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DATE

Wednesday, January 28, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Scott Adelson
  • Chief Financial Officer — Lindsey Alley
  • Managing Director — Christopher Crain

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TAKEAWAYS

  • Total Revenue -- $717 million in the third quarter of fiscal year 2026, representing a 13% increase year over year.
  • Adjusted EPS -- $1.94 in the third quarter of fiscal year 2026, an 18% increase year over year.
  • Corporate Finance Revenue -- $474 million in the third quarter of fiscal year 2026, up 12% with 177 closed transactions, an increase from 170 the prior year, and higher average transaction fees.
  • Financial Restructuring Revenue -- $156 million in the third quarter of fiscal year 2026, up 19% year over year; 41 transactions closed, in line with the previous year, with an increased average transaction fee.
  • Financial and Valuation Advisory Revenue -- $87 million, up 6% year over year, with 1,103 fee events, a 10% increase over the prior year.
  • Adjusted Compensation Expense -- $441 million with a 61.5% ratio, flat year over year; the only adjustment was $18 million for deferred retention payments from acquisitions.
  • Adjusted Non-Compensation Expense Ratio -- 13.1%, consistent year over year, with $2.2 million in integration and acquisition-related costs, $1.3 million in non-cash amortization, and $600,000 in Project Solo professional fees adjusted out.
  • Adjusted Effective Tax Rate -- 30.6%, down from 33.3% year over year, primarily due to lower state taxes and decreased non-deductible expenses.
  • Cash and Investments -- $1.2 billion on the balance sheet at quarter end.
  • Share Repurchase -- approximately 418,000 shares repurchased during the quarter.
  • Managing Director Hires -- Six new managing directors brought on during the quarter.
  • Mellon Capital Real Estate Advisory Acquisition -- Acquisition completed in early January, adding 11 colleagues in Munich and London.
  • Controlling Interest in O'Dare Partners -- Announced, expanding presence in France to about 80 colleagues; deal expected to close in the fourth quarter.
  • Global Leadership -- Recognized as the number one most active M&A and financial restructuring investment bank worldwide in 2025 by deal count.

SUMMARY

Management indicated ongoing acceleration in private equity activity and increasing M&A pipeline visibility, positioning Houlihan Lokey (HLI +0.43%) for further growth as market sentiment recovers. Commentary confirmed that typical fourth-quarter seasonality in restructuring will not occur due to a revenue pull-forward, with expectations for restructuring revenue to moderate going forward despite potential upside from geopolitical events. The firm highlighted its continued expansion in Europe, notably through a significant French acquisition and real estate advisory hire, aligning with a longer-term objective of matching European Corporate Finance scale to that of the US. Increasing activity was reported to be broad-based across sectors, driven by improving market conditions and strategic efforts to build subsector and capital solutions capabilities.

  • Management stated, "M&A activity is absolutely increasing. And even more so on the private equity side than we have seen in recent history, and we expect that to continue."
  • The O'Dare Partners transaction will give Houlihan Lokey a leading presence in France, now approximating 80 colleagues in the country.
  • Management expects the fourth-quarter adjusted non-compensation expense growth rate to match the year-to-date trend.
  • The firm maintains targeted adjusted compensation and non-compensation ratios for the remainder of the fiscal year, supporting cost stability.
  • Regarding capital allocation, management reiterated a preference to deploy excess cash toward acquisitions, with share repurchases as a secondary option.
  • The proprietary DataBank initiative is in its early stages, with monetization possibilities identified but not yet contributing materially to results.
  • Management described the current M&A cycle as in the "third inning," emphasizing significant remaining upside due to pent-up demand and expanding market share in the middle market.
  • Capital Solutions build-out remains in early stages, with demand spread across traditional, secondary, direct, and primary transaction types globally.

INDUSTRY GLOSSARY

  • Fee Event: Discrete revenue-generating advisory occurrence, such as a completed valuation, opinion, or transaction.
  • Capital Solutions: Advisory services focused on structuring, raising, or optimizing debt and equity capital, including specialized products such as real estate and secondary transactions.
  • Project Solo: Internal initiative to streamline Houlihan Lokey’s global organizational structure, involving related professional fees and efficiency measures.
  • DataBank: Houlihan Lokey’s proprietary data product featuring select data insights for clients, with broader commercialization anticipated in the future.

