2020 Annual Report
Dear Clients, Stockholders and Colleagues,
Greenhill is a leading independent advisory firm for complex financial transactions across the globe.
Our objective is to provide high quality, unconflicted advice to corporations, partnerships,
institutions and governments globally on a wide range of transactions, including mergers &
acquisitions (“M&A”), restructuring, financing, capital raising and other important financial
transactions. Over 25 years we have developed a brand that is highly respected by senior decision
makers around the world. We have grown to significant scale, with a large and expanding group of
client-facing Managing Directors supported by a highly skilled group of other professionals. Our
team includes senior bankers who have deep expertise in nearly every industry sector and type of
strategic financial advice, in each of the major international markets.
We believe the Firm we operate today is unique among its competitors. First, we are entirely focused
on advisory work for clients, and so we are able to avoid the conflicts of interests that can arise from
other business activities or other products that are cross-sold to clients. Second, we are a truly global
firm, having generated nearly half of our cumulative historic revenue from clients based outside the
U.S. and with a heavy focus on executing complex cross-border transactions. Third, we have an
unusually collegial culture, where our teams work seamlessly across sectors, regions and advisory
specialties in order to help clients achieve their goals.
Review of 2020 Performance
Any review of 2020 has to begin with a discussion of the global pandemic. Starting in mid-March
and continuing in varying degrees throughout the year and across all our offices, most of our people
worked from home or other remote locations. Armed with the appropriate technological tools and
hugely benefiting from our collegial culture, our people made the transition to working and serving
clients remotely in a remarkably smooth manner. Throughout the year we continued to maintain and
build client relationships, win new assignments from historic as well as new clients, provide advice,
execute transactions and generate revenue.
In terms of business conditions, 2020 felt like three different years within one. Most of the first
quarter was a continuation of the reasonably favorable economic and market environment from the
year before. Then, as the scale and scope of the pandemic became apparent, came a period of a few
months where most M&A activity as well as private capital advisory transactions paused while
restructuring activity involving companies in financial distress accelerated sharply. Then, later in the
year following aggressive moves by governments and central banks to stimulate the economy, M&A
activity resumed and accelerated, private capital advisory transaction activity rebounded and fewer
companies were forced to seek restructuring advice given reduced levels of financial distress.
Our team was able to successfully pivot to where the opportunity was at each stage of the economy's
progression through the pandemic. As a result, we managed to increase revenue for the year by 4%.
Our European M&A and U.S. restructuring businesses were the primary drivers in this surprising
outcome, together overcoming weaker results in many other businesses and regions that were more
negatively impacted by the pandemic. Our earnings benefited not only from increased revenue but
also from reduced costs. We achieved a significant reduction in non-compensation expenses, partly
due to pandemic-related travel restrictions and partly due to a series of successful management
initiatives. Our interest expense declined as a result of lower interest rates, more favorable terms on
our debt post our 2019 refinancing and a declining level of debt. And our tax rate fell as we earned
more income in lower tax rate jurisdictions and also benefited from certain pandemic-related
legislation. As a result of all these factors, our earnings per share increased by 202% from the prior
year.
Strategic Progress in 2020
Despite the challenges of the pandemic and more difficult working conditions for most of our team,
we continued to invest in expanding the long term earnings potential of our business. The success of
our most recent major strategic initiative, the expansion of our restructuring advisory team, was
gratifying. While we certainly did not foresee the pandemic, by expanding our restructuring
capability we had taken the necessary steps for the Firm to prosper in the next economic downturn
regardless of its cause. That investment paid off dramatically in 2020.
During the year we also saw continued progress in the development of our newest offices. Our
Madrid office achieved solid profitability in 2020 and looks poised to build further on that going
forward. And our newest offices, in Paris and Singapore, continued to build their local client
relationships and pipeline of assignments. Both look set to become meaningful contributors going
forward. Meanwhile, we withdrew from Brazil, a challenging market where our team was unable to
generate consistent profitability.
Our primary new strategic initiative for 2021 is to expand our efforts to serve the financial sponsor
(or private equity) community. Historically we focused our efforts heavily on public companies, and
we enjoyed great success in serving that important set of clients. However, over time we came to
realize we were having increasing interaction with financial sponsors across our M&A, restructuring
and private capital advisory businesses. We are now aiming to organize those efforts in a more
systematic way designed to generate more revenue, and we have already put significant resources
into this initiative. We are hopeful that it will be at least as successful as the restructuring advisory
team expansion of recent years.
The Outlook for 2021 and Beyond
Our plan going forward remains fundamentally the same: to continually seek to expand and upgrade
the quality of our team, develop our brand as a leading independent advisor globally and expand our
client base. As we enter 2021, the environment for our business feels favorable. Economies are
rebounding, stock markets are near all time highs, borrowing costs are near all time lows, and
fundamental change is forcing companies across sectors to reevaluate their business strategies. For
many, M&A will play an important role in responding to the changing landscape. Meanwhile, the
continuing impact of the pandemic will require many companies to seek new financing and/or
restructure their balance sheet. We are well positioned to assist both types of companies, as well as
their boards, shareholders, creditors and other constituencies.
While ours will always be a business where quarterly and even annual results can vary widely as a
result of economic and market factors or simply the random timing of transaction announcements
and completions, we are hopeful about the future. We provide a service (advising on large and
complex transactions) that is highly valued and highly remunerated by clients. We have built a strong
global brand in the eyes of boards of directors, senior executives and other important decision
makers who need those services. And we have developed a strong culture that allows us to attract
and retain talented professionals, who in turn help us further enhance our brand by providing sound
and unconflicted advice.
Closing
We are grateful to our clients for their trust, to our employees for their steadfast efforts and to our
stockholders for believing in our strategy and its potential for creation of value. We will do our
utmost to realize that potential in 2021 and beyond.
Scott L. Bok
Chairman & Chief Executive Officer
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________________________________________________________________________
FORM 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 12/31/2020.
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 001-32147
______________________________________________________________________________
GREENHILL & CO INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation or Organization)
1271 Avenue of the Americas
New York, New York
(Address of Principal Executive Offices)
51-0500737
(I.R.S. Employer
Identification No.)
10020
(ZIP Code)
Registrant’s telephone number, including area code: (212) 389-1500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share
Trading Symbol(s)
GHL
Name of each exchange on which
registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨
Accelerated Filer þ
Non-accelerated filer ¨
Smaller reporting company ☑
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
The aggregate market value of the common stock held by non-affiliates of the registrant, computed by reference to the closing price as of
the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2020, was approximately $141 million. The
registrant has no non-voting stock. As of February 22, 2021, there were 19,511,810 shares of the registrant’s common stock outstanding.
Portions of the Registrant’s definitive proxy statement to be delivered to stockholders in connection with the 2021 annual meeting of
stockholders to be held on April 27, 2021 are incorporated by reference in response to Part III of this Report.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Page
PART I..........................................................................................................................................................................
