Lincoln International Posts Record Quarter on 57% Revenue Surge

Lincoln International (NYSE:LCLN) grew third-quarter revenue 57% year over year to $293.7 million, a record, with adjusted diluted earnings per share of $0.46. The Chicago-based investment bank, which completed its initial public offering in May 2026, had no comparable prior-year EPS figure, and the October 2025 acquisition of MarshBerry (an insurance-focused advisory firm) distorted the year-over-year revenue comparison, Chief Financial Officer Ted Heidloff said on the earnings call.

Chief Executive Officer Rob Brown attributed the results to an improving transaction environment and sustained investment in the platform. Lincoln recorded the largest transaction fee in its history for the second consecutive quarter, he said.

What drove the top line?

Investment banking advisory revenue rose 70% to $239.9 million. Lincoln closed 93 transactions during the quarter, bringing its nine-month total to 237. Average fees rose even after stripping out the quarter's single largest deal, Heidloff said.

The M&A franchise was particularly strong in industrials and business services, Brown noted. Capital advisory posted record third-quarter and year-to-date revenue, supported in part by refinancing demand, while private funds advisory saw strong appetite for general partner-led advisory and fundraising.

Valuations and opinions revenue (fairness opinions and portfolio-valuation services) increased 18% to $53.8 million. The company completed 25% more portfolio valuations than a year earlier and now values roughly 7,600 portfolio companies quarterly, Heidloff said. Brown added that demand for more frequent independent valuations is rising as private wealth and individual investors deepen their participation in private markets.

For the first nine months of 2026, the picture is similarly blunt:

• Total revenue: up 45% to $677.1 million
• Adjusted diluted EPS: $0.87
• Investment banking advisory revenue: up 51% to $527.5 million
• Valuations and opinions revenue: up 25% to $149.7 million

Does the backlog support the outlook?

Brown said he still expects fourth-quarter investment banking revenue to represent roughly 30% to 40% of the annual total, though Lincoln anticipates a result at the lower end of that range. A large deal originally expected in the fourth quarter closed in the third, he explained.

President and Global Head of M&A Eric Malchow said the backlog was near record levels and that North American pitch activity in September and October was as strong as it had ever been across two consecutive months. Lincoln is also seeing more activity involving businesses that had faced difficult market conditions, although buyers remain selective.

Brown described the private equity sponsor market as improving but "still not in a great sponsor market." He pointed to pressure on sponsors to generate distributions, substantial capital available for deployment, and portfolio-company performance as factors supporting a continued recovery.

Looking toward 2027, Brown said he expected Lincoln's non-M&A investment banking businesses to deliver outsized growth, aided by senior hiring and cross-selling of additional services to existing clients. Across its services and industry groups, he said Lincoln was confident it could sustain its historically achieved mid-teens growth rate.

What about expenses, capital and hiring?

Third-quarter adjusted operating income was $71.9 million, a 25% margin. Adjusted compensation expense ran at $179 million, or 61% of revenue, while adjusted non-compensation expense was $42.7 million. Heidloff reaffirmed expectations for high-single-digit full-year growth in non-compensation costs on a pro forma basis including MarshBerry.

The balance sheet carries little drama. Lincoln ended September with approximately $363 million in cash and equivalents against $102 million in long-term debt, a net cash position of $261 million. The board declared a quarterly dividend of $0.07 per share, payable in December.

On talent, the company hired 10 managing directors through the first nine months and promoted six internally at the start of 2026. Brown said Lincoln has its largest-ever group of directors entering the year-end managing director promotion process, with several external hires committed to join in the first quarter.

MarshBerry's own backlog stands at an all-time high, and its business typically skews toward year-end, Brown said. Lincoln's acquisition pipeline is strong, with several potential opportunities under discussion, though no transaction was announced.

Heidloff flagged one fiscal wrinkle: a change to tax code Section 162(m) (the provision limiting tax-deductible executive compensation) will put upward pressure on Lincoln's tax rate beginning in 2027. The company is still evaluating the effect. The adjusted effective tax rate was 31% in the third quarter and for the first nine months of 2026.

Lincoln International, founded in 1996 and headquartered in Chicago, advises middle-market companies, private equity firms and financial sponsors on mergers and acquisitions, divestitures, recapitalizations and restructurings, with additional services spanning capital advisory, private funds advisory and valuation. The verdict from this quarter: records, revenue, backlog and a hiring pipeline all point the same direction. The sponsor market, evidently, remains the only party not fully convinced.