Houlihan Lokey's Gold Says He's Troubled by Italy's Political Crisis

Always. The good news is, coming out of the financial crisis, Europe was a little bit slow in reacting, but now, really across Europe, we're seeing really positive activity. I'm troubled by what we're hearing out of Italy. As you may know, we did an acquisition a couple of years back and have a joint venture in Milan. We also added additional capabilities in Madrid, Amsterdam, and Frankfurt, so we're in that market. I guess I answer that question by saying we can't control geopolitical risks; no one can. We just can manage our business in a way that allows us to be successful whatever the environment is. And we have had, for years, the leading restructuring franchise across Europe.

Yeah, it's always this way. As you know, when you look back, you say, 'Of course, of course it happened; of course that was the trigger.' I have no idea. It could. I'm hopeful it will not, and I hope the European Union will stay together and Italy will be a part of it. But it's outside our control. But if interest rates, market rates, yields rise and spreads don't compress, it's going to become that much more expensive for companies to finance. Absolutely, absolutely. And look, we've seen this environment where there'll be some geopolitical news, there'll be a spike in yields, and then yields will relax, maybe come back down—not to where they were, but come back down a little. There's this general mindset of, 'Things have been pretty great with low interest rates, and don't really want to mess it up.' I don't know where that leaves us long term. As I said, it's a grand experiment in monetary policy which no one can predict definitively how it will go. But it sure feels good having low interest rates.

It'll be a very difficult time. And we have, over the years, both through the team we brought over from Leonardo and our team in London, worked on a bunch of Italian restructurings. One of the interesting things about the restructuring business is every country has a different restructuring regimen. Obviously, the US is the most efficient as far as restructuring businesses go. Italy's a little bit less efficient—just a little bit less. But again, it gets to this opportunity for us on the capital markets side and potentially on the restructuring side. If we can't handle things from a capital markets perspective, look, there are all these credit-related funds salivating for disruptions across industries or geographies because it allows them to opportunistically deploy capital into good businesses—fundamentally good businesses. And we are the conduit for bringing that capital to these companies. So, as I said, I can't. They may put a floor underneath. So the sort of what might be a credit crisis—they could—it depends upon the regulatory overlay though. You know, look, there's a lot of things that governments can do to destroy economies. Hopefully, when push comes to shove, the leaders in Italy will do what's financially prudent and we don't have a crisis in Italy. And if there is some disruption, it's able to be filled through capital markets solutions. I'm a big believer in a functioning capital market. I do think you need regulation. But yeah, it's worked well for our growth and throughout the world. And you know, I look around and I see a bunch of smart investors who are interested in coming in and providing solutions in times of distress.