, 2021 or 2020. An excess tax benefit of $6,922 and $13,408 was recognized during the nine months ended December 31, 2021 and 2020, respectively, as a component of the provision for income taxes and an operating activity on the Consolidated Statements of Cash Flows. The excess tax benefits recognized during the nine months ended December 31, 2021 and 2020 were related to shares vested in April and May 2021 and 2020, respectively.

The share awards are classified as equity awards at the time of grant unless the number of shares granted is unknown. Awards that are settleable in shares based upon a future determinable stock price are classified as liabilities until the price is established and the resulting number of shares is known, at which time they are re-classified from liabilities to equity awards. Activity in equity classified share awards which relate to the Company's 2016 Incentive Plan during the nine months ended December 31, 2021 and 2020 is as follows:

Unvested Share Awards	Shares	Weighted Average Grant Date Fair Value
Balance, April 1, 2021	2,744,605	$	51.37
Granted	1,640,456	73.19
Vested	(1,039,535)	47.80
Forfeited/Repurchased	(71,914)	60.95
Balance, December 31, 2021	3,273,612	$	63.22
Balance, April 1, 2020	3,539,047	$	39.13
Granted	1,044,741	60.60
Vested	(1,770,294)	32.36
Forfeited/Repurchased	(60,904)	50.69
Balance, December 31, 2020	2,752,590	$	51.37

Activity in liability classified share awards during the nine months ended December 31, 2021 and 2020 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2021	$	16,950
Offer to grant	2,076
Share price determined-converted to cash payments	(2,676)
Share price determined-transferred to equity grants	(4,269)
Forfeited	—
Balance, December 31, 2021	$	12,081
Balance, April 1, 2020	$	21,676
Offer to grant	6,410
Share price determined-converted to cash payments	(52)
Share price determined-transferred to equity grants	(6,457)
Forfeited	(274)
Balance, December 31, 2020	$	21,303

Compensation expenses for the Company associated with both equity and liability classified awards totaled $19,152 and $12,642 for the three months ended December 31, 2021 and 2020, respectively, and $72,398 and $46,779 for the nine months ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, there was $159,084 and $143,660, respectively, of total unrecognized compensation cost related to unvested share awards granted under the 2016 Incentive Plan. These costs are recognized over a weighted average period of 1.5 years and 1.4 years, as of December 31, 2021 and 2020, respectively.

On October 19, 2017, our board of directors approved an amendment (the “Amendment”) to the 2016 Incentive Plan reducing the number of shares of common stock available for issuance under the 2016 Incentive Plan by approximately 12.2 million shares. Under the Amendment, the aggregate number of shares of common stock that are available for issuance under awards granted pursuant to the 2016 Incentive Plan is equal to the sum of (i) 8.0 million and (ii) any shares of our Class B common stock that are subject to awards under our 2006 Incentive Plan that terminate, expire or lapse for any reason after October 19, 2017.

The number of shares available for issuance increases annually beginning on April 1, 2018 and ending on April 1, 2025, by an amount equal to the lowest of:

•6,540,659 shares of our Class A common stock and Class B common stock;

•Six percent of the shares of Class A common stock and Class B common stock outstanding on the final day of the immediately preceding fiscal year; and

•such smaller number of shares as determined by our board of directors.

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STOCKHOLDERS' EQUITY

9 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS' EQUITY

Stockholders' EquityThere are two classes of authorized HL, Inc. common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions.

Class A Common Stock

During the three months ended December 31, 2021 and 2020, 0 and 3,174 shares were issued to non-employee directors, respectively, and 642,693 and 790,025 shares were converted from Class B to Class A, respectively. During the nine months ended December 31, 2021 and 2020, 6,512 and 8,751 shares were issued to non-employee directors, respectively, and 1,745,778 and 3,121,294 shares were converted from Class B to Class A, respectively.

As of December 31, 2021, there were 50,870,525 Class A shares held by the public and 54,273 Class A shares held by non-employee directors. As of December 31, 2020, there were 51,578,208 Class A shares held by the public and 45,475 Class A shares held by non-employee directors.

Class B Common Stock

As of December 31, 2021 and 2020, there were 16,727,176 and 17,472,592, respectively, Class B shares held by the HL Voting Trust.

Dividends

Previously declared dividends related to unvested shares of $7,894 and $5,846 were unpaid as of December 31, 2021 and 2020, respectively.

Stock Subscriptions Receivable

Employees of the Company periodically issued notes receivable to the Company documenting loans made by the Company to such employees for the purchase of restricted shares of the Company.

Share Repurchases

In July 2021, the board of directors authorized an increase to the existing January 2021 share repurchase program to a new aggregate amount of up to $250 million of the Company's Class A common stock and Class B common stock.

During the three months ended December 31, 2021 and 2020, the Company repurchased 0 and 295 shares, respectively, of Class B common stock, to satisfy $0 and $19 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the three months ended December 31, 2021, the Company repurchased an additional 644,900 shares of its outstanding Class A common stock at a weighted average price of $108.90 per share, excluding commissions, for an aggregate purchase price of $70,232. During the three months ended December 31, 2020, the Company repurchased an additional 283,035 shares of its outstanding Class A common stock at a weighted average price of $65.69 per share, excluding commissions, for an aggregate purchase price of $18,593.

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LEASES

9 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

Leases

Lessee Arrangements

Operating Leases

We lease real estate and equipment used in operations from third parties. As of December 31, 2021, the remaining term of our operating leases ranged from 1 to 15 years with various automatic extensions.

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of December 31, 2021.

Maturity of Operating Leases

	Operating Leases
Remaining 2022	$	8,997
2023	32,830
2024	26,598
2025	26,486
2026	23,704
Thereafter	95,638
Total	214,253
Less: present value discount	(26,989)
Operating lease liabilities	$	187,264

As of December 31, 2021, the Company has entered into operating leases for additional office space that have not yet commenced for approximately $131 million. These operating leases will commence between fiscal year 2022 and fiscal year 2024 with lease terms of 3 years to 10 years.

Lease costs

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Operating lease expense	$	14,705	$	7,169	$	28,379	$	21,967
Variable lease expense (1)	(398)		2,913		5,131		8,040
Short-term lease expense	44		57		134		157
Less: Sublease income	—		(53)		(18)		(154)
Total lease costs	$	14,351	$	10,086	$	33,626	$	30,010

(1)Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.