Item 1.
Business.....................................................................................................................................................
Item 1A. Risk Factors...............................................................................................................................................
Item 1B. Unresolved Staff Comments.....................................................................................................................
Item 2.
Properties...................................................................................................................................................
Item 3.
Legal Proceedings.....................................................................................................................................
Item 4. Mine Safety Disclosures............................................................................................................................
Executive Officers and Directors..............................................................................................................
PART II.........................................................................................................................................................................
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities...................................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations...................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..................................................................
Item 8.
Financial Statements and Supplementary Data.........................................................................................
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................
Item 9A. Controls and Procedures............................................................................................................................
Item 9B. Other Information......................................................................................................................................
PART III.......................................................................................................................................................................
Item 10. Directors, Executive Officers and Corporate Governance........................................................................
Item 11. Executive Compensation...........................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions, and Director Independence..........................................
Item 14. Principal Accounting Fees and Services...................................................................................................
PART IV.......................................................................................................................................................................
Item 15. Exhibits and Financial Statement Schedules.............................................................................................
Item 16. Form 10-K Summary.................................................................................................................................
Signatures......................................................................................................................................................................
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When we use the terms “Greenhill”, “we”, “us”, “our”, “the Company”, and “the Firm”, we mean Greenhill & Co., Inc., a
Delaware corporation, and its consolidated subsidiaries.
PART I
Item 1. Business
Overview
Greenhill is a leading independent investment bank that provides financial and strategic advice on significant domestic and
cross-border mergers and acquisitions, divestitures, restructurings, financings, capital raising and other transactions to a diverse
client base, including corporations, partnerships, institutions and governments globally. We serve as a trusted advisor to our
clients throughout the world on a collaborative, globally integrated basis from our offices in the United States, Australia,
Canada, France, Germany, Hong Kong, Japan, Singapore, Spain, Sweden and the United Kingdom.
At Greenhill, we are singularly focused on providing conflict-free advice to clients on a wide variety of complex financial
matters, using our global resources to provide a combination of transaction experience, industry sector expertise and knowledge
of relevant regional markets. We work seamlessly across offices and markets to provide the highest caliber advice and services
to our clients.
Greenhill was established in 1996 by Robert F. Greenhill, the former President of Morgan Stanley and former Chairman and
Chief Executive Officer of Smith Barney. Greenhill was formed as a limited liability company and converted to a Delaware
corporation in 2004 at the time of our IPO. Since our founding, Greenhill has grown significantly, by recruiting talented and
diverse managing directors and other senior professionals, acquiring complementary advisory businesses and training,
developing and promoting professionals internally. We have expanded beyond merger and acquisition advisory services to
include financing, restructuring, and private capital advisory services, and we have expanded the breadth of our sector expertise
to cover substantially all major industries. Since the opening of our original office in New York, we have expanded globally to
15 offices across four continents.
As of December 31, 2020, we had 358 employees globally. At that date, we had 70 client facing managing directors,
including those whose hiring we had announced.
Advisory Services
Greenhill is a unique global investment banking firm, not only in relation to the large integrated, or “bulge bracket”,
institutions, which engage in commercial lending, underwriting, research, sales and trading and other businesses, but also in
relation to other so-called “independent” investment banks, many of which engage in investment management, research and
capital markets businesses, all of which can create conflicts with clients’ interests. Greenhill’s singular focus on advisory
services differentiates us from other investment banks, and enables us to offer best-in-class service to each of our clients.
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Advising clients is our only business. We do not engage in investing, trading, lending, underwriting, research or
investment management businesses. Our clients’ interests are our sole priority.
• We provide unbiased, conflict-free advice. We have no products or additional services to cross-sell and, thus, no
inherent conflicts of interest. We also have no lending, prime brokerage or other relationships with activist
investors.
• We maintain the highest levels of confidentiality. Our advisory-only business model and minimal conflicts
enable us to maintain greater client confidentiality.
•
Senior level attention is fundamental to our model. Our managing directors, who are seasoned professionals
with both transaction expertise and sector and regional knowledge, are actively engaged in our client mandates from
origination through execution and closing.
• We offer a collaborative approach to global client service. Our professionals around the globe work together on
a fully-integrated, one-firm, one-team approach to advance the interests of our clients.
We provide comprehensive financial advisory services primarily in connection with mergers and acquisitions, divestitures,
restructurings, financings, private capital raising and other similar transactions. We also provide advice in connection with
shareholder defense preparedness, activist investor response strategies and other critical strategic matters. For all of our
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advisory services, we draw on the extensive experience, senior relationships and industry expertise of our managing directors
and senior advisors.
Mergers and Acquisitions. On merger and acquisition engagements, we provide a broad range of advice to global clients in
relation to domestic and cross-border mergers, acquisitions, divestitures, spin-offs and other strategic transactions, through all
stages of a transaction’s life cycle, from initial structuring and negotiation to final execution. Our focus is on providing high-
quality, unbiased advice to senior executive management teams, boards of directors and special committees of prominent large
and mid-cap companies, financial sponsors and to key decision makers in governments and at large institutions on transactions
that typically are of the highest strategic and financial importance to our clients. We have specialists in nearly every significant
industry sector who work closely with our transaction and regional specialists to provide the highest quality advice and
transaction execution. In addition to merger and acquisition transactions, we advise clients on a full range of critical strategic
matters, including activist shareholder defense, special committee projects, licensing deals and joint ventures. We provide
advice on valuation, negotiation tactics, industry dynamics, structuring alternatives, timing and pricing of transactions, as well
as financing alternatives. In appropriate situations, we also provide fairness opinions with regard to merger and acquisition
transactions.
Financing Advisory and Restructuring. Our financing advisory and restructuring practice encompasses a wide range of
advisory services. In debt restructurings, we advise debtors, creditors, governments, pension funds and other stakeholders in
companies experiencing financial distress, as well as potential acquirers of distressed companies and assets. We provide advice
on valuation, restructuring alternatives, capital structures, financing alternatives and sales or recapitalizations, and we assist
clients in identifying and capitalizing on potential incremental sources of value. We also assist those clients who seek court-
assisted reorganizations by developing and seeking approval for plans of reorganization as well as the implementation of such
plans. In addition to debt restructurings, we advise on a variety of other financing matters, including debt issuances, equity
financings, exchange offers and spin-off transactions. We also provide advice on initial public offerings (IPOs) and other
equity capital market transactions in which clients value our independent advice as a knowledgeable advisor who does not stand
to earn substantial underwriting or placement fees.
Private Capital Advisory. We are one of the leading global financial advisors to pension funds, endowments and other
institutional investors on transactions involving alternative assets. We advise such institutions globally on secondary sales of
interests in private equity and similar funds, as well as providing advice to alternative asset fund sponsors for private capital
raising, restructuring, financing, liquidity options, valuation and related services.
