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Houlihan Lokey Inc (HLI 1.14%)
Q4Â 2020 Earnings Call
May 12, 2020, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, thank you for standing by. Welcome to Houlihan Lokey's Fiscal Year-End Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded today, May 12th, 2020. I will now turn the call over to Christopher Crain, Houlihan Lokey's General Counsel. Thank you, Mr. Crain, you may begin.
Christopher M. Crain -- General Counsel
Thank you, operator and hello everyone. By now, everyone should have access to our fourth quarter and fiscal year 2020 earnings release, which can be found on the Houlihan Lokey website at www.hl.com in the Investor Relations section. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and, therefore, you should exercise caution when interpreting and relying on them. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings including the Form 10-K for the year ended March 31, 2020 when it is filed with the SEC.
During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release and our investor presentation on the hl.com website. Hosting the call today, we have Scott Beiser, Houlihan Lokey's Chief Executive Officer and Lindsey Alley, Chief Financial Officer of the company. They will provide some opening remarks and then we will open the call to questions. With that, I'll turn the call over to Scott.
Scott L. Beiser -- Chief Executive Officer and Director
Thank you, Christopher. Welcome everyone to our fourth quarter and fiscal year 2020 earnings call. I would like to start by thanking our incredible employees around the world. They have worked tirelessly the last couple of months in a difficult operating environment and they have done so from their living rooms, kitchens, and home offices. Their safety and health is our firm's utmost concern and we're blessed that very few of our employees have been afflicted with COVID-19. Next, we would like to thank all the workers who continue to provide us with our medical needs, food, and other essential services. Without their dedication and sacrifice, our world would simply be less safe. I am pleased to announce that Houlihan Lokey and its senior management team have contributed approximately $2 million to first responder causes thus far and with our ongoing employer matching program, we anticipate the firm and our employees will continue to contribute as we all get through this together.
Moving on to our operations and financial results, I will provide my remarks in three sections. One, a brief overview of our fourth quarter and fiscal year 2020 results; two, a summary of the firm's activity and how we believe we are positioned in the current business environment; and three, an overview of potential opportunities that this pandemic creates for us over the next year or two. Our fourth quarter fiscal 2020 revenues were $303 million, up 4% year-over-year. This was the firm's second highest quarterly revenues, surpassed only by our third quarter this fiscal year. For the full fiscal year, we achieved record revenues of $1.16 billion, up 7% with year-over-year growth recorded in all three business segments. Corporate Finance and Financial and Valuation Advisory achieved record results and Financial Restructuring had its second best year ever. Adjusted earnings for the quarter were $0.96 per share, up 12% and for the full year adjusted earnings were $3.20 per share, up 11%. Lindsey will provide more details on our fiscal quarter and full-year financial results including some favorable tax results that benefited our earnings per share later in this call.
Today, we operate in a completely different business environment than last quarter. Since we went public nearly five years ago, we have worked hard to explain to our investors, clients, employees, and acquisition targets why we believe our cyclically balanced business model is unique and why we are well-positioned to operate in challenging environments like the one we are in today. It is far too early to tell what the next few quarters or years hold for us, our industry or our economy. We have never seen disruption like we are seeing today and we cannot predict what our economy will look like when all is said and done. Having said that, let me describe the changes we are seeing at Houlihan Lokey as well as remind you of the key tenets of our business model.
Activity in our restructuring business has increased significantly in the last two months and the size and complexity of transactions have increased as well. New engagement activity is running at almost double our recent monthly run rate as the pandemic has greatly increased the number of troubled situations and the speed at which solutions are needed. Prior to the crisis, we believe our Financial Restructuring revenues would substantially increase in a normal economic downturn in light of the sizable amount of leverage in the marketplace. Needless to say, the ramifications of the pandemic have exceeded those of a normal downturn and the activity levels have increased faster than we expected. Nevertheless, as the largest restructuring firm in the world with nearly 250 dedicated restructuring bankers, we believe that we are better positioned than anyone to operate in this environment. Through collaboration with our capital markets team, industry bankers, and valuation professionals, we have several hundred additional colleagues assisting with liability management, debt advisory, distressed M&A, and traditional restructuring mandates. Simply put, we are prepared for this market.
In M&A, new business activity levels have declined significantly in the last two months as our clients have pulled back to await better clarity in the economy and understand what the ramifications maybe as the world begins to lift stay-at-home orders. Deals have died, even more have been put on temporary hold, and most have seen their timing slowed. Notwithstanding the current negative economic tone, we continue to be hired on numerous new engagements albeit at a much slower pace than the level experienced this time last year. Until we and our clients are through the initial stages of the pandemic and are able to travel, it is difficult to tell when M&A activity will resemble anything approaching normal. Nonetheless, our industry bankers in Corporate Finance remain active on existing M&A transactions, capital market mandates, and working with our restructuring colleagues to provide integrated solutions for our clients dealing with distressed situations.
