Inside the deal: Houlihan-MVP Capital

While Houlihan Lokey is better known for advising clients through M&A processes, it's certainly no stranger to making acquisitions of its own.

In 2019, the US investment bank acquired Freeman & Co., a New York-based independent firm advising financial institution clients on M&A and capital raising. It also made its fifth European acquisition in four years, acquiring Madrid-based Fidentiis Capital. In 2018, it acquired BearTooth Advisors, a firm that provides strategic advisory and placement agency services to alternative investment managers; as well as Quayle Munro, which enable Houlihan Lokey to tap more into the software, services, data and analytics verticals.

Speaking to TMT Finance, Scott Adelson, co-president and co-head of corporate finance, Houlihan Lokey, elaborated on the firm's latest purchase of MVP Capital, a TMT-focused boutique, and discussed some of the deal's key drivers.

"Without question, MVP's extensive sector knowledge and execution expertise has driven its success as an exceptional advisory firm. However, it is clear to us that this success is also maintained and reinforced by many of the cultural characteristics we strive to embody at Houlihan Lokey, foremost among them our steadfast dedication to our clients," he said.

"Secondly, we feel it has a good growth trajectory going forward; and while we had TMT group and a telecom presence, this expands it tremendously."

Building scale in TMT

As part of the acquisition, MVP's investment banking team will become part of Houlihan Lokey's global TMT Group. Jason Hill, MVP Managing Partner, will join as a co-head alongside Rob Louv and Roy Kabla, who currently lead the firm's sector coverage. In addition, MVP CEO Greg Widroe will assume a senior role in the TMT Group, focusing in part on strategic initiatives.

In total, the deal will add 25 financial professionals to Houlihan Lokey's TMT Group, including MVP's seven managing directors, bringing the global TMT team to more than 60 financial professionals.

"As a people-oriented business, one of the most important competitive advantages we have is our culture, so attracting and retaining talent is very important to us," said Adelson. "Indeed, every acquisition we've ever made is by almost by definition a people business because that's the business we're in.

Mid-market focus

Founded in 1987, MVP serves mid-market clients across the TMT sector, providing M&A advisory, capital formation, and other advisory services, with an emphasis on telecom, internet infrastructure, and broadcast industries. MVP's key sectors of focus include fibre, towers, small cells, distributed antenna systems (DAS), wireless, datacentres, cloud and managed services, and radio and television broadcasting – several of which will be discussed on this upcoming TMT Connect session on Telecoms Infrastructure Convergence and M&A, hosted by MVP Capital.

"Our corporate finance business is focused on the mid-cap space too and always has been, it's part of our thesis, so the addition of MVP among many others is entirely consistent," explained Adelson.

Houlihan Lokey's continued emphasis on growing its mid-market reach is also consistent with many other investment banks, even larger ones. For example, US banking giant Goldman Sachs has been increasing its mid-market portfolio, hiring a team of 50 bankers to chase smaller European deals, and holding discussions around acquiring either William Blair or Harris Williams.

This trend reflects the nature of the changing global economy, where the mid-market is asserting itself strongly, particularly in technology where companies very quickly become mid-market size and go on to grow enormously due to high rates of funding and investment in the tech sector.

According to Adelson, this trend has benefits for the smaller boutiques as well.

"It gives them a greater ability to service their existing clients," he said. "From MVP's perspective, they now have a global reach that they didn't have before. They also now have a broader suite of products and a very different form of sponsor coverage."