Revenues
Our revenues are derived from both corporate advisory services related to mergers and acquisitions (M&A), financings and
restructurings and capital advisory services related to sales or capital raises pertaining to alternative assets. Revenues from
corporate advisory are primarily driven by total deal volume and the size of individual transactions. While fees payable upon
the successful conclusion of a transaction generally represent the largest portion of our corporate advisory fees, we also earn
other fees, including on-going retainer fees, substantially all of which relate to non-success based strategic advisory, and
financing advisory and restructuring assignments, and fees payable upon the commencement of an engagement or upon the
achievement of certain milestones, such as the announcement of a transaction or the rendering of a fairness opinion.
Additionally, we generate private capital advisory revenues from sales of alternative assets in the secondary market and from
capital raises.
Human Capital
As an independent investment bank focused solely on advisory services, our people are our primary asset. We strive to
develop and promote a culture that fosters collegiality, teamwork, professionalism, excellence, diversity and collaboration
among our employees worldwide to deliver high quality results to our clients and create long term career development
opportunities for our personnel.
Approximately 39% of our managing directors have worked at Greenhill for more than 10 years; as a group our managing
directors average more than 20 years of varied and relevant experience, which they leverage to provide the highest quality
advice on a globally-integrated basis across our full range of services. Our managing directors are supported by a strong team
of more junior professionals, and we spend a significant amount of time and resources recruiting, training and mentoring them.
As an equal opportunity employer, all qualified applicants receive consideration without regard to race, color, religion, gender,
sexual orientation, gender identity, national origin or ancestry, age, disability or veteran status, or other protected status.
Employee development is an important element of our human capital management program. We seek to provide our junior
professionals with high quality technical training as well as broad exposure to a variety of assignments involving mergers and
acquisitions, divestitures, restructurings, financings, capital raisings and other transactions. This approach provides us with the
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flexibility to allocate resources depending on the transaction environment and provides our bankers with a wide variety of
experiences to assist in the development of their business and financial judgment.
We strive to provide comprehensive packages of competitive compensation and benefits in each market in which we operate,
which we believe is important to ensure our employees’ health, well-being and financial security. We review the
competitiveness of our compensation and benefits frequently. With respect to our senior employees, we seek to align their
compensation with the interests of our shareholders through stock-based incentive compensation programs.
The safety of our employees has always been a priority. In the past year, as a result of the COVID-19 pandemic, work-place
safety and employee well-being assumed even greater importance. Our employees were given the flexibility to manage their
work place and personal priorities, our employee benefits emphasized mental health and our senior personnel proactively
reached out to the more junior professionals in order to maintain connectivity and offer support. Recently, COVID-19 "work
from home" restrictions have become less stringent in several jurisdictions in which we operate; those offices have prioritized
work place safety in compliance with local guidelines and requirements and our employees continue to have the flexibility to
work remotely or in our offices.
As of December 31, 2020, Greenhill employed a total of 358 people, of which 200 were located in our offices in North
America, 108 were based in our European offices, and 50 in the rest of the world. The vast majority of our accounting,
operational and administrative employees are located in the United States.
Our day to day conduct, as embodied by our Code of Ethics, seeks to ensure that everyone feels welcome, respected and
valued so that they can contribute to their fullest potential. We utilize a comprehensive evaluation process at the end of each
year to measure performance, determine compensation and provide guidance on opportunities for continued development.
Competition
We operate in a highly competitive environment where there are no long-term contracted sources of revenue. Each revenue-
generating engagement is separately awarded and negotiated. Our list of clients with whom we have an active engagement
changes continually. To develop new client relationships, and to develop new engagements from historic client relationships,
we maintain, on an ongoing basis, business dialogues with a large number of clients and potential clients. We have gained a
significant number of new clients each year through our business development initiatives, through recruiting additional senior
investment banking professionals who bring with them client relationships and expertise in certain industry sectors or
geographies and through referrals from members of boards of directors, attorneys and other parties with whom we have
relationships. At the same time, we lose clients each year as a result of the sale or merger of a client, a change in a client’s
senior management team, competition from other investment banks and other causes.
The financial services industry is intensely competitive, and we expect it to remain so. Our competitors are global and
regional integrated banking firms, mid-sized full service financial firms, other independent financial services firms and
specialized financial advisory firms. We compete with some of our competitors globally and with others on a regional, product,
industry or niche basis. We compete on the basis of a number of factors, including the quality of our advice and service, our
range of sector expertise, strength of relationships, innovation, reputation and price.
The global and regional integrated banking firms offer a wider range of products, from loans, deposit-taking and insurance to
brokerage, hedging, foreign exchange, asset management and corporate finance and securities underwriting services, which
may enhance their competitive position. They also have the ability to support their investment banking operations with
commercial banking, insurance and other financial services revenues in an effort to gain market share, which could result in
pricing pressure in our business. In addition to our larger and mid-sized full service competitors, we compete with a number of
independent investment banks, which offer independent advisory services on a model similar to ours. A few of the independent
banks with whom we compete are larger and have greater general and industry-specific coverage resources.
We believe our primary competitors in securing mergers and acquisitions and financing advisory engagements are large,
diversified financial institutions including Bank of America Corporation, Barclays Bank PLC, Citigroup Inc., Credit Suisse
Group AG, Deutsche Bank AG, Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, and UBS AG, as well as
other publicly listed investment banking firms such as Evercore Partners Inc., Jefferies Group, Inc., Lazard Ltd., Moelis & Co.
and PJT Partners, and certain closely held boutique firms. Advisory services in restructuring and bankruptcy situations tend to
be highly specialized, and we believe our primary competitors to be Evercore Partners, Inc., Houlihan Lokey, Inc., Lazard Ltd.,
Moelis & Co., PJT Partners Inc. and many closely held boutique firms. We believe our primary competitors in our private
capital advisory business are Credit Suisse Group AG, Evercore Partners, Inc., Jefferies Group, Inc., Lazard Ltd., Park Hill
Group LLC (part of PJT Partners Inc.), UBS AG and many other closely held boutique firms.
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Competition can be intense for the hiring and retention of qualified employees. Our ability to continue to compete
effectively in our business will depend upon our ability to attract new employees and retain and motivate our existing
employees.
For a discussion of risks related to the highly competitive environment in which we operate, see “Item 1A. Risk Factors” in
this annual report.
Regulation
Our business, as well as the financial services industry generally, is subject to extensive regulation in the United States and
elsewhere. As a matter of public policy, regulatory bodies in the United States and the rest of the world are charged with
safeguarding the integrity of the securities and other financial markets and with protecting the interests of parties participating
in those markets.
