Houlihan Smith & Company

Infobox_Company

company_name = Houlihan Smith & Company, Inc.
industry = Investment Banking
foundation = 1996
founders = Richard Houlihan and Andy Smith
location = Chicago
products = Mergers & Acquisitions Advisory
Business Valuations
Private Placements of Debt and Equity
Fairness Opinions
Financial Opinions for Tax and Financial Reporting Purposes
company_slogan = "Responsive & Reasonable"
homepage = [http://www.houlihansmith.com/ www.houlihansmith.com]

Introduction

Houlihan Smith & Company is an investment banking firm that provides financial advisory and financing services to public and private businesses. Houlihan, founded in 1996, [ [http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=92871 Houlihan Smith & Company, Inc.: Private Company Information - BusinessWeek ] ] is a provider of financial opinions, merger and acquisitions advisory, financing, and other corporate advisory services. Houlihan Smith is a broker-dealer and member of the Financial Industry Regulatory Authority (FINRA). [ [http://www.finra.org/InvestorInformation/InvestorProtection/ChecktheBackgroundofYourInvestmentProfessional/index.htm FINRA - Investor Information - BrokerCheck - Check the Background of Your Investment Professional ] ] Houlihan employs approximately 125 professionals with offices in Chicago, New York, and Los Angeles. In 2006, the firm also implemented an Employee Stock Ownership Plan.

History

Houlihan Smith & Company was established in 1996 by Richard Houlihan (former chairman of Houlihan Lokey Howard & Zukin Inc.) and M&A advisor Andrew Smith. The two met in the early 1990s while Mr. Smith was employed with Kemper Securities (now part of Wachovia Bank) and together they sold a software company where Mr. Houlihan was chairman. The two partners formed Houlihan Smith as a multi-service investment bank with strong underpinnings in the fields of complex business valuation and M&A deal-making.

The firm’s largest financial opinion was a solvency opinion provided to Reliant Energy, with its $12 billion financial restructuring. [ [http://www.bizjournals.com/houston/stories/2002/08/05/daily37.html Reliant Energy cuts dividend - Houston Business Journal: ] ] Since then, Houlihan Smith has performed more than 400 valuations and financial opinions each year.

The increased pressure and scrutiny placed on boards of directors, special committees and key executives led Houlihan to offer fiduciary guidance for its clients through the Houlihan Smith Compendia Series, a compilation of case law that highlights actions and judgments where fiduciaries breached their duty of care and duty of loyalty. The Fairness Compendium and the Solvency Compendium communicate the stringent guidelines that fiduciaries must follow, including the business judgment rule, and the more prevalent Entire Fairness Standard. Under the Entire Fairness Standard, where a transaction involves a conflict of interest and has been contested by minority shareholders, directors bear the burden of proving the entire fairness of the transaction. Many directors and fiduciaries must take considerable measures to ensure that actions and judgment shift the burden of proof to shareholders. A common measure taken is the formation of an independent and disinterested special committee to oversee and negotiate the transaction process.

During the mid-2000s, Houlihan Smith extended its services into portfolio valuation, complex derivatives valuation and investment advisory for hedge funds, private equity groups and other alternative investment groups. A recent accounting pronouncement, Financial Accounting Standard No. 157 (FAS 157): Fair Value Measurements, has mandated the quarterly and annual reporting of fair value for companies and investment firms. [ [http://www.fasb.org/st/summary/stsum157.shtml FASB: Summary of Statement 157 ] ] The three-tiered fair value hierarchy is composed of the following observable inputs: Level 1, Level 2, and Level 3. Level 3 Inputs are typically hard-to-value, illiquid securities that require the use of an independent valuation advisor to opine on the value of these securities.

Current Operations

Houlihan has valued billions of dollars worth of Level 3 securities since 2006, working closely with large public companies, hedge funds and private equity firms to comply with the financial reporting requirements. Houlihan has been engaged to provide independent valuations of Auction-Rate Securities (ARS) for Fortune 1000 companies. ARS are long-term securities that hold auctions every seven to 35 days, giving the security a risk profile similar to a shorter-term security with frequent liquidity events. Compounded by the credit crisis and lack of liquidity in the credit markets, these auctions began failing in 3rd quarter 2007. [ [http://www.bloomberg.com/apps/news?pid=20601103&sid=aCPXXexI500s&refer=us Bloomberg.com: U.S ] ] Houlihan has worked closely with its clients and the Big 4 audit firms to independently value these ARS and, in certain instances, locate a secondary market for clients to unwind their portfolio of these securities.

Houlihan also represents several hedge funds and private equity firms, providing portfolio and individual security valuation, M&A advisory, risk analysis, and traditional investment banking services. Houlihan provides advisory services regarding the alternative investment marketplace and underlying complex structured financial products as well as the confidential nature and protocol of its private investment vehicle clients.

Houlihan consolidated its investment banking activities under the Houlihan Smith Capital Markets umbrella. Operating as a division of Houlihan, the group has knowledge of the middle market and specializes in transaction sizes of $10 million to $250 million. Houlihan has transacted more than 500 mergers and acquisitions, capital restructurings, ESOP advisory engagements, private placements and financial restructurings.

References

External links

* http://www.houlihansmith.com
* http://www.thehoulihanfirm.com
* http://www.fairnessopinion.com
* http://www.solvencyopinion.com
* http://www.hedgefundvaluation.com
* http://www.finra.com