This workforce shift is a hallmark of our business adaptability and sophistication, which has historically allowed us to keep our industry bankers operating efficiently through the cycles. Furthermore, the substantial involvement of our industry bankers in restructuring deals bodes well for post restructuring Corporate Finance and valuation work. Our capital markets bankers pivoted from financing healthy acquisitions to liability management, debt advisory, rescue financing, and bridge financing. Although the number of new financing opportunities has declined, the size and complexity has increased as many borrowers who historically relied on traditional financing sources now find themselves in need of more flexible financing options. As traditional capital sources become less available for certain sectors of the market, we fully expect this group to remain busy throughout the year.
Within our FVA business, each of our sub product lines are affected differently. Our portfolio valuation group is extremely busy as the volatility in the marketplace is putting pressure on clients as they mark to market their investments. However, as we see fewer clients pursuing deals, our transaction opinion and transaction advisory work has been slower than usual. Our financial sponsors coverage bankers have been a focal point for the sponsor community in understanding what their current needs are. We continue to provide advice to these important clients making introductions to our various industry, capital markets, restructuring and valuation bankers.
It's also important to highlight some timing results and expectations about our business model. We saw a significant decline in M&A revenues in March and continue to see lower revenues in April. For restructuring, the new business activity levels picked up as quickly as the levels declined in M&A and although our restructuring transaction engagements have monthly retainers, the larger success fees won't begin to significantly impact revenues for several quarters and into our next fiscal year.
As a result of this dynamic in previous cycles, there were a few quarters where we experienced a decline in total revenues before a leveling off and ultimate growth of the business. It is too early to predict how this economic downturn will behave, but it is important to understand history. Similar trends that I just described occurred in our business in 2008 and before that in 2001. In both of those recessions, we outperformed the industry and exited the bottom of the cycle stronger than we entered. Today, once again, our business model is performing the way we had envisioned. Our execution and the depth and breadth of the pandemic aftermath over the next 24 months will be critical to our performance during this crisis and thereafter.
Now I'd like to highlight a couple of strategic opportunities that exist because of the dislocation in the market. Firstly, any dislocation of this size puts a significant strain on many industries including the one in which Houlihan Lokey operates. Many of our Corporate Finance competitors are small boutiques or mid-size middle market investment banking firms, many of them offer only the M&A product or in one industry sector or geography. Some of our competitors may struggle significantly over the next several quarters or wish they had a more diverse product offering. This highlights to our competitors the strength of our platform and spotlights some of their own limitations. In the last few months, our dialog with firms interested in partnering with or being acquired by Houlihan Lokey has significantly increased. Furthermore, the size of these opportunities are somewhat larger than what we have historically encountered.
Secondly, the potential to hire talented bankers who might be looking for a more stable and diversified organization should increase. In previous cycles, we have found very talented bankers out of work or at institutions that had less balance in their business model. Finally, our capital markets business should significantly benefit during and after this crisis as the value proposition of capital markets advice increases. There is now a growing set of opportunities for our firm to participate in and expand our capital market services.
In closing, we are fortunate to have healthy employees, are pleased about our fiscal year 2020 financial results, and are realistic about the challenges that lie ahead. However, we also fully expect to see opportunities in the near future that will drive value to our shareholders and we believe we are very well-positioned to capitalize on those opportunities. With that, I'll turn the call over to Lindsey.
J. Lindsey Alley -- Chief Financial Officer
Thank you, Scott. Revenues in Corporate Finance were $156 million for the quarter, up 8% when compared to the same quarter last year. We closed 84 transactions compared to 64 in the same period last year and our average transaction fee on closed deals was slightly lower this quarter when compared to the same period last year. Our Corporate Finance revenues were meaningfully impacted beginning in March as a result of COVID-19.
Financial Restructuring revenues were strong this quarter at $103 million, a 3% increase from the same period last year driven by higher transaction volume. We closed 29 transactions compared to 27 transactions in the same period last year and our average transaction fee on closed deals was relatively flat. As Scott mentioned, our Financial Restructuring activity has significantly increased, but there was no impact related to COVID-19 on our Financial Restructuring results this last quarter. While this quarter was one of our strongest ever in Financial Restructuring, our restructuring business can be lumpy across quarters depending on the timing of certain large transaction fees. In Financial and Valuation Advisory, revenues were $44 million for the quarter, an 8% decrease from the same period last year. We had 624 fee events during the quarter compared to 605 in the same period last year. However, our FVA revenues were negatively impacted beginning in March.