Certain of our operations are subject to compliance with laws and regulations of U.S. federal and state governments, non-
U.S. governments, their respective agencies and/or various self-regulatory organizations or exchanges, and any failure to
comply with these regulations could expose us to liability and/or damage our reputation. Our businesses have operated for
many years within a legal framework that requires us to monitor and comply with a broad range of legal and regulatory
developments that affect our activities. However, additional legislation, changes in rules promulgated by self-regulatory
organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States or elsewhere,
may directly affect our mode of operation and profitability. Our activities are subject to financial markets regulation in the
following jurisdictions:
United States
In the United States, the Securities and Exchange Commission (“SEC”) is the federal agency responsible for the
administration of the federal securities laws and the protection of investors who invest in Greenhill. Greenhill & Co., LLC
(“G&Co LLC”) is a wholly-owned subsidiary of Greenhill through which we conduct our U.S. advisory business. It is
registered as a broker-dealer with the SEC, is a member of the Financial Industry Regulatory Authority (“FINRA”) and is
subject to regulation and oversight by the SEC. In addition, FINRA, a self-regulatory organization that is subject to oversight
by the SEC, adopts and enforces rules governing conduct, and examines the activities of its member firms, such as G&Co LLC.
State and local securities regulators also have regulatory oversight authority over G&Co LLC.
Broker-dealers are subject to regulations that cover all aspects of the securities business. Our business model is exclusively
focused on providing strategic advice to clients and we do not hold customer funds or securities, or carry on research, securities
trading, lending or underwriting activities. While this means that certain broker-dealer regulations, such as those pertaining to
the use and safekeeping of customers’ funds and securities and the financing of customers’ purchases, may not be applicable to
us, we remain subject to other applicable broker-dealer regulations, including regulatory capital levels, record keeping and
reporting requirements, and the conduct and qualifications of officers and employees. In particular, as a registered broker-
dealer and member of a self-regulatory organization, G&Co LLC is subject to the SEC’s uniform net capital rule, Rule 15c3-1.
Rule 15c3-1 specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant portion
of a broker-dealer’s assets be retained in liquid financial instruments relative to the amount of its liabilities. The SEC and
various self-regulatory organizations impose rules that require notification when net capital falls below certain predefined
criteria, limit the ratio of subordinated debt to equity in the regulatory capital composition of a broker-dealer and constrain the
ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC’s uniform net capital rule
imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital
and requiring prior notice to the SEC for certain withdrawals of capital.
In addition, Greenhill Capital Partners, LLC, our wholly-owned subsidiary, which operated as and will continue to operate as
general partner of Greenhill Capital Partners II, a former merchant banking fund, is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. As such, it is subject to regulation and periodic examinations by the SEC. Such
regulations relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation
agreements, conflicts of interest, recordkeeping and reporting requirements, disclosure requirements, limitations on agency
cross and principal transactions between an adviser and advisory clients and general anti-fraud prohibitions.
Europe
Greenhill & Co. International LLP, our wholly owned affiliated partnership with an office in the United Kingdom, through
which we conduct a large portion of our European advisory business, is authorized and regulated by the United Kingdom’s
Financial Conduct Authority (“FCA”). The current UK regulatory regime, that governs all aspects of our advisory business in
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the United Kingdom, is based upon the Financial Services and Markets Act 2000 (the “FSMA”), together with secondary
legislation and other rules made under the FSMA.
As a result of the United Kingdom’s departure from the European Union and the expiry of the transitional period at the end
of 2020, we incorporated a new German partnership, Greenhill Europe GmbH & Co. KG. We received approval of our
application from Bundesanstalt fur Finanzdienstleistungsaufsicht (“BaFin”) and commenced providing investment banking
services from our offices in Frankfurt, Madrid and Paris, with effect from October 1, 2020. Greenhill Europe GmbH & Co. KG
has a regulated branch in Spain, which is regulated and authorized by the Comisión Nacional del Mercado de Valores
(“CNMV”), and in France, which is authorized and regulated by the Autorité de Contrôle Prudentiel et de Régulation
(“ACPR”). The current German regulatory regime is based upon the supervisory rules imposed by the BaFin, together with
applicable national and European regulations that are relevant to the business of the firm, including the German Banking Act
(KWG).
In connection with our Brexit planning, Greenhill & Co. Europe LLP, our wholly owned affiliated partnership with an office
in Germany, and Greenhill & Co. Spain Limited, our wholly-owned Spanish subsidiary with an office in Madrid, were both
deregulated by the FCA in October 2020 respectively, following the integration of both businesses with Greenhill Europe
GmbH & Co. KG. Notifications were also made to the BaFin and the CNMV to deregister the respective branch registrations.
Greenhill & Co. Sweden AB, our wholly-owned Swedish subsidiary with an office in Stockholm, provides financial advice
to clients in Sweden and the wider Nordic region.
Australia
Greenhill & Co. Australia Pty Limited (“Greenhill Australia”), our wholly-owned Australian subsidiary, is licensed and
subject to regulation by the Australian Securities and Investments Commission (“ASIC”) and must also comply with applicable
provisions of the Corporations Act 2001 and other Australian legal and regulatory requirements, including capital adequacy
rules, customer protection rules, and compliance with other applicable trading and investment banking regulations.
Hong Kong
Greenhill & Co. Asia Limited, a wholly-owned Hong Kong subsidiary, is licensed under the Hong Kong Securities and
Futures Ordinance with the Securities and Futures Commission (“SFC”) and is regulated by the SFC. The compliance
requirements of the SFC include, among other things, net capital, stockholders’ equity and periodic reporting requirements, and
also the registration and training of certain employees and responsible officers.
Singapore
Greenhill & Co. Asia (Singapore) PTE. LTD., a wholly-owned Singapore subsidiary, is regulated by the Monetary
Authority of Singapore (“MAS”) and licensed under the Securities and Futures Act to conduct the regulated activities of dealing
in capital markets products and advising on corporate finance. The compliance requirements in relation to the capital markets
services license include, among other things, capital adequacy, business conduct rules, periodic reporting requirements and
ensuring representatives are fit and proper to carry out the regulated activities.
Our business may also be subject to regulation by other governmental and regulatory bodies and self-regulatory authorities
in other countries where Greenhill operates or conducts business.
Anti-money laundering, Sanctions and Bribery Legislation
Federal anti-money-laundering laws make it a criminal offense to own or operate a money transmitting business without the
appropriate state licenses, which we maintain, and require registration with the U.S. Department of Treasury’s Financial Crimes
Enforcement Network (“FinCEN”), where we are registered. In addition, pursuant to the USA PATRIOT Act of 2001 and the
Treasury Department’s implementing federal regulations, as a “financial institution,” we have established and maintain an anti-
money-laundering program. We are generally prohibited from dealing with “Specially Designated Nationals” or SDNs, that are
identified by the Treasury Department’s Office of Foreign Assets Control, or OFAC. In addition, OFAC administers a number
of comprehensive sanctions and embargoes that target certain countries, governments and geographic regions. Similar
restrictions have been issued in the U.K. by HM Treasury. We are prohibited from engaging in transactions involving any
country, region or government that is subject to such comprehensive sanctions.
