Houlihan Lokey seeks boutique acquisitions

By Joseph A. Giannone

NEW YORK, Nov 6 (Reuters) - Houlihan Lokey Howard & Zukin, a U.S. middle market investment bank, is "seriously" looking at the potential acquisition of at least two boutique advisory firms as part of a new, more aggressive expansion plan, Co-Chief Executive Jeffrey Werbalowsky said on Tuesday.

Los Angeles-based Houlihan Lokey, which advises companies on mergers and has one of the world's largest restructuring businesses, in May acquired Baxter Energy Partners, an energy banking boutique, and in September acquired London-based Blenheim Advisors Ltd.

"And we're in the market for more stuff. We're in the market for people. We're in the market for boutique investment banks," Werbalowsky said at the Reuters Finance Summit in New York.

Houlihan's expansion efforts got a boost in January 2006 when it struck a deal with a unit of Japans's ORIX Corp (8591.T: Quote, Profile, Research, Stock Buzz). The relationship has given Houlihan access to deep pockets that is now being used to help fund a merchant bank fund and support acquisitions, Werbalowsky said.

"I've always been incredibly cheap, incredibly conservative and incredibly home-grown. At some point in your corporate life you may, and we have, become a little more aggressive," he said. "Our relationship with ORIX has certainly made it that way. They've encouraged us to think a little bit bigger than we have." Werbalowsky said the closely held partnership is "looking seriously at at least two things right now."

A couple of potential deals are in the United States and there is one in Europe. Werbalowsky said he would be interested in buying a small firm in Asia, though that is more challenging.

Investment banking deals are risky, since talented bankers just paid for can then leave. But Werbalowsky says small merger advisory firms, usually just a handful of bankers with deep contacts in a particular industry, can benefit by linking up with a bigger bank with global reach.

"We're finding you can take someone who's really good, maybe a small team doing well, pay them a reasonable price for their business -- in stock to align your interests -- and it's going to be a win-win," he said.  Continued...