Turning to expenses. Our adjusted compensation expenses were $184 million for the fourth quarter versus $177 million for the same period last year. We adjusted for pre-IPO grants and for deferred payments primarily related to certain acquisitions. The adjusted compensation ratio was 60.9% for the quarter within our targeted range of between 60.5% and 61.5%. As a reminder, the last tranche of our pre-IPO grants have vested and as a result, these adjustments will go away beginning next quarter. We will continue to adjust for acquisition-related expenses as they occur. The adjustment for acquisition-related compensation expenses was positive this quarter as we reevaluated certain contingent compensation given the new operating environment.
Our adjusted non-compensation expenses during the fourth quarter were $45 million versus $39 million for the same period last year. Our adjusted non-compensation expense ratio increased to 14.9% from 13.3% in the same quarter last year and our year-to-date adjusted non-compensation ratio is 15.2% versus 15.1% for the same period last year. For fiscal year 2021, we expect to see our non-compensation expenses decline on an absolute basis as a result of less travel and marketing related expenses. However, the vast majority of our non-compensation expenses are fixed and will not vary with revenue. This quarter, we adjusted one item out of our non-compensation expenses of approximately $2.3 million in acquisition related amortization. We will continue to adjust for similar types of expenses when they occur.
Our adjusted other income and expense resulted in a gain for the quarter of approximately $1 million versus a gain during the same period last year of $1.9 million. This was primarily a result of interest income earned on our cash and investment balances. This quarter, we adjusted out of our other income and expenses approximately $1.2 million in reduction of acquisition earnout liabilities. Our adjusted effective tax rate for the quarter was 15.1%. For the fiscal year, our adjusted effective tax rate was 25.2%. The decrease in our adjusted effective tax rate this year was a result of decreased state tax expense driven by favorable shift in the geographical make up of our client base. We do not expect to see future benefits from state apportionment as there has been no structural change in our business. For future years, we are still anticipating an effective tax rate at our long-term targeted range of between 27% and 29%.
Turning to the balance sheet and use of cash. As of the quarter-end, we had $516 million of unrestricted cash and equivalents and investment securities. We expect our unrestricted cash and equivalents and investment securities to decline significantly in the first quarter of fiscal 2021 as we pay the majority of our cash bonuses to our employees in May and we will need to continue to maintain a significant amount of cash in order to pay the cash deferred part of our bonus in November.
In the fourth quarter, we repurchased approximately 39,000 shares at an average price of $46.66 per share as part of our share repurchase program. In addition to having adequate liquidity in our business to weather the challenges caused by the crisis, we have effectively no debt and an undrawn revolver balance of $100 million. Finally, we are pleased to announce that we're paying a $0.31 per share dividend on June 15th to shareholders of record as of June 5th. And with that, operator, we can open the line for questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Our first question comes from Ken Worthington with J.P. Morgan. Please proceed with your question.
Ken Worthington -- J.P. Morgan -- Analyst
Hi, good afternoon, thank you for taking my question. I'm curious in the compare and contrast between today's COVID-19 crisis and the 2018 [Phonetic] financial crisis as it relates to the restructuring business. So how are you seeing the magnitude of the restructuring opportunity today versus a decade ago and what are the factors that we should consider in terms of evaluating both the size of the restructuring opportunity as well as the timing of the restructuring opportunity versus a decade ago and then I'll sneak one last one in, you talked about it being a big opportunity. How are you evaluating your capacity at this point? You mentioned all the bankers, but anyway -- still capacity is something I'm interested in.
Scott L. Beiser -- Chief Executive Officer and Director
Hey Key. Again, so in terms of the opportunity set, call it today versus what we experienced in the Great Recession a little over a decade ago. One, we would point to the fact that on an absolute basis, total amount of leverage indebtedness is just much larger today than it was a decade ago spread out in more come companies and more different countries. So we always thought that eventually whenever that downturn would occur, we'd all experience some increased activity. What we probably didn't expect in the next downturn was once again something that impacted effectively probably almost every country and it may not have impacted every single industry, but this obviously is a very widespread type of a downturn versus what we had seen also 10 years ago was also widespread albeit it was a different kind of a crisis, but usually we have found different countries in different industries impacted at different times.
So this is a rapid negative impact to lots and lots of businesses. I don't think anybody knows exactly how it will all fold out in the next coming months, quarters etc and from a timing standpoint, I'm not sure we see it much different than what we'd experienced before. You do get a certain amount of ramp up, I'll call it in Phase 1 of getting some work. We would expect there is probably subsequent increases of business opportunities not only for ourselves but our peers as well and as we've always tried to describe some of this stuff does take time before the revenues will actually come in and the transaction fees or something that takes obviously longer than the monthly or quarterly retainers that we might get.