We also are subject to the Foreign Corrupt Practices Act ("FCPA"), which prohibits offering, promising, giving, or
authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence
official action or otherwise gain an unfair business advantage, such as to obtain or retain business. We are also subject to
applicable anti-corruption laws in the United States and in the other jurisdictions in which we operate, such as the U.K. Bribery
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Act. We have implemented policies, procedures, and internal controls that are designed to comply with such laws, rules, and
regulations.
Data Privacy
As part of our business we routinely receive sensitive and confidential information from our clients. We also collect
personal information from our prospective and current employees, as permitted by employment laws and regulation. As a result,
we are subject to the laws and regulations in relation to privacy of the U.S. federal and state governments, non-U.S.
governments, their agencies and self-regulatory organizations, such as the E.U.’s data privacy and security framework titled the
General Data Protection Regulations (the “GDPR”), the California Consumer Privacy Act (“CCPA”) and the new California
Privacy Rights Act ("CPRA").
For a discussion of risk related to the regulation that we are subject to, see “Item 1A. Risk Factors” in this annual report.
Where You Can Find Additional Information
Greenhill & Co., Inc. files current, annual and quarterly reports, proxy statements and other information required by the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the SEC. Our SEC filings are also available to the
public from the SEC’s internet site at http://www.sec.gov.
Our public internet site is http://www.greenhill.com. We make available, free of charge, through our internet site, via a link
to the SEC’s internet site at http://www.sec.gov, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers and any
amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. Also posted on our website in the “Corporate Governance”
section, and available in print upon request of any stockholder to our Investor Relations Department, are the charters for our
Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee, our Corporate Governance
Guidelines, Related Party Transaction Policy and Code of Business Conduct & Ethics governing our directors, officers and
employees. The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any
of our other filings with the SEC.
Item 1A. Risk Factors
Our ability to retain our managing directors and other professionals is critical to the success of our business
The success of our business depends upon the personal reputation, judgment, integrity, business generation capabilities and
project execution skills of our managing directors. Our managing directors’ personal reputations and relationships with our
clients are a critical element in obtaining and maintaining client engagements. Accordingly, the retention of our managing
directors, who are not obligated to remain employed with us, is particularly crucial to our future success. Managing directors
have left Greenhill in the past and others may do so in the future, and we cannot predict the impact that the departure of any
managing director would have on our business. For example, in late 2020 a number of managing directors in our U.S. private
capital advisory business departed the Firm to join a competitor. The departure or other loss of a number of our managing
directors could materially adversely affect our ability to secure and successfully complete engagements, which could materially
adversely affect our results of operations.
In addition, if any of our managing directors were to join an existing competitor or form a competing company, some of our
clients could choose to use the services of that competitor instead of our services, or some of our managing directors or other
professionals could choose to follow the departing managing director in joining an existing competitor or forming a competing
company. Although we have entered into non-competition agreements with our managing directors, the restriction period in
many of the agreements does not exceed three to six months, and there is no guarantee that these agreements are sufficiently
broad or effective to prevent our managing directors from resigning to join our competitors or that the non-competition
agreements would be upheld if we were to seek to enforce our rights under these agreements. Further, certain states and
jurisdictions in which we operate have laws that limit the enforceability of non-compete agreements. If additional states and
jurisdictions adopt similar regulation, it may further limit our ability to prevent our managing directors from joining our
competitors.
Principally all of our revenues are derived from advisory fees, which results in volatility in our revenues and profits
We are entirely focused on the financial advisory business and we earn principally all of our revenues from advisory fees
paid to us by each of our clients, in large part upon the successful completion of the client’s transaction, the timing of which is
outside of our control. Unlike diversified investment banks, which generate revenues from commercial lending, securities
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trading and underwriting, or other advisory firms, which have asset management and other businesses, our generation of
revenues from sources other than advisory fees is minimal. As a result, a decline in our advisory engagements, the number and
scale of successfully completed client transactions or the market for advisory services generally would have a material adverse
effect on our business and results of operations.
Our engagements are singular in nature and do not provide for subsequent engagements, which could cause our
revenues to fluctuate materially from period to period and translates into potential volatility in our stock price
We operate in a highly-competitive environment where our clients generally retain us on a non-exclusive, short-term,
engagement-by-engagement basis in connection with specific transactions or projects, rather than under long-term contracts
covering potential additional future services. As these transactions and projects are singular in nature and subject to intense
competition, we must seek out new engagements when our current engagements are successfully completed or are terminated.
As a result, high activity levels in any period are not necessarily indicative of continued high levels of activity in the next-
succeeding period or any future period. In addition, we generally derive most of our engagement revenues at key transaction
milestones, such as announcement or closing, and the timing of these milestones is outside our control. Extended regulatory and
other delays in the closing of announced transactions can create increased volatility in our revenues from period to period, since
the largest portion of our fees is typically paid upon closing. Further, a transaction can fail to be completed for many reasons,
including failure to agree upon final terms with the counterparty, failure to secure necessary board or shareholder approvals,
failure to secure necessary financing, failure to achieve necessary regulatory approvals and adverse market conditions. In cases
where an engagement is terminated prior to the successful completion of a transaction or project, whether due to market reasons
or otherwise, we may earn limited or no fees and may not be able to recoup the costs we incurred prior to the termination.
Our business is also highly dependent on market conditions and the decisions and actions of our clients and interested third
parties. For example, in our mergers and acquisitions business, a client could delay or terminate a transaction because of a
failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or shareholder
approvals, failure to secure necessary financing, or adverse market conditions. In our financing advisory and restructuring
business, anticipated bidders for assets of a client in financial distress may not materialize or our clients may not be able to
restructure their operations or indebtedness due to a failure to reach agreement with their principal creditors. In our private
capital advisory business, our clients may not be able to sell their fund interests in secondary transactions because anticipated
investors or buyers may decline to invest in such a fund due to lack of liquidity, change in strategic direction of the investor, or
other factors. In these circumstances, we may receive limited or no advisory fees and may not be able to recoup all of our
expenses, despite having committed substantial time and resources to an engagement. In particular, cross-border deals may
require numerous approvals in numerous jurisdictions, and the likelihood and timing of approvals may be difficult to predict.
Our dependence on a relatively small number of successful completions of transactions for a large percentage of our
revenues in each quarterly or annual reporting period also impacts our earnings rather significantly in any particular quarter or
year. As a result, it may be difficult for us to achieve consistent results and steady earnings growth on a quarterly basis, which
could adversely affect our stock price.