Full Conference Call Transcript

Christopher Crain: Thank you, operator, and hello, everyone. By now, everyone should have access to our third quarter fiscal year 2026 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 the 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-Q for the quarter ended 12/31/2025, 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 Adelson, Houlihan Lokey's Chief Executive Officer, and Lindsey Alley, Chief Financial Officer. 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 Adelson: Thank you, Christopher. Welcome, everyone, to our third quarter fiscal 2026 earnings call. We ended the quarter with revenues of $717 million and adjusted earnings per share of $1.94. Revenues were up 13%, and adjusted earnings per share were up 18% compared to the same period last year. We are pleased with our results for the quarter as well as our performance year to date. We continue to benefit from improving investor sentiment, partially fueled by stronger company performance and expectations of declining interest rates, both of which should continue to further the M&A recovery. As a result, private equity activity has accelerated with an increasing number of portfolio companies choosing to explore liquidity.

Looking at each of our businesses, Corporate Finance produced $474 million of revenue for the quarter, representing a 12% increase over last year's third quarter. Both average fee and new business activity continue to move upward. We enter our last fiscal quarter with positive inflection in the activity levels that increase our optimism for fiscal year 2027. While we have anticipated and reported consistent progress in corporate finance throughout the year, our current visibility into both deal activity and backlog gives us more confidence in fiscal 2027 compared to our assessment a quarter ago. Financial restructuring produced $156 million of revenue for the third quarter, a 19% increase versus the same period last year.

We performed better than anticipated during the quarter due to accelerated transaction timelines that moved several of our deals forward into the third quarter. Accordingly, we expect our third quarter restructuring results to be stronger than our fourth quarter, reversing our typical seasonal pattern. Looking ahead to fiscal 2027, we expect restructuring to face some revenue pressures as it adjusts to an improving market environment. That said, recent geopolitical events introduce a new variable that could potentially drive restructuring activity levels higher. Financial and valuation advisory produced $87 million of revenue for the third quarter, a 6% increase versus the third quarter last year.

Like corporate finance, this business continues to benefit from an improving M&A climate and continued strong capital markets, with solid new business generation heading into our fourth quarter. We hired six new managing directors in the third quarter, and in early January, we closed the acquisition of the real estate advisory business of Mellon Capital, bolstering our capital solutions capabilities. We gained 11 new colleagues between Munich and London, and our new partners are off to a great start. In addition, last week, we announced an agreement for a controlling interest in O'Dare Partners, a prominent French corporate finance firm.

The deal will significantly enhance our footprint in France to around 80 colleagues, making it one of our largest offices in Europe. This transaction is expected to close in our fourth quarter. We are thrilled with these transactions, which reflect our commitment to build our capabilities in the right places at the right time and, most importantly, with the right partners. Our culture grows even stronger when we welcome new colleagues with the same vision and commitment to our client's success. These two deals continue to strengthen our business in Europe, which, as we have said before, has the potential to be the size of our US corporate finance business.

Finally, as we look back at 2025, we are honored once again to be the number one most active M&A investment bank in the world and also once again, the number one most active financial restructuring investment bank in the world. We congratulate our colleagues around the globe for the dedication that produced these distinctions. As we look beyond our fiscal fourth quarter, our outlook for the future is positive. The expansion of our workforce across geography, industry, and product will continue. Our relentless focus on independent, high-quality advice to our clients will continue, and our drive to create value for our shareholders will continue. We thank our employees for their commitment and our shareholders for their support.

And with that, I will turn it over to Lindsey.

Lindsey Alley: Thank you, Scott. Revenues in Corporate Finance were $474 million for the quarter, up 12% compared to the same period last year. It closed 177 transactions this quarter, up from 170 in the same period last year, and our average transaction fee on closed deals increased. Financial Restructuring revenues were $156 million for the quarter, a 19% increase versus the same period last year. We closed 41 transactions this quarter, consistent with the same quarter last year, and our average transaction fee on closed deals increased. We benefited from the closing of several transactions that were expected to close in our fiscal fourth quarter, resulting in our second strongest third quarter ever.