Weighted-average details

	December 31,
	2021		2020
Weighted-average remaining lease term (years)	8		9
Weighted-average discount rate	3.5	%	3.8	%

Supplemental cash flow information related to leases:

	Nine Months Ended December 31,
	2021		2020
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	24,275	$	23,658
Non-cash activity:
Operating lease right-of-use assets obtained in exchange of Operating lease liabilities	$	7,736	$	30,246
Change in Operating lease right-of-use assets due to remeasurement	(7,760)		(1,208)

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Commitments and Contingencies

The Company has been named in various legal actions arising in the normal course of business. In the opinion of the Company, in consultation with legal counsel, the final resolutions of these matters are not expected to have a material adverse effect on the Company’s financial condition, operations and cash flows.

The Company also provides routine indemnifications relating to certain real estate (office) lease agreements under which it may be required to indemnify property owners for claims and other liabilities arising from the Company’s use of the applicable premises. In addition, the Company guarantees the performance of its subsidiaries under certain office lease agreements. The terms of these obligations vary, and because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the maximum amount that it could be obligated to pay under such contracts. Based on historical experience and evaluation of specific indemnities, management believes that judgments, if any, against the Company related to such matters are not likely to have a material effect on the consolidated financial statements. Accordingly, the Company has not recorded any liability for these obligations as of December 31, 2021 or March 31, 2021.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2021 Annual Report.

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SEGMENT AND GEOGRAPHICAL INFORMATION

9 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHICAL INFORMATION

Segment and Geographical Information

The Company’s reportable segments are described in Note 1 and each are individually managed and provide separate services that require specialized expertise for the provision of those services. Revenues by segment represent fees earned on the various services offered within each segment. Segment profit consists of segment revenues, less (1) direct expenses including compensation, travel, meals and entertainment, professional fees, and bad debt and (2) expenses allocated by headcount such as communications, rent, depreciation and amortization, and office expense. The corporate expense category includes costs not allocated to individual segments, including charges related to incentive compensation and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and compliance and legal. The following tables present information about revenues, profit and assets by segment and geography.    

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by segment
Corporate Finance	$	715,663	$	306,171	$	1,314,064	$	502,191
Financial Restructuring	89,273		177,995		271,232		392,006
Financial and Valuation Advisory	83,862		53,710		213,496		130,551
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748
Segment profit (1)
Corporate Finance	$	277,546	$	96,431	$	513,880	$	143,167
Financial Restructuring	15,310		78,855		61,485		169,832
Financial and Valuation Advisory	28,127		13,901		68,703		33,213
Total segment profit	320,983		189,187		644,068		346,212
Corporate expenses (2)	71,723		30,771		129,813		78,331
Other (income)/expense, net	253		(187)		1,005		(1,544)
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2)Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	December 31, 2021		March 31, 2021
Assets by segment
Corporate Finance	$	996,830	$	575,241
Financial Restructuring	188,796		181,239
Financial and Valuation Advisory	152,888		136,761
Total segment assets	1,338,514		893,241
Corporate assets	1,707,248		1,532,826
Total assets	$	3,045,762	$	2,426,067

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Income before provision for income taxes by geography
United States	$	196,322	$	123,774	$	407,563	$	210,580
International	52,685		34,829		105,687		58,845
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by geography
United States	$	646,301	$	414,891	$	1,390,754	$	815,904
International	242,497		122,985		408,038		208,844
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748

	December 31, 2021		March 31, 2021
Assets by geography
United States	2,034,207		1,837,332
International	1,011,555		588,735
Total assets	$	3,045,762	$	2,426,067

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Business Combinations

9 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Business Combinations

Business Combinations

On October 4, 2021 ("the Acquisition Date"), the Company completed a tender offer process resulting in the Company's acquisition of approximately 90% of GCA Corporation's (“GCA”) common stock for cash consideration of $531.9 million. The Company then acquired the GCA shares not purchased through the tender offer by way of a second-step transaction, which occurred on November 5, 2021 for $57.7 million (included within Other liabilities in the December 31, 2021 Consolidated Balance Sheet). The consideration for these shares was paid on January 20, 2022, subsequent to the period ended December 31, 2021. This all-cash transaction was valued at approximately $589.6 million, based on the consideration of ¥1,398 per share of GCA. Total GCA related transaction costs included in non-compensation expenses were $(5,436) and $(6,513) for the three and nine months ended December 31, 2021, respectively.

GCA is a global technology-focused investment bank providing M&A advisory and capital markets advisory services in Europe, Japan/Asia, and the United States. The addition of GCA significantly increases the Company's position in the technology sector, which is critical to meeting the needs of our clients as technology increasingly touches every business sector. GCA also increases the depth and breadth of our UK and European operations and this significant increase in scale has a direct impact on our ability to better serve our clients, both corporate and private equity, and meaningfully expands our geographic footprint in the UK and Europe. GCA also creates a significant platform for us to build from in the Asia Pacific region, meaningfully increasing our presence there and allowing us to begin to reach for scale in this rapidly growing part of the world.

Acquisition Consideration
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date	49,382,808
Cash consideration per share	¥	1,398
Cash consideration for tendered common shares	$	531,883
Cash consideration for remaining shares purchased	57,686
Total cash consideration	$	589,569

The Company financed the acquisition with cash on hand.

Purchase Price Allocation

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as part of the GCA acquisition. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. The intangible assets subject to amortization will be amortized on a straight-line basis over their estimated useful lives as of the acquisition date.

	Fair Value		Weighted-Average Amortization Period
Assets acquired:
Cash and cash equivalents	$	226,550
Investment securities	515
Accounts receivable	53,431
Unbilled work in progress	4,672
Property and equipment	8,727
Operating lease right-of-use assets	27,383
Receivable from affiliates	1,288
Other assets	20,503
Intangible assets other than goodwill
Backlog	42,000		1.2 years
Trade name	17,100		2.0 years
Customer relationships	15,200		1.0 year
Total intangible assets acquired	74,300		1.3 years
Total assets	417,369
Liabilities assumed:
Accrued salaries and bonuses	152,409
Accounts payable and accrued expenses	22,627
Payable to affiliates	15
Deferred income	78
Income taxes payable	5,857
Deferred income taxes	3,199
Operating lease liabilities	27,527
Other liabilities	19,897
Total liabilities	231,609
Net identifiable assets acquired	185,760
Goodwill	403,809
Total GCA equity value	$	589,569

We applied the acquisition method of accounting in accordance with Financial Accounting Standards Board ("FASB") ASC Topic 805, Business Combinations ("ASC 805"). Goodwill of $403.8 million was recognized as a result of the transaction and relates to (i) the value of assets that do not meet the definition of an identifiable intangible asset under ASC 805, but that do contribute to the value of the acquired business, including the assembled workforce and relationships with customers that are not tracked; (ii) the assemblage value associated with acquiring an on-going business whose value is worth more than simply the sum of its parts; and (iii) the expected synergies associated with combining global operations. None of the goodwill recognized is expected to be deductible for income tax purposes. The goodwill recognized is attributable to our CF business segment.