A high percentage of our revenues is derived from a small number of clients, and the termination of any one engagement
could reduce our revenues and harm our operating results
Each year, we advise a limited number of clients. Our top ten client engagements accounted for 43% of our total revenues in
2020 and 35% in 2019. In 2020, one client represented greater than 10% of our revenues. In 2019, a different client represented
greater than 10% of our revenues. While the composition of the group comprising our largest clients varies significantly from
year to year, we expect that our engagements will continue to be limited to a relatively small number of clients, compared to
some of our larger competitors, and that an even smaller number of those clients will account for a high percentage of revenues
in any particular year. Our dependence on a relatively small number of transactions for a large percentage of our revenues in
each quarterly or annual reporting period also impacts our earnings rather significantly in any particular quarter or year. As a
result, the adverse impact on our results of operation from lost engagements or the non-completion of transactions on which we
are advising can be significant.
We generate a substantial portion of our revenues from our services in connection with mergers and acquisitions; in the
event of a decline in merger and acquisition activity, it is unlikely we could offset lower revenues with revenues from other
services
The large majority of our bankers are focused on covering clients in the context of providing merger and acquisition advisory
services and those activities generate a substantial portion of our revenues. In the event of a decline in merger and acquisition
activity, we may seek to generate greater business from our financing advisory and restructuring and/or private capital advisory
services. However, it is unlikely that we will be able to completely offset lower revenues from our merger and acquisition
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activities with revenues generated from either financing advisory and restructuring or private capital advisory assignments.
Both our financing advisory and restructuring businesses, which provides financing, restructuring and bankruptcy advice to
companies in financial distress or their creditors or other stakeholders, and our private capital advisory business, which
primarily advises on secondary transactions for alternative assets, are smaller than our mergers and acquisitions advisory
business, and we expect that they will remain that way for the foreseeable future.
If the number of debt defaults, bankruptcies or other factors affecting demand for our restructuring services is at a low
level, our financing advisory and restructuring business could suffer
We provide various financing advisory and restructuring and related advice to companies in financial distress or to their
creditors or other stakeholders. A number of factors affect demand for these advisory services, including general economic
conditions, the availability and cost of debt and equity financing, governmental policy and changes to laws, rules and
regulations, including those that protect creditors. In addition, providing restructuring advisory services entails the risk that the
transaction will be unsuccessful, takes considerable time and can be subject to a bankruptcy court’s discretionary power to
disallow or discount our fees. If the number of debt defaults, bankruptcies or other factors affecting demand for our
restructuring advisory services is at a low level, our financing advisory and restructuring business would likely be adversely
affected.
Our private capital advisory business is dependent on the availability of capital for deployment in the alternative asset
classes in which our clients are invested
In our private capital advisory business, we advise institutional investors and general partners of investment funds on the sale
of alternative assets funds in secondary transactions and other restructuring and/or capital raising transactions. Our ability to
find suitable engagements and earn fees in this business depends on the availability of private and public capital for investments
in illiquid assets such as private equity. Our ability to assist investors in selling their interests in secondary transactions or to
assist fund managers and sponsors in raising capital from investors depends on a number of factors, including many that are
outside our control, such as the general economic environment, changes in the weight investors give to alternative asset
investments as part of their overall investment portfolio among asset classes, and market liquidity and volatility. To the extent
private and public capital focused on alternative investment opportunities for our clients is limited, the results of our private
capital advisory business may be adversely affected.
Our business may be adversely affected by difficult market conditions and adverse economic conditions which may cause
a decline in transaction activity, the extent of which is not known, predictable or under our control
Adverse market or economic conditions caused by external factors, for example the rapid worldwide spread of the
COVID-19 global pandemic and the difficulties in containing it has caused significant disruption and uncertainty in the
domestic and international economies and markets; this in turn has affected the number, size and timing of transactions on
which we provide advice and therefore adversely affect our advisory fees. For example, we experienced a decrease in M&A
activity and associated fees in the first half of 2020 due to the impact of COVID-19. Furthermore, rapid changes in equity
valuations, the uncertainty of available credit and the volatility of equity markets can also adversely affect the size, volume and
timing of, as well as the ability of our clients to successfully complete merger and acquisition transactions, which can affect our
advisory business. For example, when there is a disruption in the financial markets there may be an increase in the number of
pending deals that are terminated prior to closing or where one party seeks not to close. In these cases, we may receive only a
portion of our fee, or in some cases no fee, if the deals on which we advise are terminated or otherwise do not close.
While we operate in North America, Europe, Australia, and Asia, our operations in the United States and Europe have
historically provided most of our revenues and earnings. Consequently, our revenues and profitability are particularly affected
by market conditions in these locations.
We face strong competition from far larger firms and other independent firms, which could adversely affect our market
share of the advisory business
The investment banking industry is intensely competitive, and we expect it to remain so. We compete on the basis of a
number of factors across the U.S. and internationally, including the quality of our advice and service, our range of sector
expertise, strength of relationships, innovation, reputation and price. We are a relatively small investment bank, with
358 employees as of December 31, 2020 and total revenues of $311.7 million for the year ended December 31, 2020. Most of
our competitors in the investment banking industry have a far greater range of products and services, greater financial and
marketing resources, larger customer bases, greater name recognition, more managing directors to serve clients’ needs, greater
global reach and broader relationships with current and potential clients than we have. These larger and better capitalized
competitors may be better able to respond to changes in the investment banking market, to compete for skilled professionals, to
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finance acquisitions, to fund internal growth and to compete for market share generally. Further, we may experience pricing
pressures in the future if some of our competitors seek to obtain market share by reducing prices.
Our integrated investment banking competitors and other large commercial banks, insurance companies and other broad-
based financial services firms that have established or acquired financial advisory practices and broker-dealers, or that have
merged with other financial institutions, have the ability to offer a wide range of products, from loans, deposit-taking and
insurance to brokerage, hedging, foreign exchange, asset management and investment banking services, which may enhance
their competitive position. Their ability to support investment banking with commercial banking, insurance and other financial
services revenues in an effort to gain market share could result in pricing pressure in our businesses. In particular, the ability to
provide financing as well as advisory services has become an important advantage for some of our larger competitors; and,
because we are unable to provide such financing, we may be unable to compete for advisory clients in a significant part of the
advisory market.
In addition to our larger competitors, a number of independent investment banks offer independent advisory services and
most of these firms are larger and have greater general and industry specific coverage resources and larger financing advisory
and restructuring groups than we do. Furthermore, a number of such independent firms may have greater financial resources
than us. Additionally, independent advisory firms require minimal capital to operate and there are few obstacles to forming a
new firm. As these independent firms seek to gain market share, our share of the advisory business could diminish and there
could be pricing pressure, which would adversely affect our revenues and earnings.