As a result, we expect that our fourth quarter will look more like the first two quarters of our fiscal year and won't have the same typical seasonality associated with that quarter. For Financial and Valuation Advisory, revenues were $87 million for the quarter, a 6% increase from the same period last year. We had 1,103 fee events during the quarter compared to 1,015 in the same period last year, a 10% increase. Turning to expenses, our adjusted compensation expenses were $441 million for the quarter, versus $390 million for the same period last year. Our only adjustment was $18 million for deferred retention payments related to certain acquisitions.

Our adjusted compensation expense ratio for the third quarter in both fiscal 2026 and 2025 was 61.5%. We expect to maintain our long-term target of 61.5% for the adjusted compensation expense ratio for the balance of the year. Our adjusted non-compensation expense ratio for the third quarter was 13.1%, consistent with the same period last year. For the quarter, we adjusted out of non-compensation expenses $2.2 million in integration and acquisition-related costs, $1.3 million in non-cash acquisition-related amortization, and $600,000 pertaining to professional fees associated with streamlining our global organizational structure, also referred to as Project Solo. Looking at year-to-date performance, our adjusted non-compensation expenses increased 11% versus the same year-to-date period last year.

We expect the fiscal fourth quarter year-over-year growth in adjusted non-compensation expenses to be consistent with what we have experienced year-to-date. Our adjusted effective tax rate for the third quarter was 30.6% compared to 33.3% for the same quarter last year. The decrease was primarily a result of decreased state taxes and decreased non-deductible expenses. For the quarter, we adjusted out of our effective tax rate the effects of non-deductible acquisition-related costs. We expect the French transaction to close in the next couple of weeks. This transaction is structured as a combination between our French operations and Audem and will result in Houlihan Lokey owning 51% of the combined business and the previous shareholders of Adera owning 49%.

As with many business combinations, we have created mechanisms that allow us to increase our ownership over time and under certain circumstances. Turning to the balance sheet, we ended the quarter with approximately $1.2 billion of cash and investments. Also in our third quarter, we repurchased approximately 418,000 shares as part of our share repurchase. We will continue to evaluate balance sheet flexibility for acquisitions versus excess cash for share repurchases. With that, operator, we can open the line for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, At this time, we will pause for just a moment to assemble our roster. And the first question today will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Brennan Hawken: Hey. Good afternoon, Scott. Good afternoon, Lindsey. Hope you guys are doing well. Would love to drill down on the outlook for restructuring. So loud and clear on the seasonality not gonna see the more typical strength in the fiscal fourth quarter. But more importantly, you know, the outlook, you guys have been early on in saying the activity was slowing. As the capital markets activity and Corp Fin has improved. Sounds like that remains the case. Can you maybe help us bridge the gap in between increasing concerns around the private credit markets, you know, the press attention, on some of those issues recently, and then the outlook for the restructuring activity as well?

Scott Adelson: Yeah. Happy to do that. If you look at structurally what we've been saying is that the market is getting better for M&A. Capital is very plentiful. Interest rates are likely declining. And you put those all together, you're likely to see declining activity levels in restructuring. Just structural. Don't disagree with you that there are always, all over the world, pockets of opportunities, whether that is in industries, whether that's in geographies, whether that is due to geopolitical events, that creates opportunity for restructuring. The visibility of that in what we're talking about it's not clear enough that it is showing up in consistent new opportunities. I don't disagree with you at all.

That there is a very good chance that a number of those elements that we just discussed, some of them will occur, whether it be a sector or geography. That will cause new opportunities to arise.

Brennan Hawken: Okay. Got it. Thanks for that. And then, corporate finance. So the revenues picked up a bit quarter over quarter, but not as much as we typically see in the December quarter. So curious about the expectations for the end of the fiscal year on the corporate finance side. I believe your commentary on not the lack of the seasonality was focused on restructuring. So I just wanna make sure I heard that right. And then it also sounds like the outlook is improving for next fiscal year.

Know, could you maybe help us understand, what if there's, a comparable period that we should think about when we're considering the magnitude of potential growth that seems to be shaping up here as we think about next fiscal year?