In terms of capacity, I think we have done as good a job as any to take the core sizable restructuring team that we've had for really decades, which is in fact more experienced and talented today than it was 10 years ago, there has been very little turnover in that group and therefore, they just have 10 years of more experience than they did before and we continue to supplement it where we can and appropriate with our capital markets bankers, industry bankers, sponsor bankers, and valuation bankers as I mentioned so that we can continue to flex with the size of the opportunity.
Ken Worthington -- J.P. Morgan -- Analyst
Great, thank you. I'm just going to follow-up on the differences. My understanding for '08, we really had a -- it was a financial crisis and that the SEC may have pushed through bankruptcies maybe more quickly than would have otherwise been the case. There was more of a sense of urgency to get things resolved and that may have contributed to maybe more of a quick resolution to restructuring versus what we might expect now or in a more typical recession, is there any merit to that comment or is that either too small or just incorrect?
Scott L. Beiser -- Chief Executive Officer and Director
You know, the world continues to change so rapidly and we might have told you one thing at the end of March different than in the middle of May. So I think initially everybody was really just worried about, did they have enough cash to survive the next day, next week, next month. I think people have taken a little bit of pause in that and there are still lots of companies in trouble, but they may not be in the same crisis mode that they were six or eight weeks ago which gets to our point that there could be a few waves of this.
The other difference I would say is the last crisis in theory you could continue to provide money to try to solve the problem. This has a lot to do with the human psyche and a certain amount of money will not change people's fear to go outside and to go do certain things. Once again, there isn't a paradigm that we can all compare it to. So I think this is going to be as broad-based of a kind of downturn. I don't think there is enough significant comments that we would make to say that kind of the speed of what the government is doing causing it to be quicker or slower this time versus last time. We also know the Feds have come in and have talked about purchasing certain kinds of bonds that can also have some impact on the pacing of all of this, but right now, I think you should assume it's a rather busy time in the restructuring world.
Ken Worthington -- J.P. Morgan -- Analyst
Okay, great. Thank you very much.
Operator
Thank you. Our next question comes from Devin Ryan with JMP Securities. Please proceed with your question.
Devin Ryan -- JMP Securities -- Analyst
Great. Hey Scott, hey Lindsey.
Scott L. Beiser -- Chief Executive Officer and Director
Hey, Devin.
Devin Ryan -- JMP Securities -- Analyst
I guess first question here, just on the M&A backdrop. You know, obviously appreciate that activity has slowed and there's quite a bit of uncertainty out there and markets typically don't like uncertainty. So I'm just trying to think about the M&A activity that you are seeing. It sounds like you're still winning some mandates. Is the nature of the deals already changing to maybe more distressed or activity that that's tied to COVID or supply chain etc or I'm just trying to think about the type of M&A that's occurring right now even at maybe a more modest pace and whether that starts to shift to kind of a different tenor and then are the financing markets open and do sponsors or other companies have access to financing right now?
Scott L. Beiser -- Chief Executive Officer and Director
So a couple of responses. Clearly, there is some work in the distressed M&A environment as you described. We also have to remember that in this particular downturn, there are some industries that are doing fine and some actually are even growing and obviously some industries are just getting decimated. So you do have a mix and match between the financial wherewithal of different industries. We're also getting hired in certain situations where people say we know we'll get through this, we don't know exactly when. So, go ahead and get started. Go prep, put together information, build your book, but they're not ready to have us actually go out and talk to prospective buyers.
I think the real issue, some of it is financing, but as much as until people are able and willing to actually go and physically meet with management and talk with management, there's only so much that at least buyers and sellers have done or are willing to do via Zoom or some other form of tele and video conferencing. So I think that's one of the gating issues. I think initially on the financing side, it really stemmed from people trying to deal with rescue financing and it's clearly improved on the financing marketplace today versus where it was six or eight weeks ago, but it's clearly not nearly as healthy as it obviously was three, six months ago.
I think it's really the uncertainty where people do not know exactly how this will end and when it will end and they do by ordinary course and whether you are a private equity firm or whether you are a strategic, the ordinary course is eventually you do need to get to meet the business, the management team, tour the factories, all those things, there are certain things that they still want to do and at this juncture, they are finding difficulties in doing it.
Devin Ryan -- JMP Securities -- Analyst
Okay, great color. Thanks, Scott. And then just a follow-up here. Lindsey, you gave a little bit of detail on how to think about expenses and I appreciate that maybe some of that especially travel etc is more temporary. So I'm trying to think about if the business mix is shifting maybe for the next couple of years, what the implications are on operating margins, if any?