Strategic investments and acquisitions, or foreign expansion, may result in additional risks and uncertainties in our
business
To the extent that we pursue business opportunities in certain markets outside the United States, we will be subject to
political, economic, legal, operational, regulatory and other risks that are inherent in operating in a foreign country, including
risks of possible nationalization, expropriation, price controls, capital controls, exchange controls, inflation controls, excessive
taxation, licensing requirements and other restrictive governmental actions, as well as the outbreak of hostilities and pandemic
diseases.
If we expand to new geographic locations, we will incur additional compensation, occupancy, integration, legal and business
development costs. Additionally, it may take significant time for us to determine whether new managing directors will be
profitable or effective, during which time we may incur significant expenses and expend significant time and resources on
compensation, integration and business development. Accordingly, the additional costs and expenses of an expansion may be
reflected in our financial results before any offsetting revenues are generated. Depending upon the extent of our expansion, and
whether it is done by recruiting new managing directors, strategic investment or acquisition, the incremental costs of our
expansion may be funded from cash from operations or other financing alternatives. There can be no assurance that we will be
able to generate or obtain sufficient capital on acceptable terms to fund our expansion needs, which would limit our future
growth and could adversely affect our share price.
If we grow, we will also be required to commit additional management, operational, and financial resources to maintain
appropriate operational and financial systems to adequately support expansion. There can be no assurance that we will be able
to manage our expanding operations effectively or that we will be able to maintain or accelerate our growth, and any failure to
do so could adversely affect our ability to generate revenues and control our expenses.
Our future growth is dependent on both our ability to identify, attract and hire additional managing directors and other
professionals and our ability to identify, acquire and successfully integrate complementary advisory businesses
The future growth of our business is dependent upon our ability to recruit new personnel, develop our existing and new
personnel and expand through strategic investments or acquisitions. To successfully increase our headcount we must identify,
attract and hire professionals, or teams of professionals, to join our firm, who not only will be able to function as trusted
advisors to our clients without the support of a large suite of products but also will be able to fit into our collegial culture. The
recruitment, development and training of professionals requires large commitments of time and resources. It may take a
substantial amount of time to determine whether new professionals will be effective and, during that time, we may incur
significant expenses on compensation, integration and business development activities. Furthermore, there can be no certainty
that our personnel will develop the skills necessary to advise our client base or that we will be able to retain those high
achieving personnel.
In the event we grow by strategic investment or acquisition, we face numerous risks and uncertainties similar to those of
hiring and developing internally our individual professionals. We also face the challenge of integrating a large number of
personnel into our global organization and ensuring a good cultural fit. Management and other existing personnel will spend
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considerable time and resources working to integrate the acquired business, which may distract them from other business
operations.
If we are unable to successfully attract, hire and train new and existing professionals or make strategic investments and
integrate the personnel into our business and retain them, our financial results could suffer.
We currently have a substantial amount of long-term debt that could adversely affect our business
At December 31, 2020, we had $326.9 million of outstanding debt under our term loan facility. We are obligated to make
quarterly principal installment payments on our term loan facility of $4.7 million (or $18.8 million annually), with the
remaining balance of the term loan facility due at maturity on April 12, 2024. The next quarterly principal installment payment
is due on March 31, 2022. If we only make the quarterly principal amortization payments through March 31, 2024, we will
have due $285.9 million at maturity on April 12, 2024.
Our ability to make payments on, or repay or refinance, our debt, and to fund other contractual obligations will depend
largely upon our future operating performance, which is subject to general economic, financial, competitive, regulatory and
other factors that are beyond our control. We cannot provide assurance that we will maintain a level of cash flows from our
operating activities sufficient to permit us to pay the principal of, and interest on, any indebtedness or fund other contractual
obligations.
The amount of our long-term debt could have adverse consequences. For example, it could:
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increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flow from operations to make interest and principal
payments on our debt, thereby limiting the availability of our cash flow to fund our operating activities,
including deferred compensation arrangements, working capital, and other general corporate requirements;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate;
place us at a competitive disadvantage compared with our competitors; and
limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity and meet
regulatory capital requirements.
There is no assurance that our cash flow will be sufficient to allow us to make either timely quarterly principal and interest
payments under the credit agreement or the payment due at maturity. If we are unable to fund our debt obligations, we may
need to consider taking other actions, including refinancing the debt obligation with a new debt obligation, issuing additional
securities, seeking strategic investments, reducing operating costs or consider taking a combination of these actions, in each
case on terms which may not be favorable to us. Further, failure to make timely principal and interest payments under the debt
agreement could result in a default. A default would permit lenders to accelerate the maturity for the debt and to foreclose upon
any collateral securing the debt. In addition, the limitations imposed by the financing agreements on our ability to incur
additional debt could limit our business opportunities, which could in turn have a material impact on our operations and a
material adverse effect on our share price.
Our borrowings bear interest at variable rates, subject to, at our election, either the U.S. Prime Rate plus a margin of 2.25%
or LIBOR plus a margin of 3.25%. For the year ended December 31, 2020 we incurred interest expense of $15.5 million, and
our borrowing rate ranged from 3.4% to 5.0%. We currently do not hedge our borrowing rate and we are subject to
unanticipated interest rate and currency exchange rate fluctuations. An increase in interest rates would increase the portion of
our cash flow used to service our indebtedness and could have a material adverse effect on our liquidity and our ability to meet
our obligations in a timely manner, which could have a material adverse effect on our stock price. The FCA, which regulates
LIBOR, has announced that it will not compel panel banks to contribute to LIBOR after 2021. In November 2020, the ICE
Benchmark Administration Limited announced a plan to extend the date as of which most U.S. LIBOR values would cease
being computed from December 31, 2021 to June 30, 2023. Although financial regulators and industry working groups have
suggested alternative reference rates, global consensus on alternative rates is lacking. It is not possible to predict whether
LIBOR will continue to be viewed as an acceptable market benchmark or what rate or rates may become accepted alternatives
to LIBOR. Although our credit agreement provides a mechanism for the replacement of LIBOR with a new broadly accepted
market convention for determining a rate of interest for syndicated loans in the United States, there can be no assurances that
the phase out of LIBOR will not cause the cost of capital to increase.
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The credit agreement contains various covenants that impose restrictions on us that may affect our ability to operate our
business
The credit agreement contains covenants that may limit our ability to take actions that might be to the advantage of the Firm
and our shareholders. Among other things, subject to certain exceptions, the credit agreement limits our ability to:
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incur additional indebtedness (including guarantees and other contingent obligations);
make certain investments (including loans and advances);
make certain acquisitions;
merge or make other fundamental changes;
sell or otherwise dispose of property or assets;
pay dividends and other distributions, repurchase shares and prepay certain indebtedness; and
enter into transactions with our affiliates.