Scott Adelson: So, yes, you heard that correctly, though, that was in relation to restructuring, not the corporate finance. Corporate finance is continuing to get stronger and stronger as I said in my prepared statements, the M&A activity is absolutely increasing. And even more so on the private equity side than we have seen in recent history, and we expect that to continue and have good visibility that is gonna continue for a while. And, yeah, I mean, respect to Q4, corporate finance has seen quite solid growth year to date.

That's probably not a bad proxy for Q4, and I'd say that as Scott said, you know, the activity levels, which are revenues six months from now, nine months from now, continue to give us comfort in our fiscal 2027 estimates and how everyone's thinking about the business.

Brennan Hawken: Great. Thanks so much for taking my questions.

Scott Adelson: Always our pleasure.

Operator: The next question will come from James Yaro with Goldman Sachs. Please go ahead.

James Yaro: Thanks, and thanks for taking the questions and good afternoon. Just quickly, Hey, guys. Just quickly on corporate finance, I just want to dig in a little bit on the US versus non-US outlook. And I obviously, I understand that you have a little bit more idiosyncratic growth in Europe given, you know, for example, the two acquisitions you just announced, and, you know, scaling from a lower base there. But maybe you could just talk a little bit about compare and contrast the growth potential of those two regions.

Scott Adelson: Yeah. Happiness. Right? Obviously, the US continues to be both for us and for the market overall, the largest region. And that therefore, is still the most important market. Having said that, in our European business, is growing incredibly well. We really believe we are offering a truly differentiated product in Europe, and the market is rewarding us for that. And we continue to feel very good about the traction that we're getting in Europe.

James Yaro: Great. And so maybe tying that in with the acquisitions, you know, I'd just love to get your sense if you take a step back on just you know, the overall strategy for Europe and how these two acquisitions fit into completing the mosaic for your European business.

Scott Adelson: Yeah. Happy to do that. I mean, I think that, obviously, we have had a presence in France for a period of time. But it was a very relatively small business relative to a number of other countries in Europe. And at the same time, it's one of the most important markets in Europe. It's not lost on us that it is the headquarters of a couple of our sizable competitors. And we had to wait until it was we found the right partners to really aggressively grow that business, and we feel incredibly good with the decision we've made.

And I'd say that the acquisition of France obviously brings or the combination of France brings revenues along with it, but it also lifts kind of all the boats in Europe. I mean, it being underweighted in that country had an impact across The UK and Europe for us. And I'd say that now that we have a solution, everyone is gonna benefit from it in the Houlihan Lokey umbrella in EMEA. I agree with that completely. And then on the other side, within capital solutions is we have said before, we're probably underweighted on the real estate side. And this is an effort to really continue to grow that underweighting on the real estate side.

As always standard way reduce the underweighting would be the better way to say that. No double negatives.

James Yaro: Okay. That's perfect. As always, super clear and helpful. Thank you so much.

Scott Adelson: Great. Thanks, James.

Operator: Next question will come from Devin Ryan with Citizens. Please go ahead.

Devin Ryan: Great. Hi, Scott. Hi, Lindsey. How are you?

Scott Adelson: Hey, Devin. Thanks, Evan. Wanna ask a question just on sponsor engagement, and nice to hear, you know, some of the improvement you're seeing. And this would be good to get a little bit of better sense of kind of the rate of change that you're seeing with sponsors. And obviously, a lot of pressure, I think, on sponsors to return capital. Obviously, still record dry powder to deploy. So are you seeing kind of a steady build there? Or is it something maybe better than that given kind of those pressures? And is it broad-based across verticals? Or is it targeted to certain verticals? Just love a little more context on kind of the trajectory that you're seeing there.

Scott Adelson: Yeah. Happy to do that. I mean, what we've been saying for a while is it's been getting better quarter by quarter, and that has been very consistent with some bumps along the road usually due to external factors, geopolitical mostly, that have caused that. And, really, for the last couple of quarters, we've really been saying it's been picking up quite a bit, and it's really been after the beginning of the year picked continuing to pick up even more. And so it's at an accelerating rate is what it feels like for new opportunities. And we've said this to individuals on, you know, either investor calls or analyst calls.