The results of operations for GCA have been included in the Company's Consolidated Financial Statements since the acquisition date. GCA contributed $210.5 million and $12.1 million, to Revenue and Net income, respectively, for the period from the Acquisition Date to December 31, 2021.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of GCA on the Company as if it had occurred on April 1, 2020, the first day of the Company's fiscal year-end 2021, and is not necessarily indicative of either future results of operations or results that may have been achieved had the acquisition been consummated as of this date. The below unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on April 1, 2020, including the following:

•Elimination of transaction costs incurred by the Company directly attributable to the GCA acquisition of $(5,436) and $(6,513) for the three and nine months ended December 31, 2021, respectively.

•An increase/(decrease) of amortization expense of $(12,117) and $14,688 for the three months ended December 31, 2021 and 2020, respectively, and $(437) and $43,589 for the nine months ended December 31, 2021 and 2020, respectively, directly attributable to the GCA acquisition. This amortization was recognized as a result of the allocation of purchase consideration to the definite-lived intangible assets subject to amortization, noted above.

•Resulting tax impact of above adjustments of $5,266 and $(3,716), for the three months ended December 31, 2021 and 2020, respectively, and $1,897 and $(9,067) for the nine months ended December 31, 2020 and 2021, respectively.

	(Unaudited)
	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenue	$	888,798	$	625,791	$	2,047,030	$	1,198,360
Net income	186,595		110,913		397,285		187,270

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Subsequent Events

9 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On January 20, 2022, the Company completed its final payment of $57.7 million for the remaining shares of GCA. See Note 19 for additional information.

On January 26, 2022, the Company's board of directors declared a quarterly cash dividend of $0.43 per share of Class A and Class B common stock, payable on March 15, 2022, to shareholders of record on March 2, 2022.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the nine months ended December 31, 2021 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2022. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (the "2021 Annual Report").

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

The Company’s equity method investments include variable interest entities (VIEs), which are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary, and is generally the entity with (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

Our involvement with VIEs arises from our variable interest related to a recently sponsored special purpose acquisition company. The Company's exposure to loss from such VIEs is not material to our operating results and financial position.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, valuation of acquired intangibles and goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

Revenue, Operating Expenses

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contracts. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling the contracts for such services. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event, which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

Operating ExpensesThe majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses

Translation of Foreign Currency Transactions

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of December 31, 2021, we had one foreign currency forward contract outstanding between the pound sterling and the euro with a notional balance of €4.1 million. The change in fair value of this contracts represented a net gain included in Other operating expenses of $11 during the three months ended December 31, 2021. We did not have any outstanding foreign currency forward contracts as of December 31, 2020.

Cash and Cash Equivalents, and Restricted Cash

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of December 31, 2021 and March 31, 2021, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	1,058,976	$	847,224

(1)Restricted cash as of December 31, 2021 and March 31, 2021 consisted of a cash secured letter of credit issued for our Frankfurt office.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	1,058,976	$	847,224

(1)Restricted cash as of December 31, 2021 and March 31, 2021 consisted of a cash secured letter of credit issued for our Frankfurt office.

Schedule of Restricted Cash

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	1,058,603	$	846,851
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	1,058,976	$	847,224

(1)Restricted cash as of December 31, 2021 and March 31, 2021 consisted of a cash secured letter of credit issued for our Frankfurt office.

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REVENUE RECOGNITION (Tables)

9 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Contract with Customer, Asset and Liability

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2021		Increase/(Decrease)		December 31, 2021
Receivables (1)	$	103,987	$	88,401	$	192,388
Unbilled work in progress, net of allowance for credit losses	118,115		(31,611)		86,504
Contract Assets (1)	4,422		(898)		3,524
Contract Liabilities (2)	27,868		(549)		27,319

(1)Included within Accounts receivable, net of allowance for credit losses in the December 31, 2021 Consolidated Balance Sheet.

(2)Included within Deferred income in the December 31, 2021 Consolidated Balance Sheet.

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Information About Other Financial Assets

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	December 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	30,121	$	—	$	30,121
U.S. treasury securities	—		4,866		—		4,866
Certificates of Deposit	—		516		—		516
Total asset measured at fair value (1)	$	—	$	35,503	$	—	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Level I		Level II		Level III		Total
Corporate debt securities	$	—	$	178,659	$	—	$	178,659
U.S. treasury securities	—		24,083		—		24,083
Total asset measured at fair value (1)	$	—	$	202,742	$	—	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities

The amortized cost and gross unrealized gains (losses) of marketable investment securities accounted under the fair value method were as follows:

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	30,409	$	36	$	(324)	$	30,121
U.S. treasury securities	4,883		33		(50)		4,866
Certificates of Deposit	516		—		—		516
Total securities with unrealized gains/(losses)	$	35,808	$	69	$	(374)	$	35,503

(1) Included within Investment securities in the Consolidated Balance Sheets.

	March 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value (1)
Corporate debt securities	$	178,384	$	389	$	(114)	$	178,659
U.S. treasury securities	23,761		322		—		24,083
Total securities with unrealized gains/(losses)	$	202,145	$	711	$	(114)	$	202,742

(1) Included within Investment securities in the Consolidated Balance Sheets.

Schedule of Maturities of Debt Securities

Scheduled maturities of the debt securities held by the Company included within the investment securities portfolio were as follows:

	December 31, 2021				March 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	2,576	$	2,576	$	172,747	$	172,798
Due within years two through five	33,232		32,927		29,398		29,944
Total debt within the investment securities portfolio	$	35,808	$	35,503	$	202,145	$	202,742

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ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Dec. 31, 2021

Receivables [Abstract]

Allowance for Uncollectible Accounts Receivable

	December 31, 2021
Beginning balance	$	11,782
Provision for bad debt, net	4,626
Recovery/(write-off) of uncollectible accounts, net	(1,063)
Ending balance	$	15,345

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	December 31, 2021		March 31, 2021
Equipment	$	9,238	8,795
Furniture and fixtures	25,879		21,493
Leasehold improvements	56,505		52,561
Computers and software	14,060		10,772
Other	7,429		7,056
Total cost	113,111		100,677
Less: accumulated depreciation	(61,361)		(54,307)
Total net book value	$	51,750	$	46,370

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Other Intangibles

The following table provides a reconciliation of Goodwill and other intangibles, net reported on the Consolidated Balance Sheets.

