Lincoln International (LCLN) Q3 2026 earnings review
Lincoln's merger fees jump, while valuation growth slows down
Lincoln International, an investment bank and valuation advisor for private markets, closed more mergers at higher fees in the third quarter while its valuation arm grew at a slower clip. Total revenue rose 57% from a year ago to $294 million, and jumped 30% from the second quarter. Chief executive Rob Brown kept employee pay excluding one-offs at 61% of revenue, which lifted the operating margin excluding one-offs to 25%.
| Revenue | $293.7M +57% from a year ago (+30% from Q2) |
|---|---|
| Operating margin, excluding one-offs | 24.5% 13.5% a year ago (20.3% in Q2) |
| Profit per share, excluding one-offs | $0.46 +77% from $0.26 in Q2 |
| Fourth-quarter dividend | Unchanged $0.07 per share |
⚖️ Verdict: 🟢 Bullish
The story got better because the 35% quarter-to-quarter jump in advisory revenue proves deal closings are accelerating on their own, not just because of last October's MarshBerry acquisition. Operating leverage also came through ahead of the fourth quarter, as overhead costs fell below 15% of sales. One caution: revenue growth in the valuations division slowed from 35% in the second quarter to 18%.
The question now is how much reported growth will slow in the fourth quarter when the MarshBerry acquisition enters the year-ago comparison base. Bulls argue a rising merger pipeline will keep sequential revenue climbing in the bank's busiest season, while bears point out that public shareholders still collect only 36% of reported profit. Fourth-quarter advisory revenue will settle the debate.
🐂 Bull Case
Advisory Revenue Jumped 35% From Last Quarter
"Lincoln delivered a record third quarter, achieving new highs in both revenue and adjusted earnings, with strong growth across our Investment Banking Advisory and Valuations and Opinions businesses," chief executive Rob Brown said. Investment Banking Advisory, the unit that earns fees for arranging company sales and debt deals, generated $239.9 million in revenue, up 70% from a year ago.
Because the October 2025 purchase of insurance advisor MarshBerry inflates the comparison with last year, the change from the second quarter is the cleaner test. Advisory revenue rose 35% from last quarter's $177.7 million, driven by "a higher number of transactions completed, higher average fees and our acquisition of MarshBerry". The firm also "welcomed three Managing Directors through lateral hires", taking senior banker headcount to 163.
What to watch: fourth-quarter advisory revenue. Because the final quarter usually brings in 30% to 40% of annual revenue, a sequential rise above $240 million will confirm that deal closings followed the customary year-end surge.
Steady Pay Discipline Lifted Operating Margin
Lincoln International's operating margin excluding one-offs climbed to 24.5%, up 11 percentage points from a year ago and 4.2 points from the second quarter. Management kept employee pay and benefits excluding one-offs at 61.0% of revenue, matching last quarter and down from 68.5% a year ago.
Overhead costs such as travel, rent and software — which the firm calls non-compensation expenses — grew 27% excluding one-offs to $42.7 million on "our acquisition of MarshBerry and focused investment in technology". Because revenue grew twice as fast, overhead fell to 14.6% of sales from 18.0% a year ago and 18.7% in the second quarter, sending every saved point into operating profit.
What to watch: the full-year employee pay ratio in the fourth-quarter report. Holding the ratio at 61% during year-end bonus payouts will prove management can protect margins as public-company stock awards vest.
🐻 Bear Case
Valuations Growth Cut in Half From Q2
Valuations and Opinions, the division that prices private-market loans and companies for investment funds, is Lincoln's pure gauge of sales from businesses owned a year ago because it includes nothing from MarshBerry. While Brown highlighted growth across both divisions, Valuations revenue rose 18.4% from a year ago to $53.8 million, nearly half the 35.0% pace it set in the second quarter.
The slowdown came against a tougher comparison base, as third-quarter revenue a year ago jumped 28% from the prior quarter. On a quarter-to-quarter basis, Valuations sales still rose 12.1% from $47.9 million in the second quarter on "increasing demand for portfolio valuations and transaction opinions". The release did not update how many portfolio companies the team valued.
What to watch: the number of portfolio companies valued on the conference call. Revenue growth lagging company count growth would mean competition or automation is pressuring the fee per valuation.