But you know, there's a couple of major inflection points during the calendar year in the middle market. One of them is after Labor Day, and one of them is after New Year's. And both of those periods of time were quite solid and strong for us and probably exceeded expectations. And I think that's a little bit why you're hearing the commentary that we're saying when we talk about activity levels increasing. And in terms of your question of sectors, it is really broad and across sectors.

And I would say that if anything, it's the sectors that under from an increased standpoint, the ones that had underperformed have come back even stronger, but it is very much across the board.

Devin Ryan: Got it. Okay. I appreciate that. And then just wanna come back to, kind of a follow-up of some of the discussion you were just having in those questions. As we kind of think about some of the investments the firm has made over the past five, six years. I mean, you've obviously built out quite a bit outside The U.S, a lot of kind of sector-specific M&A. Beefing up capital solutions. So kind of the capabilities are broader, they're deeper. When you think about kind of the white space at the firm today, where do you still see the biggest opportunities?

Like, if I look at a heat map from external data, which I know is not perfect, it looks like maybe there's a little bit of room in health care and energy just example. But would love to hear from you kinda where you feel like there's still you know, nice white space and where you could just maybe add a little bit of resource and get, you know, some nice network effects on that.

Scott Adelson: Yeah. I mean, I am a very strong believer that it is everywhere. We have so much opportunity. I know that you want me to be more specific than that. But it is in every sector, we have really, really meaningful room to grow. And we talk about it. We have around 200 subsectors today. And that is not built out all over the world even remotely. And it is also not 200 is nowhere near saturation of subsectors. So that's just on the industry side.

And then, obviously, on the product side, you're seeing us continue to build out with the example of what we've done in Germany and The UK and that capital solutions will continue to have build out in capability as well around the world. And then, obviously, we have our other product lines as well, and we have geographies. I mean, there is a tremendous amount of white space out there. Our map, our page is quite white.

Devin Ryan: Okay. Well, good to hear. Thanks so much, guys. Appreciate it.

Scott Adelson: Thanks.

Operator: The next question will come from Brendan O'Brien with Wolfe Research. Please go ahead.

Brendan O'Brien: Good afternoon, and thanks for taking my questions. Just want to start. I just want to follow-up on the restructuring outlook. I know there's some uncertainty still, but just given the longer lead time for the business, you should have a pretty good baseline for how revenues will track at least early next year. So I was just hoping you can put some guardrails around how we should be thinking about the magnitude of decline in this business potentially, just given it does tend to see higher highs, higher floors as you continue to progress through time.

Scott Adelson: Yeah. I mean, I'd say we do have decent visibility looking forward in restructuring. We don't generally share that information, but I think that, you know, it's kind of like anything else. With respect to cyclicality. They're going to be ebbs and flows. We didn't know sitting here before the last peak what it was gonna look like, and we don't know what the next couple years is gonna look but we're in a net period. Having said that, I'd say that we still believe that there are we that is a true global business for us. It is highly diversified. And at any point, whether it's a geography, an industry, or a specific product, could trigger restructuring growth.

And so quite comfortable with our position in restructuring over the next ten to twenty years. We're just in a net period right now. And what the sort of ebb looks like, I think, is anyone's guess. But I don't we're certainly not sitting here concerned about the magnitude of the decline. We don't think about it that way.

Brendan O'Brien: Helpful color. Thank you for taking the question. And I guess for my follow-up, just want to touch on capital return. I understand your preference for, you know, maintaining enough cash to do acquisitions as you executed this quarter. But just given revenue should only accelerate from here and you already have a fair strong cash position at least for you paying out these deals. I just wanna get an update to how you're thinking about capital management at this juncture, and also if we can get an update on what your acquisition pipeline looks like at the moment.

Lindsey Alley: So I'll let Scott handle the acquisition pipeline. I think with respect to capital deployment, it really hasn't changed. We have as I think everyone knows, for the last couple of quarters, have started to repurchase some shares. I think we will continue so long as the economy continues to perform well we will continue to take a look at whether or not it makes sense to repurchase shares going forward. In relatively smaller increments. And the reason we do it that way is because our pipeline, which Scott will talk about, is quite strong, and we wanna be to remain flexible in terms of being able to do acquisitions for cash.