	Useful Lives	December 31, 2021		March 31, 2021
Goodwill	Indefinite	$	1,082,934	$	671,065
Tradename-Houlihan Lokey	Indefinite	192,210		192,210
Other intangible assets	Varies	93,264		6,809
Total cost		1,368,408		870,084
Less: accumulated amortization		(21,981)		(3,863)
Goodwill and other intangibles, net		$	1,346,427	$	866,221

Schedule of Goodwill

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2021		Change (1)		December 31, 2021
Corporate Finance	$	416,535	$	411,869	$	828,404
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	671,065	$	411,869	$	1,082,934

(1)Changes pertain primarily to the acquisition of GCA Corporation. See Note 19 for additional information.

Estimated Future Amortization for Amortizable Intangible Assets

The estimated future amortization for finite-lived intangible assets for each of the next five years and thereafter are as follows:

	Year Ended March 31,
Remainder of 2022	$	15,796
2023	45,120
2024	8,091
2025	1,877
2026 and thereafter	97

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LOANS PAYABLE LOANS PAYABLE (Tables)

9 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Scheduled Aggregate Repayments of Loan Payable to Affiliate

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheet on a fiscal year-end basis as of December 31, 2021 are as follows:

Remaining 2022 (1)	$	71,466
2023	28,020
2024	7,260
2025	15,863
2026	713
2027 and thereafter	10,227
Total	$	133,549

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) (Tables)

9 Months Ended

Dec. 31, 2021

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive (loss) as of December 31, 2021 was comprised of the following:

Balance, April 1, 2021	$	(20,176)
Foreign currency translation adjustment	(6,236)
Balance, December 31, 2021	$	(26,412)

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EARNINGS PER SHARE (Tables)

9 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Income Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Numerator:
Net income attributable Houlihan Lokey, Inc.	$	173,735	$	118,515	$	372,578	$	213,405
Denominator:
Weighted average shares of common stock outstanding — basic	64,914,373		66,547,587		65,259,927		65,680,516
Weighted average number of incremental shares pertaining to unvested restricted stock and issuable in respect of unvested restricted stock units, as calculated using the treasury stock method	3,365,566		2,808,760		3,260,922		2,915,987
Weighted average shares of common stock outstanding — diluted	68,279,939		69,356,347		68,520,849		68,596,503
Basic earnings per share	$	2.68	$	1.78	$	5.71	$	3.25
Diluted earnings per share	$	2.54	$	1.71	$	5.44	$	3.11

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EMPLOYEE BENEFIT PLANS (Tables)

9 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Activity in Equity Classified Share Awards

Activity in equity classified share awards which relate to the Company's 2016 Incentive Plan during the nine months ended December 31, 2021 and 2020 is as follows:

Unvested Share Awards	Shares	Weighted Average Grant Date Fair Value
Balance, April 1, 2021	2,744,605	$	51.37
Granted	1,640,456	73.19
Vested	(1,039,535)	47.80
Forfeited/Repurchased	(71,914)	60.95
Balance, December 31, 2021	3,273,612	$	63.22
Balance, April 1, 2020	3,539,047	$	39.13
Granted	1,044,741	60.60
Vested	(1,770,294)	32.36
Forfeited/Repurchased	(60,904)	50.69
Balance, December 31, 2020	2,752,590	$	51.37

Activity in Liability Classified Share Awards

Activity in liability classified share awards during the nine months ended December 31, 2021 and 2020 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2021	$	16,950
Offer to grant	2,076
Share price determined-converted to cash payments	(2,676)
Share price determined-transferred to equity grants	(4,269)
Forfeited	—
Balance, December 31, 2021	$	12,081
Balance, April 1, 2020	$	21,676
Offer to grant	6,410
Share price determined-converted to cash payments	(52)
Share price determined-transferred to equity grants	(6,457)
Forfeited	(274)
Balance, December 31, 2020	$	21,303

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LEASES (Tables)

9 Months Ended

Dec. 31, 2021

Leases [Abstract]

Lessee, Operating Lease, Liability, Maturity

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of December 31, 2021.

Maturity of Operating Leases

	Operating Leases
Remaining 2022	$	8,997
2023	32,830
2024	26,598
2025	26,486
2026	23,704
Thereafter	95,638
Total	214,253
Less: present value discount	(26,989)
Operating lease liabilities	$	187,264

Lease, Cost

Lease costs

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Operating lease expense	$	14,705	$	7,169	$	28,379	$	21,967
Variable lease expense (1)	(398)		2,913		5,131		8,040
Short-term lease expense	44		57		134		157
Less: Sublease income	—		(53)		(18)		(154)
Total lease costs	$	14,351	$	10,086	$	33,626	$	30,010

(1)Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.

Weighted-average details

	December 31,
	2021		2020
Weighted-average remaining lease term (years)	8		9
Weighted-average discount rate	3.5	%	3.8	%

Supplemental cash flow information related to leases:

	Nine Months Ended December 31,
	2021		2020
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	24,275	$	23,658
Non-cash activity:
Operating lease right-of-use assets obtained in exchange of Operating lease liabilities	$	7,736	$	30,246
Change in Operating lease right-of-use assets due to remeasurement	(7,760)		(1,208)

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SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)

9 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Schedule of Revenue, Profit and Assets by Segment

The following tables present information about revenues, profit and assets by segment and geography.    