J. Lindsey Alley -- Chief Financial Officer
I'm not sure that a business shift has a significant impact on the operating margins. I think that what we expect to see is a reduction in travel and entertainment and a reduction in marketing expenses, but as you suggested, that will be a short-term next couple of quarters favorable benefit to us. I think after that regardless of whether Corporate Finance is up or down or restructuring is up or down, it won't have much of an impact on our non-comp expense nor will it have an impact on our comp expense.
Devin Ryan -- JMP Securities -- Analyst
Okay, great. Thank you very much guys.
Operator
Thank you. Our next question comes from Brennan Hawken with UBS. Please proceed with your question.
Brennan Hawken -- UBS -- Analyst
Good afternoon guys. Thanks for taking my question. I was hoping you could maybe help us frame the situation through the lens of some prior cycles and Scott, I know you made some comments on that as far as timing earlier, but thinking about it from a productivity perspective, could you talk to us about typically what kind of order of magnitude increase you see in a normal cyclical downturn from your restructuring bankers and correspondingly, what kind of a typical decline do you see in the productivity metrics for your M&A bankers? Thanks.
Scott L. Beiser -- Chief Executive Officer and Director
So why don't we got to go a little back in our memory, you've got what a 11 years, 12 years since the last downturn and then you got to go back another seven years. So a lot of this is almost ancient history in today's financial world. Having said that, I would say that the time frame to complete restructuring deals seems to have shrunk cycle-to-cycle. So things do get done on a little quicker basis, but how you get paid, when you get paid, this whole retainer amount versus transaction fee amount, I don't think has changed. There is always a delay between getting hired, getting started, getting retainer fees and then eventually getting the transaction fees. So, initially the comment is going to be your bankers are incredibly busy, but if your definition of productivity measure is revenues divided by people, there's always going to be a lag in the revenue build up on the restructuring side.
Conversely, on the M&A side is you have a large number of deals at any given time as I mentioned earlier in my comments, there is a subset of them that died, we don't think will come back, there is even a larger amount that are on hold. We believe the vast majority of those will come back. It's just a matter of when. So those are available to assist the productivity and then as I mentioned, you've got new deals coming in, less than what we've seen in a normal time period, but while we are processing and moving forward on them, we'll eventually hit a hurdle on how far we can go with some of these new engagements until like I said the world kind of frees up to allow people to travel and interact a bit more.
Brennan Hawken -- UBS -- Analyst
I appreciate all that. I guess what I was just trying to think about is, when we think about trough to peak restructuring cycle, does the -- and putting timing aside, right. I'm not talking about the next few [Phonetic] quarters, who knows, right, all of that stuff is very uncertain. I was just more trying to think about from a frame of reference of do you see the productivity as measured by revenue per MD [Phonetic], is it double, does it go up 150%, like what kind of a quantum of increase do you typically see in restructuring and then correspondingly when you look at the decline in M&A, at least during a time frame of a few years, how much of the decline do you typically see from your peak levels of activity down to the trough?
J. Lindsey Alley -- Chief Financial Officer
We have more familiarity on the restructuring side where I think in the last cycle, we probably came close to doubling productivity. Clearly, a reduction in Corporate Finance. The problem in describing Corporate Finance is we were a much different, smaller, less diversified organization on the Corporate Finance side in 2007 and 2008 than where we are today. So I don't think it would be a reasonable comparison and then you do get -- and the way we report things we book things in the type of the task that it is, but then we will move people around to help out. So, you're also going to get some skewing.
We don't take a Corporate Finance person and all of a sudden make him a restructuring person or take a restructuring person and make him a Corporate Finance person, the revenues will get booked on what the task is, but we will have -- we have a shift of people working on it. So we've always said, the better metric to look at is really the totality of our revenues divided by our MD [Phonetic] headcount and if you focus too much product-by-product, there is just that skewing because like I said, we keep revenues where they're supposed to be, but we don't move the headcount, we deal with that on how we bonus and pay people, but not necessarily from a reporting segment standpoint.
Brennan Hawken -- UBS -- Analyst
Okay, that makes a lot of sense and that's very helpful. Thank you. I think you flagged the fact that you're seeing a lot of mandates come in at a pace that's picked up a lot. Is there a way to quantify where the outstanding mandates stand today versus where they stood two months ago before you saw this big flurry of activity?
Scott L. Beiser -- Chief Executive Officer and Director
I assume you're talking about restructuring -- was your question.
Brennan Hawken -- UBS -- Analyst
Restructuring, yes. Sorry, apologies. [Speech Overlap].