MarshBerry Still Masks Underlying Advisory Growth
Lincoln International bought insurance specialist MarshBerry in October 2025, so the third quarter was the final period where the acquired business sat in current results but not in the year-ago comparison. For a second public quarter, the release did not disclose MarshBerry's revenue or the firm's sales from businesses owned a year ago.
That omission matters because headline revenue growth of 57% and advisory growth of 70% blend true deal recovery with an acquisition boost. Acquisition-related intangible write-offs and retention charges also took $20.0 million out of reported profit this quarter. Starting in the fourth quarter, MarshBerry enters the year-ago base, so reported growth rates will drop on calendar math alone.
What to watch: standalone MarshBerry revenue in the quarterly filing's acquisition footnote. That figure will reveal how much of the 70% advisory surge came from the core bank before the comparison resets.
Public Shareholders Claim Only 36% of Profit
Lincoln's May 2026 stock-market listing left pre-IPO partners holding partnership units that sit outside the public Class A shares. Although the firm reported $50.2 million in profit excluding one-offs, that figure assumes all 110.2 million total shares and partner units convert into public stock and pay a 31% corporate tax rate, up from 26% a year ago.
- Public Class A diluted share count: 39.7 million, or 36% of the 110.2 million total
- Reported profit to public shareholders: $9.9 million ($0.25 per share) vs $27.9 million to noncontrolling partner interests
- Tax receivable liability to pre-IPO owners: $85.2 million on the balance sheet
What to watch: partner unit exchanges in the quarterly filing. Any wave of conversions after lock-up expirations will increase the public share float and trigger cash tax-sharing obligations from 2028.
Risks this quarter didn't answer
Brown said Lincoln enters the final quarter "from a position of strength, supported by healthy pipeline activity and continued client engagement", but the release gave no numbers on three standing risks.
- Fourth-quarter deal concentration: the final quarter usually brings in 30% to 40% of annual revenue, leaving full-year profit exposed if economic or geopolitical shocks delay year-end closings.
- Software deal slowdowns: management previously flagged that artificial intelligence uncertainty was delaying software buyouts; conference call commentary will show if software deal flow improved.
- Advisory backlog size: Lincoln does not publish a dollar figure for its unclosed deal pipeline, so investors cannot verify how much fourth-quarter revenue is already under contract.
💲 Other KPIs
Net cash rose by $112.5 million from last quarter, as cash and equivalents climbed to $363.1 million while long-term debt held steady at $101.9 million. After paying down $195.8 million of acquisition debt in the second quarter following the initial public offering, the advisory firm is accumulating cash ahead of year-end bonus payouts.
Uncollected client bills rose 20.9% from $105.8 million in the second quarter, slower than the 30.1% jump in total revenue. Client receivables Remain 20.2% below the $160.2 million year-end peak in December 2025, showing that Lincoln collected cash promptly on closed third-quarter transactions.
Accrued employee bonuses and pay jumped 67.5% from $127.8 million in the second quarter and 54.6% from $138.4 million at the end of 2025. Investment banks set aside pay each quarter and pay out annual bonuses early in the new year, so this liability builds alongside revenue and will drain cash in the first quarter.
🔮 Guidance
Unchanged. The board declared a fourth-quarter dividend of $0.07 per share, payable on December 15, 2026, matching the initial payout set in the second quarter. Lincoln International did not issue quantitative revenue or expense targets in the earnings release.
❓ Key Questions
How much revenue did MarshBerry add in the third quarter?
Advisory revenue rose 70% from a year ago and 35% from last quarter, but MarshBerry was absent a year ago and becomes comparable in Q4. Knowing its standalone revenue is the only way to measure underlying advisory growth.
How many portfolio companies did the Valuations team price?
Valuations revenue growth slowed from 35% in Q2 to 18% in Q3. Last quarter the team priced 7,400 companies, up 19% from a year ago; if company counts still grew 19%, fee rates per valuation stopped expanding.
Does the 7% to 9% overhead growth plan still stand?
Overhead costs excluding one-offs rose 27% from a year ago in Q3 and 20% across the first nine months because of MarshBerry and technology spending. Management has not stated whether its single-digit growth target applies to a combined baseline.
Is the fourth quarter still on track for 30% to 40% of annual sales?
After generating $677.1 million in the first nine months and $293.7 million in Q3 alone, hitting the normal 30% to 40% fourth-quarter share would require at least $290 million in Q4 revenue.