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by segment
Corporate Finance	$	715,663	$	306,171	$	1,314,064	$	502,191
Financial Restructuring	89,273		177,995		271,232		392,006
Financial and Valuation Advisory	83,862		53,710		213,496		130,551
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748
Segment profit (1)
Corporate Finance	$	277,546	$	96,431	$	513,880	$	143,167
Financial Restructuring	15,310		78,855		61,485		169,832
Financial and Valuation Advisory	28,127		13,901		68,703		33,213
Total segment profit	320,983		189,187		644,068		346,212
Corporate expenses (2)	71,723		30,771		129,813		78,331
Other (income)/expense, net	253		(187)		1,005		(1,544)
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2)Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	December 31, 2021		March 31, 2021
Assets by segment
Corporate Finance	$	996,830	$	575,241
Financial Restructuring	188,796		181,239
Financial and Valuation Advisory	152,888		136,761
Total segment assets	1,338,514		893,241
Corporate assets	1,707,248		1,532,826
Total assets	$	3,045,762	$	2,426,067

Revenue by Geographic Areas

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Income before provision for income taxes by geography
United States	$	196,322	$	123,774	$	407,563	$	210,580
International	52,685		34,829		105,687		58,845
Income before provision for income taxes	$	249,007	$	158,603	$	513,250	$	269,425

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues by geography
United States	$	646,301	$	414,891	$	1,390,754	$	815,904
International	242,497		122,985		408,038		208,844
Revenues	$	888,798	$	537,876	$	1,798,792	$	1,024,748

Assets by Geographical Areas

	December 31, 2021		March 31, 2021
Assets by geography
United States	2,034,207		1,837,332
International	1,011,555		588,735
Total assets	$	3,045,762	$	2,426,067

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Business Combinations (Tables)

9 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Business Acquisitions, by Acquisition

Acquisition Consideration
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date	49,382,808
Cash consideration per share	¥	1,398
Cash consideration for tendered common shares	$	531,883
Cash consideration for remaining shares purchased	57,686
Total cash consideration	$	589,569

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as part of the GCA acquisition. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. The intangible assets subject to amortization will be amortized on a straight-line basis over their estimated useful lives as of the acquisition date.

	Fair Value		Weighted-Average Amortization Period
Assets acquired:
Cash and cash equivalents	$	226,550
Investment securities	515
Accounts receivable	53,431
Unbilled work in progress	4,672
Property and equipment	8,727
Operating lease right-of-use assets	27,383
Receivable from affiliates	1,288
Other assets	20,503
Intangible assets other than goodwill
Backlog	42,000		1.2 years
Trade name	17,100		2.0 years
Customer relationships	15,200		1.0 year
Total intangible assets acquired	74,300		1.3 years
Total assets	417,369
Liabilities assumed:
Accrued salaries and bonuses	152,409
Accounts payable and accrued expenses	22,627
Payable to affiliates	15
Deferred income	78
Income taxes payable	5,857
Deferred income taxes	3,199
Operating lease liabilities	27,527
Other liabilities	19,897
Total liabilities	231,609
Net identifiable assets acquired	185,760
Goodwill	403,809
Total GCA equity value	$	589,569

Business Acquisition, Pro Forma Information

	(Unaudited)
	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenue	$	888,798	$	625,791	$	2,047,030	$	1,198,360
Net income	186,595		110,913		397,285		187,270

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BACKGROUND (Details)	9 Months Ended
	Dec. 31, 2021 segment
Class of Stock [Line Items]
Number of business segments	3

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) € in Millions		3 Months Ended		9 Months Ended
	Apr. 01, 2020 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2021 USD ($) segment	Dec. 31, 2020 USD ($)	Dec. 31, 2021 EUR (€)	Mar. 31, 2021 USD ($)
Related Party Transaction [Line Items]
Number of business segments | segment				3
Reduction to retained earnings		$ 1,529,416,000		$ 1,529,416,000			$ 1,383,561,000
Retained earnings		886,995,000		886,995,000			$ 600,096,000
Provision for income taxes		74,699,000	$ 40,088,000	$ 140,099,000	$ 56,020,000
Cumulative Effect, Period Of Adoption, Adjustment
Related Party Transaction [Line Items]
Reduction to retained earnings	$ (924,000)
Retained earnings	(682,000)
Provision for income taxes	$ 242,000
Foreign Currency Forward Contract
Related Party Transaction [Line Items]
Aggregate notional value of foreign currency forward contract | €						€ 4.1
Other operating expenses | Foreign Currency Forward Contract
Related Party Transaction [Line Items]
Fair value gains (losses) included in other operating expenses		$ 11

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020
Accounting Policies [Abstract]
Cash and cash equivalents	$ 1,058,603	$ 846,851
Restricted cash	373	373
Total cash, cash equivalents, and restricted cash	$ 1,058,976	$ 847,224	$ 634,032	$ 380,746

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REVENUE RECOGNITION - Summary of Receivables, Contract Assets, and Contract Liabilities (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2021 USD ($)
Receivables
Beginning balance	$ 103,987
Increase/(Decrease)	88,401
Ending balance	192,388
Unbilled work in process, net of allowance for doubtful accounts
Beginning balance	118,115
Increase/(Decrease)	(31,611)
Ending balance	86,504
Contract Assets
Beginning balance	4,422
Increase/(Decrease)	(898)
Ending balance	3,524
Contract Liabilities
Beginning balance	27,868
Increase/(Decrease)	(549)
Ending balance	$ 27,319

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REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Revenue recognized that was previously included in deferred income	$ 19.0	$ 3.0

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Other Assets | Loans Receivable | Certain employees
Related Party Transaction [Line Items]
Due from related parties	$ 14,763	$ 16,657

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	$ 35,503	$ 202,742
Level I
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Level II
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	35,503	202,742
Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	30,121	178,659
Corporate debt securities | Level I
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Corporate debt securities | Level II
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	30,121	178,659
Corporate debt securities | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
U.S. treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	4,866	24,083
U.S. treasury securities | Level I
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
U.S. treasury securities | Level II
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	4,866	24,083
U.S. treasury securities | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	$ 0
Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	516
Certificates of Deposit | Level I
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0
Certificates of Deposit | Level II
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	516
Certificates of Deposit | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	$ 0

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INVESTMENT SECURITIES - Schedule of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities Held to Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 35,808
Gross Unrealized Gains	69
Gross Unrealized (Losses)	(374)
Fair Value (1)	35,503
Amortized Cost		$ 202,145
Gross Unrealized Gains		711
Gross Unrealized (Losses)		(114)
Fair Value (1)		202,742
Corporate debt securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	30,409
Gross Unrealized Gains	36
Gross Unrealized (Losses)	(324)
Fair Value (1)	30,121
Amortized Cost		178,384
Gross Unrealized Gains		389
Gross Unrealized (Losses)		(114)
Fair Value (1)		178,659
U.S. treasury securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	4,883
Gross Unrealized Gains	33
Gross Unrealized (Losses)	(50)
Fair Value (1)	4,866
Amortized Cost		23,761
Gross Unrealized Gains		322
Gross Unrealized (Losses)		0
Fair Value (1)		$ 24,083
Certificates of Deposit
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	516
Gross Unrealized Gains	0
Gross Unrealized (Losses)	0
Fair Value (1)	$ 516