Scott L. Beiser -- Chief Executive Officer and Director
The only thing we disclose is the number of closed transactions we have by quarter. We don't really talk about number of active assignments we have or backlog in an actual stated amount. So I think we should just be consistent with what we provided in the past, which is really just input on number of closed transactions. Like I said, I can tell you over the last couple of months, post kind of the COVID crisis, we've just seen as has I think you've heard from all of our competitors, a significant increase in the number of assignments that we're talking to, getting hired on etc.
Brennan Hawken -- UBS -- Analyst
Okay. Fair enough. Maybe since I can take a mull again on that one, you had talked, Scott, I think about the fact that in the past, there was a few quarters lag between when the economic downturn began and restructuring ticked up, but you also have said that this environment is very different and its resulting in mandates coming in at a far more rapid pace than you've seen in the past and the magnitude of disruption to certain business models being significantly greater. Could that result in a environment where the typical cyclical lag in restructuring revenue actually does not become manifest in this environment and you actually see restructuring revenues start picking up sooner or is that too optimistic to be thinking about given some of the other constraints around meeting with people and such.
Scott L. Beiser -- Chief Executive Officer and Director
Yeah, I think when you blend it all together, our timing expectations from activity levels getting hired, billing, accruing revenues, collecting, I don't think are much different than what we saw in the previous one or two cycles. There'll be certain projects that obviously are going to get more accelerated because of this crisis versus the different -- but no, I don't think you'll see kind of a significant timing difference on kind of a revenue buildup heading into this particular downturn versus what we saw back in the '08. '09, '10 time frame.
Brennan Hawken -- UBS -- Analyst
Great. Thanks for taking my questions.
Scott L. Beiser -- Chief Executive Officer and Director
Okay, thanks, Brennan.
Operator
Thank you. Our next question comes from Jeff Harte with Piper Sandler. Please proceed with your question.
Jeff Harte -- Piper Sandler -- Analyst
Good afternoon, guys. Most have been hit but one thing I want to touch on is, you talked about how much better and worse, I guess, restructuring and Corporate Finance got late in the quarter. I'm trying to get a feel for the magnitude there to kind of get an idea what our jumping-off point would be and I'm kind of -- I thought I heard you say and correct me if I'm wrong, that the activity level changes in each have been very similar implying kind of offsetting, but that the Financial Restructuring just has a longer revenue recognition lag. I mean am I getting that correctly?
Scott L. Beiser -- Chief Executive Officer and Director
What we saw, if your question was about January, February, March, it was clearly I would say a normal looking January and February and an abnormal looking March, which impacted what ultimately we produced in our fiscal fourth quarter and that's the jumping-off point. In terms of the comment about activity, yeah, I'm talking about kind of business coming in or business coming out that isn't necessarily the same as revenues where like I said we saw a lot more business activity coming in restructuring and we saw a lot less business activity coming in and some existing Corporate Finance activity either died or put on hold.
Once again from a timing issue, you're going to find a relatively quick evaporation on Corporate Finance revenues. If the deal has died or put on hold, obviously, you're not going to get the revenues and on restructuring, we've got activity, we've got people working, we've got a number of assignments, we are getting revenues on those, but the pace of how those revenues come in and specifically the transaction fees, you don't close the deals in one or two months, we've always said, this could be typically six months to two years of an assignment in restructuring and look some go multiple years and some could go a little shorter, like I said, on a blended basis. I don't think we'll find a huge timing difference in the ramp-up on how it looks in this downturn versus the previous downturn.
Jeff Harte -- Piper Sandler -- Analyst
Okay and if we were to look back at kind of the prior like the say the '09, which was probably the peak of the last restructuring cycle. For some reason, I thought you guys had talked about restructuring revenues being somewhere in the neighborhood of $400 million back then, is that right or if not, can you size how big restructuring revenues were back in 2009?
Scott L. Beiser -- Chief Executive Officer and Director
Yeah, that's a fair comment. We were in the very high 300s [Phonetic] in the last cycle, kind of where we peaked.
Jeff Harte -- Piper Sandler -- Analyst
Okay and finally can you talk a bit more to the virtual client interaction environment you're operating in. I get that you can't really do a lot of due diligence kind of face-to-face, but is the need -- are people working from home having beyond just that a bigger impact do you think on M&A and I guess the question, the follow-up would be assuming we gradually come back to work, is this going to be a kind of a longer tailwind kind of happen to do those things virtually than maybe we're used to thinking of a normal M&A tailwind or I should say headwind being?