And so you know, said before, our strong preference is to put money to work, excess cash to work through strategic acquisitions that make sense for us. Followed by dividends and share repurchases. And that really hasn't changed for us. And Scott will talk a little bit about the pipeline.

Scott Adelson: Happy to do that. As I said before, we've been very fortunate. Our pipeline is very strong. I think these two deals are an indication, but they're backed up by a number of other opportunities that are coming through the pipe, and I wish probably even more than all of you do that I could time them all perfectly to roll quarter by quarter. I don't get the right to do that. But they are lined up and fair to say we have more than we have planned to do over time.

Brendan O'Brien: Great. Thank you for taking my questions.

Scott Adelson: Our pleasure.

Operator: The next question will come from Ryan Kenny with Morgan Stanley. Please go ahead.

Ryan Kenny: Hi, thanks for taking my questions. Wondering if you could give some more color on the non-comp expenses. It looks like IT and communication spend and professional fees have been a bit elevated. So anything that we should think about in terms of puts and takes in non-comp in the quarter and as we look forward into fiscal 2027?

Lindsey Alley: I'd say no puts and takes specifically in the quarter to mention. Just a little bit higher than certainly the first couple of quarters in terms of growth. I'd say for Q4, you know, the year-to-date growth for non-comp is probably a decent to what the Q4 is gonna look like. Probably a little bit higher than expected in terms of rent, particularly in Europe and particularly around the acquisitions. You're seeing a little bit of that. But other than that, not much to mention. And I say year-to-date, as a proxy for Q4 growth is probably how I think about it.

Ryan Kenny: Got it. Thanks. Then And then twenty fiscal twenty seven, you know, same as I've mentioned before, kinda high single digits. Which is kinda how we're how we're thinking about non-comp.

Ryan Kenny: Alright. Great. And then, you announced the DataBank product in November. Can you give more color on what the strategy is with DataBank? And is it something that you're charging for? And how should we expect that, in general, your data strategy evolve over time?

Scott Adelson: Yeah. I mean, I would love to spend the next hour talking about that. Lindsey would remind me. That this is a small part of our business. But it is a it certainly is an important indicator of what's to come. And I think the fact that we have a tremendous amount of what we perceive to be very valuable data and the marketplace seems to be indicating that as well. It's super early days for us right now that where some of that is available to some existing clients. There is a technological front end to making it available and things like that for other people that is in the works.

But, as I have stated many times before, the ability to monetize some of our proprietary data is something that is certainly top of mind to us.

Ryan Kenny: Thank you.

Operator: The next question will come from Alexander Bond with KBW. Please go ahead.

Alexander Bond: Just wanted to drill down on corporate finance business a little bit more. So it sounds like the outlook for fiscal 2027 remains upbeat, which is great. But just curious if you've seen activity levels impacted at all really by recent geopolitical happenings or I guess a heightened sense of geopolitical uncertainty over the last couple weeks or clients really been willing to look through these issues and are now maybe just more accustomed to higher uncertainty levels. So any color there would be great.

Scott Adelson: Yeah. Happy to do that. And I think that ties well to what Lindsey was talking about after the kind of inflection points that most recently again, at the beginning of the year. It really is we recognize there noise, right, that around the world, and the people's willingness and ability to just look through that noise and just get on with business is stronger than it has ever been.

Alexander Bond: Got it. That makes sense. And maybe just moving over to capital solutions. You know, you've touched on continuing to build out a few of the teams within the group as an area of focus for you recently. It'd be great if you can just go into maybe a little bit more detail there and maybe comment on what inning you think might be in terms of the build-out for the Capital Solutions group more broadly.

Scott Adelson: We are still in very early innings on capital solutions. I mean, pick your innings. We're using a baseball analogy, but third inning, fourth inning, I mean, very early. And that business is growing really nice on call with the one ahead of it before this. And the demand is really in terms of where it's coming from, it is literally all over the map. From the traditional business to the secondaries to directs, even primary. So it is on all fronts at this point.