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INVESTMENT SECURITIES - Schedule of Maturities of Debt Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Debt Securities, Held-to-maturity, Maturity [Abstract]
Amortized Cost , due within one year	$ 2,576	$ 172,747
Estimated Fair Value, due within one year	2,576	172,798
Amortized Cost, Due within one year through five years	33,232	29,398
Estimated Fair Value, Due within one year through five years	32,927	29,944
Amortized Cost	35,808	202,145
Estimated Fair Value	$ 35,503	$ 202,742

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ALLOWANCE FOR CREDIT LOSSES (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2021 USD ($)
Allowance for Uncollectible Accounts Receivable
Beginning balance	$ 11,782
Transition adjustment as of April 1, 2020	15,345
Provision for bad debt, net	4,626
Recovery/(write-off) of uncollectible accounts, net	(1,063)
Ending balance	$ 15,345

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Property, Plant and Equipment [Line Items]
Total cost	$ 113,111		$ 113,111		$ 100,677
Less: accumulated depreciation	(61,361)		(61,361)		(54,307)
Total net book value	51,750		51,750		46,370
Depreciation expense	4,621	$ 2,756	10,460	$ 8,212
Equipment
Property, Plant and Equipment [Line Items]
Total cost	9,238		9,238		8,795
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total cost	25,879		25,879		21,493
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total cost	56,505		56,505		52,561
Computers and software
Property, Plant and Equipment [Line Items]
Total cost	14,060		14,060		10,772
Other
Property, Plant and Equipment [Line Items]
Total cost	$ 7,429		$ 7,429		$ 7,056

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 1,082,934	$ 671,065
Tradename-Houlihan Lokey	192,210	192,210
Other intangible assets	93,264	6,809
Total cost	1,368,408	870,084
Less: accumulated amortization	(21,981)	(3,863)
Goodwill and other intangibles, net	$ 1,346,427	$ 866,221

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GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill by Business Segments (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2021 USD ($)
Goodwill
44287	$ 671,065
Changes	411,869
December 31, 2021	1,082,934
Corporate Finance
Goodwill
44287	416,535
Changes	411,869
December 31, 2021	828,404
Financial Restructuring
Goodwill
44287	162,815
Changes	0
December 31, 2021	162,815
Financial Advisory Services
Goodwill
44287	91,715
Changes	0
December 31, 2021	$ 91,715

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GOODWILL AND OTHER INTANGIBLE ASSETS - Finite-Lived Intangible Assets, Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 15,454	$ 1,193	$ 18,130	$ 3,079

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GOODWILL AND OTHER INTANGIBLE ASSETS - Finite-Lived Intangible Assets, Amortization Expense, Fiscal Year Maturity (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of 2022	$ 15,796
2023	45,120
2024	8,091
2025	1,877
2026 and thereafter	$ 97

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LOANS PAYABLE - Narrative (Details)				1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Apr. 30, 2018 GBP (£)	Aug. 31, 2015	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Aug. 23, 2019 USD ($)	May 31, 2018 USD ($)
Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity									$ 100,000,000
Outstanding line of credit					$ 0		$ 0
LIBOR | Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				1.00%
2019 Line of Credit, Expansion Option | Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity									$ 200,000,000
Loans Payable | Non Interest Bearing Unsecured Convertible Loan
Debt Instrument [Line Items]
Interest on debt					34,000	$ 68,000	128,000	$ 218,000
Loans payable, face amount	$ 4,500,000		£ 10,500,000		12,700,000		12,700,000
Debt instrument, exchange period	3 years		3 years
Loans Payable | 2.88% Loans Payable
Debt Instrument [Line Items]
Interest on debt					26,000	26,000	79,000	79,000
Stated interest rate (as a percent)										2.88%
Loans payable, face amount										$ 2,800,000
Loans Payable | 2.75% Loans Payable
Debt Instrument [Line Items]
Interest on debt					20,000	28,000	59,000	83,000
Stated interest rate (as a percent)		2.75%
Loans payable, face amount		$ 4,000,000
Debt instrument, exchange period		4 years
Loans Payable | Former Shareholders
Debt Instrument [Line Items]
Interest on debt					$ 2,000	$ 5,000	$ 8,000	$ 18,000
Stated interest rate (as a percent)					1.38%	1.46%	1.38%	1.46%
Baylor Klein, Ltd
Debt Instrument [Line Items]
Asset acquisition, contingent consideration, liability					$ 18,700,000		$ 18,700,000

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LOANS PAYABLE - Schedule of Loan Repayments (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Debt Disclosure [Abstract]
Remaining 2022 (1)	$ 71,466
2023	28,020
2024	7,260
2025	15,863
2026	713
2027 and thereafter	10,227
Total	$ 133,549

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2021
Accumulated Other Comprehensive Loss
Balance, April 1, 2021		$ (20,176)
Balance, December 31, 2021	$ (26,412)	$ (26,412)
Accumulated Foreign Currency Adjustment Attributable to Parent
Accumulated Other Comprehensive Loss
Foreign currency translation adjustment	$ (6,236)

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 74,699	$ 40,088	$ 140,099	$ 56,020
Effective tax rate	30.00%	25.30%	27.30%	20.80%

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Net income attributable Houlihan Lokey, Inc.	$ 174,308	$ 118,515	$ 373,151	$ 213,405
Denominator:
Weighted average shares of common stock outstanding—basic (in shares)	64,914,373	66,547,587	65,259,927	65,680,516
Weighted average number of incremental shares issuable from unvested restricted stock and restricted stock units, as calculated using the treasury stock method (in shares)	3,365,566	2,808,760	3,260,922	2,915,987
Weighted average shares of common stock outstanding—diluted (in shares)	68,279,939	69,356,347	68,520,849	68,596,503
Net income per share attributable to holders of shares of common stock
Basic (in dollars per share)	$ 2.68	$ 1.78	$ 5.71	$ 3.25
Diluted (in dollars per share)	$ 2.54	$ 1.71	$ 5.44	$ 3.11

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EMPLOYEE BENEFIT PLANS - Defined Contribution Plans (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2020
Share-based Payment Arrangement [Abstract]
Defined contribution plan, amount of contributions	$ 2,556	$ 2,327	$ 5,304

