Houlihan Lokey's Strategic Expansion in European Financial Sponsors Coverage: Capitalizing on Post-Pandemic Private Equity Consolidation and Cross-Border Deal Flow

In the aftermath of the pandemic, global private equity (PE) firms have recalibrated their strategies to navigate shifting macroeconomic dynamics, regulatory shifts, and evolving capital flows. Elite M&A advisory firms like Houlihan Lokey have emerged as pivotal players in this new landscape, leveraging their expertise to capitalize on post-pandemic consolidation and cross-border deal activity. The firm's aggressive expansion in European financial sponsors coverage-particularly in the EMEA region-reflects a calculated response to these trends, positioning it at the intersection of PE-driven growth and geopolitical realignments.

Strategic Expansion in Europe: A Response to Post-Pandemic Realities

Houlihan Lokey's Financial Sponsors Group has grown into one of the largest in the industry, with over 35 professionals and 20 managing directors across eight countries. The firm's recent appointment of Martin Rezaie as a Managing Director in Frankfurt underscores its commitment to deepening its footprint in the DACH region (Germany, Austria, Switzerland), a move highlighted in a Houlihan Lokey press release. Rezaie's role is critical: he will lead financial sponsors coverage in a market where PE activity has surged, driven by cross-border consolidation and sector-specific opportunities.

This expansion aligns with broader post-pandemic trends. By Q3 2025, Houlihan Lokey reported a 14.7% year-on-year revenue increase to $659.5 million, fueled by a rebound in M&A activity and improved capital market conditions, according to a Q3 earnings call transcript. CEO Scott Adelson highlighted that transaction volumes had reached their highest levels since late 2021, with Europe and Asia Pacific contributing significantly to this growth, as noted in the same earnings call. The firm's ability to adapt to evolving client needs-whether through M&A advisory, restructuring, or its proprietary Private Credit DataBank-has been a key differentiator, as detailed in a Marketscreener announcement.

Cross-Border Deal Flow: Europe as a Strategic Hub

European private equity firms have become increasingly active in cross-border deals, particularly in sectors like technology, healthcare, and energy. Data from 2023–2025 reveals a complex picture: while total European PE deal value reached €603.2 billion in 2024, it declined to €222.1 billion in the first half of 2025, reflecting a shift toward quality over quantity, according to a PE150 market update. Despite this, cross-border transactions remain a cornerstone of growth. For instance, the $1.2 billion acquisition of TreeHouse Foods by Investindustrial-a European firm-exemplifies the continent's appetite for strategic consolidation in sectors like food and beverage, as reported in a Storebrands announcement.

Houlihan Lokey's role in these deals is amplified by its global network. The firm's EMEA operations outperformed its U.S. business in Q3 2025, partly due to the smaller scale of its international markets, as noted in the earnings call. This dynamic highlights Europe's potential as a growth engine, particularly as macroeconomic volatility and tariff-related uncertainties ease. CFO Lindsey Alley noted that improved client confidence has driven engagement, with European markets offering fertile ground for cross-border synergies, as also discussed in the earnings call.

Valuation Normalization and Sectoral Shifts

The European PE market has undergone significant valuation normalization since 2021. Median EV/EBITDA multiples fell from 14.3x to 10.0x by 2024, reflecting tighter financial conditions and recalibrated risk pricing, as described in the PE150 update. However, high-growth sectors like technology and healthcare have maintained premiums, with TMT and science/health sectors trading at 15.5x multiples, according to the same update. This divergence underscores the importance of sectoral expertise, a domain where Houlihan Lokey's Financial Sponsors Group excels.

The firm's Private Credit DataBank, which aggregates insights from 60,000 loan valuations, provides clients with granular metrics to navigate these valuation shifts, as detailed in the Marketscreener announcement. By offering structured analytics on credit risk and market trends, the platform supports sponsors in identifying undervalued assets-a critical capability as European PE firms pivot toward operational value creation over speculative bets.

Geopolitical and Monetary Considerations

Europe's monetary landscape has also evolved, with 10-year sovereign yields rising from negative territory in 2021 to 3.0% in 2025, according to the PE150 update. While this has increased capital costs, policy rates are stabilizing, suggesting a transition from restrictive to neutral conditions. Houlihan Lokey's strategic emphasis on international markets-particularly in the UK, France, and the DACH region-positions it to benefit from this normalization. Southern Europe, meanwhile, is closing the gap in average deal size, driven by international fund participation in infrastructure and healthcare, as noted in the PE150 update.

Trade relations with the U.S., which accounts for 21% of extra-EU exports, remain a wildcard. Renewed tariff discussions on electric vehicles and clean tech subsidies could introduce headwinds, but Europe's focus on industrial competitiveness frameworks offers a buffer, according to the PE150 update. For Houlihan Lokey, this environment demands agility-a trait the firm has demonstrated through its dual focus on M&A and restructuring advisory services.

Conclusion: A Cyclical Rebound on the Horizon?

As European private equity firms navigate a recalibrated valuation landscape, the next growth cycle will likely favor managers who combine strategic patience with sectoral insight. Houlihan Lokey's expansion in EMEA, bolstered by its proprietary tools and global network, positions it to capitalize on both cyclical rebounds and structural shifts. With cross-border deal activity expected to stabilize in 2026, the firm's ability to adapt to evolving client needs-whether through data-driven analytics or restructuring expertise-will be critical to sustaining its momentum.