Alexander Bond: Got it. Great. Thank you both.

Operator: The next question will come from Nathan Stein with Deutsche Bank. Please go ahead.

Nathan Stein: Hey, everyone. Good evening. One of your larger peers suggested on their earnings call a couple weeks ago or in the third inning of the broader capital market cycle. So this comment constitutes more than just advisory revenues, but I think that caught some folks by surprise. Just because it still seems rather early. Wanted to address wanted to ask you guys your thoughts on that and what inning UCS being in for the broader call it? Advisory cycle.

Scott Adelson: Well, when you say advisory cycle, it means different things to different people. Right? Because we are bull bear Business makes it mix makes that it when you just say advisory, I'm not I think M&A. Yeah. If you're talking about M&A. Yeah. Sorry.

Nathan Stein: Mean talking about M&A M&A specific M&A specifically. Within the corporate finance. Got it.

Scott Adelson: I do agree with that. I mean, we I agree it's very early innings. I mean, third inning is as good a number. I mean, I don't think we're in the first. We're definitely not in the fifth or sixth. So, yeah, third, fourth, something like that. Third, actually, third feels even better now that I think about it. Third, feels early. There is an enormous amount of pent-up demand. I mean, it's not Yeah. And for Okay. All of that yeah, that everybody has talked about and read about and everybody's backlogs that have been on hold, that still exists. It has been picking up. But here is still a tremendous amount of pent-up demand. Out there.

And following up on that, if when I was looking at 2025 calendar year, industry M&A data It shows, call it, the middle market and below size deals. Stable, down slightly, up slightly, you know, versus the year before. So, really, just could consistent with the broader messaging of almost everyone who's just very excited about the upper middle market space and below.

Katie, I just wanted to I guess, gauge how you guys are thinking about like, anything you guys can do to kinda capitalize on what could be like, a really strong next couple years in terms of in terms of you know, just being well, anyway, I think I'm just asking, like, do you guys agree with that statement? And how prepared do you feel for the cyclical rebound?

Scott Adelson: Yeah. I do agree with this statement, and I do think that, many of the things that we have done positioning ourselves to be continue to be even better to take advantage of it, and that is why we continue to take share that marketplace and have for quite a while and intend to for quite a while to the best of our ability. And that is through this continuing subsector just knowing more about sectors, and doing more deals in sectors giving us more knowledge than other people, but the growth in our capital solutions group being able to provide a broader array of services and helping people evaluate how they wanna seek liquidity.

I mean, the global reach continues to expand. So that we are able to that much better be able to service our clients. I mean, the list goes on and on. But I'm sorry to sound just like a pitch on it. But the reality of the matter is that those are all things we are constantly working on. So, yes, we do. We're well-positioned for it.

Lindsey Alley: And I would add that, you know, it's not lost on us that large cap M&A has come out faster and more aggressively than middle market M&A. And, frankly, we don't for us, we don't think about it that way. We are going to grow with the markets but the sizzle is market share. We believe we continue to take market share in the middle market every single year regardless of whether the market is up or the market is down. We don't think we think it's increasingly harder to compete with our business model and the size of our platform. And that's the story.

It's not what the M&A markets are doing and whether they're up or whether they're down. And it doesn't matter what the large cap of space doing and whether it's up or whether it's down. I mean, I think we are quite focused on the area that we've been focused on for decades. And come rain or storm, we are going to continue to take market share, and that story is not gonna end. And just a reminder, that large cap is 1% of the volume. Right? I mean, it's ninety-eight to 99% of all the M&A volume around the world is with that.

Nathan Stein: Hello? This Nathan, your line may be muted.

Nathan Stein: No. That's all bad. The are my two questions. I appreciate it. Thanks, guys.

Scott Adelson: Thanks, guys. Thanks. Appreciate it.

Operator: This will conclude our question and answer session. I would like to turn the conference back over to Scott Adelson for any closing remarks.

Scott Adelson: I want to thank you all for participating in our third quarter fiscal 2026 earnings call. We look forward to updating everyone on our progress when we discuss our fourth quarter and full year results for the fiscal 2026 this spring. Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.