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EMPLOYEE BENEFIT PLANS - Share-Based Incentive Plans (Narrative) (Details)	1 Months Ended	3 Months Ended					9 Months Ended
	Aug. 31, 2015	Dec. 31, 2021 USD ($)	Sep. 30, 2021 director $ / shares	Mar. 31, 2021 director $ / shares	Dec. 31, 2020 USD ($)	Sep. 30, 2020 director $ / shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax benefits recorded		$ 0			$ 0		$ 6,922,000
Payments to settle employee tax obligations on share-based awards							33,700,000	$ 17,810,000
Compensation expenses					$ 12,642,000		$ 72,398,000	$ 46,779,000
Unrecognized compensation cost, period for recognition							1 year 6 months	1 year 4 months 24 days
2006 Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares) | shares							1,640,456	1,044,741
Aggregate shares granted, price per share (in dollars per share) | $ / shares							$ 73.19	$ 60.60
2016 Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
2016 Incentive Plan | Director | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares granted, number of recipients | director			6	2		4
Aggregate shares granted, price per share (in dollars per share) | $ / shares			$ 73.19	$ 63.01		$ 60.60

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EMPLOYEE BENEFIT PLANS - Activity in Equity Classified Share Awards (Details) - 2006 Incentive Plan - Restricted Stock - $ / shares	3 Months Ended	9 Months Ended
	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Shares
Beginning balance (in shares)	2,752,590	2,744,605	3,539,047
Granted (in shares)		1,640,456	1,044,741
Vested (in shares)		(1,039,535)	(1,770,294)
Forfeited/Repurchased (in shares)			(60,904)
Ending balance (in shares)	2,744,605	3,273,612	2,752,590
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 51.37	$ 51.37	$ 39.13
Granted (in dollars per share)		73.19	60.60
Vested (in dollars per share)		$ 47.80	32.36
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Repurchased in Period		71,914
Forfeited/Repurchased (in dollars per share)		$ 60.95	50.69
Ending balance (in dollars per share)	$ 51.37	$ 63.22	$ 51.37

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EMPLOYEE BENEFIT PLANS - Activity in Liability Classified Shares (Details) - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Awards Settleable in Shares
Beginning balance	$ 16,950	$ 21,676
Offer to grant	2,076	6,410
Share price determined-converted to cash payments	(2,676)	(52)
Share price determined-transferred to equity grants	(4,269)	6,457
Forfeited	0	(274)
Ending balance	$ 12,081	$ 21,303

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STOCKHOLDERS' EQUITY (Details)	3 Months Ended		9 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Sep. 30, 2021 shares	Jul. 31, 2021 USD ($)	Mar. 31, 2021 shares	Sep. 30, 2020 shares	Mar. 31, 2020 shares	Aug. 18, 2015
Class of Stock [Line Items]
Conversion ratio of common stock										1
Dividends outstanding | $	$ 7,894,000	$ 5,846,000	$ 7,894,000	$ 5,846,000
Authorized amount to be repurchased | $						$ 250,000,000
Weighted average price per share (in dollars per share) | $ / shares	$ 88,350		$ 108,900	$ 65,690
Class A Common Stock
Class of Stock [Line Items]
Conversion of Class B to Class A shares (in shares)				3,121,294,000
Shares issued of common stock (in shares)	50,924,798		50,924,798				51,245,442
Number of common shares outstanding (in shares)	50,924,798		50,924,798				51,245,442
Outstanding common stock repurchased and retired (in shares)	2,072,934,000	684,995,000	644,900,000	283,035,000
Shares repurchased and retired, value | $	$ 183,136,000		$ 70,232,000	$ 18,593,000
Class A Common Stock | Common stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)		(3,174,000)	6,512,000	8,751,000
Conversion of Class B to Class A shares (in shares)	642,693,000	790,025,000	1,745,778,000
Number of common shares outstanding (in shares)	50,924,798,000	51,623,683,000	50,924,798,000	51,623,683,000	50,927,005,000		51,245,442,000	51,506,192,000	46,178,633,000
Class B Common Stock
Class of Stock [Line Items]
Shares issued of common stock (in shares)	16,727,176		16,727,176				16,951,696
Number of common shares outstanding (in shares)	16,727,176		16,727,176				16,951,696
Outstanding common stock repurchased and retired (in shares)	455,402,000	286,730,000	0	295,000
Shares repurchased and retired, value | $	$ 33,700,000	$ 17,810,000	$ 0	$ 19,000
Class B Common Stock | Common stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)		0
Number of common shares outstanding (in shares)	16,727,176,000	17,472,592,000	16,727,176,000	17,472,592,000	17,348,305,000		16,951,696,000	18,255,244,000	19,345,277,000
Investor | Class A Common Stock
Class of Stock [Line Items]
Shares issued of common stock (in shares)	50,870,525,000	51,578,208,000	50,870,525,000	51,578,208,000
Director | Class A Common Stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)	0		6,512,000	8,751,000
HL Holders | Class B Common Stock
Class of Stock [Line Items]
Number of common shares outstanding (in shares)	16,727,176,000	17,472,592,000	16,727,176,000	17,472,592,000
Director | Class A Common Stock
Class of Stock [Line Items]
Shares issued of common stock (in shares)	54,273,000	45,475,000	54,273,000	45,475,000
Restricted Stock | 2006 Incentive Plan
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Repurchased in Period			71,914

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LEASES - Narrative (Details) $ in Millions	Dec. 31, 2021 USD ($)
Lessee, Lease, Description [Line Items]
Lease not yet commenced, amount	$ 131
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	1 year
Operating lease, lease not yet commenced, term of contract	3 years
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	15 years
Operating lease, lease not yet commenced, term of contract	10 years

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LEASES - Maturity of Existing Operating Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021
Leases [Abstract]
Remaining 2022	$ 8,997
2023	32,830
2024	26,598
2025	26,486
2026	23,704
Thereafter	95,638
Total	214,253
Less: present value discount	(26,989)
Operating lease liabilities	$ 187,264	$ 174,516

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease expense	$ 14,705	$ 7,169	$ 28,379	$ 21,967
Variable lease expense	(398)	2,913	5,131	8,040
Short-term lease expense	44	57	134	157
Less: Sublease income	0	(53)	(18)	(154)
Total lease costs	$ 14,351	$ 10,086	$ 33,626	$ 30,010

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LEASES - Weighted Average Details (Details)	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Weighted-average remaining lease term (years)	8 years	9 years
Weighted-average discount rate	3.50%	3.80%