J. Lindsey Alley -- Chief Financial Officer
I think that we've all been surprised about how seamless its been working from home. I think we're forced into it. I think people have adapted extremely quickly, Financial Restructuring will close transactions and execute these transactions from a computer. FVA is also reasonably set up for that as well. I think with respect to the M&A product. Scott hit it, it is you can do a lot of diligence, you can create materials, but when you go to market, most of these firms are going to want to meet the management team and if it's a strategic acquisition, they're going to want to walk the facility. So it is very hard to get an M&A transaction done if you are working from a computer. So I think until we're back to work for lack of a better way to say it, the M&A market is going to be, is just going to be very slow in terms of new transactions going to market, new transactions getting started, unless they are distressed.
Jeff Harte -- Piper Sandler -- Analyst
Okay, thank you.
Operator
Thank you. Our next question comes from Michael Brown with KBW. Please proceed with your question.
Michael Brown -- KBW -- Analyst
Hey Scott and Lindsey.
Scott L. Beiser -- Chief Executive Officer and Director
Hey, Michael.
Michael Brown -- KBW -- Analyst
So I appreciate all the color on the restructuring business. I guess can we talk a little bit more about some of the near-term opportunities that you flagged in capital markets, advisory, liability management, specifically debt advisory. What is kind of the potential that those businesses can provide to offset pressure over the next quarter or two and where do those revenues hit? Do those hit Corporate Finance or do they hit the restructuring line. Is it somewhat of a mix?
Scott L. Beiser -- Chief Executive Officer and Director
So I guess three comments to that. One, we really do think you need to think about this whole process as a one to two-year process and not a one or two quarter process and that pertains to whether it's capital markets, M&A or restructuring. In terms of what we will do if we are raising debt and it's more probably for a distressed situation, it may in fact booked in our restructuring business segment. If it is more raising capital for a company that's in not necessarily in bankruptcy or heading toward bankruptcy, but needs capital, it still maybe to help their businesses survive, but it's still a business that's got positive equity value. We're going to probably book it in our Corporate Finance and we use it kind of general same rule of thumb in that regard.
What we're seeing and I think we've always said in Capital Markets, our biggest competitive issue was not another namesake investment banking firm, it's a whole host of companies and a whole host of private equity firms who said, we can raise the capital ourselves and probably because there was so much capital available on relatively attractive terms, it was why would you hire an agent unless that agent can provide you the added value for the cost of that.
We've always said and we still believe and even more so now in tougher times like this, we will come out as will our competitors in this particular sub-product area with people appreciating the importance of this kind of advice and the capital markets business will actually improve post cycle and pre-cycle, but it's going to take some time and right now, people are primarily raising capital, not for historical reasons like I want to raise capital to go buy something, they're doing it to shore up their balance sheet, improve terms that they have, looking at it potentially to deal with some level of distress for liquidity issues that they have, but it will eventually turn back to once again I'll call it opportunistic raising of capital instead of probably defensive raising of capital.
Michael Brown -- KBW -- Analyst
Okay, thank you. And just wanted to ask a question about the strategic opportunity that you mentioned in your prepared remarks. Any color you can share as to what white space you could be targeting and if I heard your commentary correctly, I don't want to put words in your mouth, it sounds like you might be looking at something a little more sizable than some of your more recent transactions, is that true and I guess how do we think about what you could be considering and capital markets sounds like something that you have been interested in growing. You've been kind of talking about that a lot more recently. Is there opportunities to add for that business or would this be focused on kind of regular way M&A. Thanks.
Scott L. Beiser -- Chief Executive Officer and Director
So the white space that we see today in terms of where we'd like to build out in further industries, further things in capital markets, further things in certain geographies, certain things in the business valuation side, I would say, in many regards it is the same white space as we saw three months ago or three years ago. The issue is there are more companies that are motivated to want to potentially do something and therefore just I'll call it the volume of potential interested parties in conversations we're having are greater than what we've seen prior to the crisis and some of the things are a bigger-sized companies than what we've seen in the past, but it's not that what we're focused on, I would say, has changed today versus three months ago, there is just more opportunities in conversations we're having.
Michael Brown -- KBW -- Analyst
Okay, got it. Thank you for that clarification. That's it from me.
Scott L. Beiser -- Chief Executive Officer and Director
Thanks, Michael.
Operator
Thank you. Our next question comes from Manan Gosalia with Morgan Stanley. Please proceed with your question.
Manan Gosalia -- Morgan Stanley -- Analyst
Hi, good afternoon. I was wondering, just as a follow-up to the last question, does the environment change how you think about the economics of acquiring whole boutique firms versus recruiting talent. In this kind of an environment, should we see more of a preference for recruiting talent rather than acquiring whole firms?