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LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Cash paid for amounts included in the measurement of Operating lease liabilities	$ 24,275	$ 23,658
Operating lease right-of-use assets obtained in exchange of Operating lease liabilities	7,736	30,246
Change in Operating lease right-of-use assets due to remeasurement	$ (7,760)	$ (1,208)

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SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue and Assets by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Segment Reporting Information [Line Items]
Revenues	$ 888,798	$ 537,876	$ 1,798,792	$ 1,024,748
Segment profit	320,983	189,187	644,068	346,212
Corporate expenses	639,538	379,460	1,284,537	756,867
Other (income)/expense, net	253	(187)	1,005	(1,544)
Income before provision for income taxes	249,007	158,603	513,250	269,425
Total assets	3,045,762		3,045,762		$ 2,426,067
Operating Segments
Segment Reporting Information [Line Items]
Total assets	1,338,514		1,338,514		893,241
Operating Segments | Corporate Finance
Segment Reporting Information [Line Items]
Revenues	715,663	306,171	1,314,064	502,191
Segment profit	277,546	96,431	513,880	143,167
Total assets	996,830		996,830		575,241
Operating Segments | Financial Restructuring
Segment Reporting Information [Line Items]
Revenues	89,273	177,995	271,232	392,006
Segment profit	15,310	78,855	61,485	169,832
Total assets	188,796		188,796		181,239
Operating Segments | Financial Advisory Services
Segment Reporting Information [Line Items]
Revenues	83,862	53,710	213,496	130,551
Segment profit	28,127	13,901	68,703	33,213
Total assets	152,888		152,888		136,761
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Corporate expenses	71,723	30,771	129,813	78,331
Total assets	1,707,248		1,707,248		$ 1,532,826
Segment Reconciling Items
Segment Reporting Information [Line Items]
Other (income)/expense, net	$ 253	$ (187)	$ 1,005	$ (1,544)

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SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue and Assets by Geographical Areas (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	$ 249,007	$ 158,603	$ 513,250	$ 269,425
Revenues	888,798	537,876	1,798,792	1,024,748
Total assets	3,045,762		3,045,762		$ 2,426,067
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	196,322	123,774	407,563	210,580
Revenues	646,301	414,891	1,390,754	815,904
Total assets	2,034,207		2,034,207		1,837,332
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	52,685	34,829	105,687	58,845
Revenues	242,497	$ 122,985	408,038	$ 208,844
Total assets	$ 1,011,555		$ 1,011,555		$ 588,735

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Business Combinations - Narrative (Details) $ in Thousands			3 Months Ended			4 Months Ended	9 Months Ended
	Jan. 20, 2022 USD ($)	Oct. 04, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jan. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Oct. 04, 2021 ¥ / shares
Business Acquisition [Line Items]
Provision for income taxes			$ 74,699		$ 40,088		$ 140,099	$ 56,020
Revenues			888,798		537,876		1,798,792	1,024,748
Net income attributable to Houlihan Lokey, Inc.			173,735		118,515		372,578	213,405
GCA Corporation
Business Acquisition [Line Items]
Investment interest in Italy (as a percent)									90.00%
Payments to acquire businesses, gross		$ 531,883
Cash consideration per share | ¥ / shares									¥ 1,398
Revenues				$ 210,500
Net income attributable to Houlihan Lokey, Inc.				$ 12,100
GCA Corporation | Acquisition-related Costs
Business Acquisition [Line Items]
Business combination, acquisition related costs			(5,436)				(6,513)
Amortization			(12,117)		$ 14,688		(437)	$ 43,589
Provision for income taxes			$ 5,266				$ (3,716)
GCA Corporation | Subsequent Event
Business Acquisition [Line Items]
Payments to acquire businesses, gross	$ 57,686					$ 589,569

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Business Combinations - Schedule of Business Acquisitions, by Acquisition (Details) - GCA Corporation $ in Thousands			4 Months Ended
	Jan. 20, 2022 USD ($)	Oct. 04, 2021 USD ($)	Jan. 31, 2022 USD ($)	Oct. 04, 2021 ¥ / shares shares
Business Acquisition [Line Items]
GCA common shares, including employee share-based payment awards outstanding, as of the Acquisition Date | shares				49,382,808,000
Cash consideration per share | ¥ / shares				¥ 1,398
Payments to acquire businesses, gross		$ 531,883
Subsequent Event
Business Acquisition [Line Items]
Payments to acquire businesses, gross	$ 57,686		$ 589,569

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Business Combinations - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Oct. 04, 2021	Dec. 31, 2021	Mar. 31, 2021
Business Acquisition [Line Items]
Goodwill		$ 1,082,934	$ 671,065
GCA Corporation
Business Acquisition [Line Items]
Cash and cash equivalents	$ 226,550
Investment securities	515
Accounts receivable	53,431
Unbilled work in progress	4,672
Property and equipment	8,727
Operating lease right-of-use assets	27,383
Receivable from affiliates	1,288
Other assets	20,503
Total intangible assets acquired	74,300
Total assets	417,369
Accrued salaries and bonuses	152,409
Accounts payable and accrued expenses	22,627
Payable to affiliates	15
Deferred income	78
Income taxes payable	5,857
Deferred income taxes	3,199
Operating lease liabilities	27,527
Other liabilities	19,897
Total liabilities	231,609
Net identifiable assets acquired	185,760
Goodwill	403,809
Total GCA equity value	$ 589,569
Weighted-Average Amortization Period	1 year 3 months 18 days
GCA Corporation | Backlog
Business Acquisition [Line Items]
Total intangible assets acquired	$ 42,000
Weighted-Average Amortization Period	1 year 2 months 12 days
GCA Corporation | Trade name
Business Acquisition [Line Items]
Total intangible assets acquired	$ 17,100
Weighted-Average Amortization Period	2 years
GCA Corporation | Customer relationships
Business Acquisition [Line Items]
Total intangible assets acquired	$ 15,200
Weighted-Average Amortization Period	1 year

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Business Combinations - Business Acquisition, Pro Forma Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 888,798	$ 625,791	$ 2,047,030	$ 1,198,360
Net income	$ 186,595	$ 110,913	$ 397,285	$ 187,270

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Subsequent Events (Details)	Jan. 26, 2022 $ / shares
Subsequent Event
Subsequent Event [Line Items]
Common stock, dividends, per share, declared (in dollars per share)	$ 0.43