Scott L. Beiser -- Chief Executive Officer and Director
I think we've always viewed there's three paths in terms of bringing in talent, it will continue to be promotion of folks and internal development, it will continue to be hiring on the opportunistic side and it will be acquisitions. So all of those avenues we've been open-minded about it for years and continue to be and in our prepared remarks I think we expect more opportunities on the acquisition side as well as more opportunities on the hiring side just because I think of the stability of our business in contrast to some of the other organizations that either we're talking to or where employees are part of those organizations, but I don't think you should view that we are going to lean more so on acquisitions versus hiring or vice versa post-COVID than pre-COVID.
Manan Gosalia -- Morgan Stanley -- Analyst
Okay, got it. And then maybe if I can sneak in one last one on restructuring. We're seeing multiple industries under stress today, not just in the U.S. but globally as well. So can you talk a little bit about the global opportunity in restructuring and how you think you're positioned to take advantage of that?
Scott L. Beiser -- Chief Executive Officer and Director
Yeah, we, I think last count, we've done well over restructurings in I don't know 50 different or so countries. We're all over the globe, not only by offices, but by presence and while the U.S. restructuring marketplace is still bigger than other parts. I mean, we're doing work all over in Europe, Middle East, Asia, Latin America and this particular crisis as I mentioned earlier is impacting effectively every single major country. So this is not a country specific or even a particular region specific. So this distress area I think is going to help the restructuring business around the globe and we're seeing it in terms of the things that we're talking to, things that we've already been hired on, it continues to be a trend for this is probably our most global of our businesses and it will continue to -- I think we will see a lot of business globally above and beyond just the U.S.
J. Lindsey Alley -- Chief Financial Officer
And I think our comments whether they are in published materials or that we've made on the phone about being the leader in restructuring, we don't make that comment specific to the U.S. I mean we feel like we're a leader in restructuring in Europe, we feel like we're a leader in restructuring in the Middle East, the Asian and Australian countries and it just -- it is always as Scott suggested been run as a global business. It is a much bigger percentage of our revenues are overseas in restructuring than they are in Corporate Finance and we fully expect to take advantage of the opportunities regardless of where they end up on the globe.
Manan Gosalia -- Morgan Stanley -- Analyst
That's helpful. Thank you.
Operator
Thank you. Our next question comes from Matt Coad with Autonomous Research. Please proceed with your question.
Matt Coad -- Autonomous Research -- Analyst
Hey guys, thanks for taking the question. Just one quick one, could you provide some detail on your outlook for the financial and valuation advisory business just given the number of businesses that make up that cohort, any detail on how sticky you view that revenue base is. Would be greatly appreciated.
Scott L. Beiser -- Chief Executive Officer and Director
Yeah, so that business is run on a composite between what we'll call sub products, some elements of industry and some geography and there are clearly certain elements of that business have and are experiencing right now probably an improved opportunity set and there is some components that are going to not do as well in the current market environment. We've always described as examples in the fairness opinion good times you do fairness opinions on mergers of an equals. In bad times, you're doing fairness opinions in down round financings and bad times or good times there is a lot of stickiness I think to the portfolio valuation work, but more marks slip into a level three category, you tend to do more goodwill impairment in this environment than purchase price allocation. Litigation tends to usually increase a little during bad times people like to pick on each other in disputes, so there is some component of it that I think as we said will do just fine and maybe even better and some components are going to lag and that's what we have seen really over the decades that we've been in this business. It still is net-net, a business that does better in a healthy environment than a distressed environment, but it's got far less volatility than either the Corporate Finance, which clearly tends to be heavily bullish oriented and the restructuring business which is heavily bearish oriented.
Operator
Thank you. There are no further questions at this time. I would now like to turn the floor back over to Mr. Beiser for closing comments.
Scott L. Beiser -- Chief Executive Officer and Director
Well, thank you everyone and I want to thank everybody for participating in our fourth quarter and fiscal year 2020 earnings call. We look forward to updating everyone on our progress when we discuss our first quarter results for fiscal 2021 this coming summer.
Operator
[Operator Closing Remarks].
Duration: 51 minutes
Call participants:
Christopher M. Crain -- General Counsel
Scott L. Beiser -- Chief Executive Officer and Director
J. Lindsey Alley -- Chief Financial Officer
Ken Worthington -- J.P. Morgan -- Analyst
Devin Ryan -- JMP Securities -- Analyst
Brennan Hawken -- UBS -- Analyst
Jeff Harte -- Piper Sandler -- Analyst
Michael Brown -- KBW -- Analyst
Manan Gosalia -- Morgan Stanley -- Analyst
Matt Coad -- Autonomous Research -- Analyst