Under the terms of the credit agreement, in addition to our requirement to make timely principal and interest payments under
the debt agreement and the restrictions enumerated above, we are also subject to certain other non-financial covenants.
Failure to comply with any of the covenants in our credit agreement could result in a default, which would permit lenders to
accelerate the maturity for the debt and to foreclose upon any collateral securing the debt. Under these circumstances, we might
not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by the credit
agreement on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other
financing. Our inability to repay or refinance the credit agreement when due could have a material adverse effect on our
liquidity and result in our inability to meet our obligations, which could have a material adverse effect on our business
operations and our stock price.
Our decision to return cash to our shareholders through repurchases of our common stock may not prove to be the best
use of our capital or result in the effects we anticipated, including a positive return of capital to stockholders
Since we announced our recapitalization in 2017 through December 31, 2020, we have repurchased 15,040,528 common
shares through open market purchases (including pursuant to 10b5-1 plans) and tender offers at an average price of $21.03 per
share, for a total cost of $316.3 million. In February 2021, our Board of Directors authorized the repurchase of our common
stock and common stock equivalents of up to $50.0 million for the period ended January 31, 2022. Since our Board
authorization in 2021 (as of February 22, 2021), we have repurchased 337,739 shares of our common stock for $5.0 million and
we are deemed to have repurchased 635,027 shares of common stock equivalents in conjunction with the payment of tax
liabilities in respect of stock delivered to our employees in settlement of restricted stock units that vested for $9.6 million and
have $35.4 million remaining and authorized for repurchase through January 2022. We may repurchase our common stock
through various means, such as open market purchases (including pursuant to 10b5-1 plans) and privately negotiated
transactions. The price and timing of share repurchases, as well as the total funds ultimately expended, will be subject to market
conditions and other factors, such as our results of operations, financial position and capital requirements, general business
conditions, legal, tax and regulatory constraints or restrictions, any contractual restrictions and other factors deemed relevant.
There can be no assurances of the price at which we may be able to repurchase our shares or that we will repurchase the full
amount authorized for the period through January 2022 or the amount authorized in any future period. Our ability to repurchase
shares for 2021 and future years is also limited by covenants in our credit agreement and Section 160 of the Delaware General
Corporation Law that requires repurchases only be made out of surplus (as defined under Delaware law).
There can be no assurance that any past or future repurchases will have a positive impact on our stock price or enhance
shareholder value, or that share repurchases provide the best use of our capital because the value of our common stock may
decline significantly below the levels at which we repurchased shares of common stock.
Our decision to repurchase shares of our common stock will reduce our public float, which could cause our share price
to decline
As a result of any past or future share repurchases we will likely reduce our “public float,” (i.e., the number of shares of our
common stock that are owned by non-affiliated stockholders and available for trading in the securities markets), which will
most likely reduce the volume of trading in our shares and result in reduced liquidity which may cause fluctuations in the
trading price of our common stock unrelated to our performance.
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Furthermore, certain institutional holders of our common shares (including index funds) may require a minimum market
capitalization of each of their holdings in excess of our market capitalization and therefore be required to dispose of our
common stock, which may cause the value of our common stock to decline. There can be no assurance that this reduction in our
public float will not result in a lower share price or reduced liquidity in the trading market for our common shares during and
upon completion of our share repurchase plan. As a result of a lower stock price and reduction in our outstanding shares we are
no longer a “well-known seasoned issuer”, which otherwise would allow us to, among other things, file automatically effective
shelf registration statements. As a result, any attempt to access the public capital markets could be more expensive or subject to
delays.
Our executive officers, directors and other employees, together with their affiliated entities, hold a significant percentage
of our common stock, and their interests may differ from those of our unaffiliated shareholders
Our executive officers, directors and other employees and their affiliated entities collectively owned approximately 29% of
the total shares of common stock outstanding as of February 22, 2021 (or approximately 49%, assuming vesting in full on
February 22, 2021 of all restricted stock units they hold).
As a result of these shareholdings, our executive officers, directors and employees, together with their affiliated entities,
currently are able to exercise, and may increasingly be able to exercise, significant influence over the election of our Board of
Directors, the management and policies of Greenhill and the outcome of any corporate transaction or other matter submitted to
the shareholders for approval, including mergers, and their interests may differ from those of our unaffiliated shareholders. In
addition, this concentration of ownership could have the effect of delaying, preventing or defeating a third party from
acquiring control over or merging with us.
In addition, sales of substantial amounts of common stock by our executive officers, directors and other employees, or their
affiliated entities, or the possibility of such sales, may adversely affect the price of the common stock and impede our ability to
raise capital through the issuance of equity securities. Though such persons are subject to certain restrictions on sales of our
common stock by applicable securities laws and our internal policies and procedures, they may nonetheless sell a substantial
number of shares over time during open trading windows.
A significant portion of the compensation of our managing directors is paid in restricted stock units, and the shares we
expect to issue on the vesting of those restricted stock units could result in a significant increase in the number of shares of
common stock outstanding and if sold at vesting could cause the market price of our common stock to decline.
As part of annual bonus and incentive compensation, we award restricted stock units to managing directors and other
employees. Generally, restricted stock units are awarded in the first calendar quarter each year and as a result, generally vest
around the same time in the first calendar quarter of each year. We also award restricted stock units as a long-term incentive to
new hires at the time they join Greenhill. In February 2021, 1,474,940 restricted stock units vested related to awards granted in
prior years and net of the units that we settled for withholding taxes, 839,913 common shares were delivered to our managing
directors and other employees. To the extent that there are substantial sales of our common stock by our managing directors
and other employees in the days and weeks after the vesting of our restricted stock units, or the perception that such sales might
occur, the market price of our common stock could decline.
At February 22, 2021, 7,746,952, restricted stock units were outstanding. Each restricted stock unit represents the holder’s
right to receive one share of our common stock or a cash payment equal to the fair value thereof, at our election, following the
applicable vesting date. Awards of restricted stock units to our managing directors and other employees generally vest ratably
over a three to five-year period, with the first vesting on the first anniversary of the grant date, or do not vest until the fourth or
fifth anniversary of their grant date, when they vest in full, subject to continued employment on the vesting date. Shares will be
issued in respect of restricted stock units only under the circumstances specified in the applicable award agreements and the
equity incentive plan, and may be forfeited in certain cases. Vesting of restricted stock units will be accelerated and
immediately vested upon a participant’s death, disability or retirement, as defined in the relevant agreements. Assuming all of
the conditions to vesting are fulfilled, shares in respect of the restricted stock units that were outstanding as of February 22,
2021 are scheduled to be issued as follows: 499,063 additional shares in 2021, 2,818,792 shares in 2022, 1,825,214 shares in
2023, 1,240,556 shares in 2024, 1,039,797 shares in 2025, and 323,530 shares in 2026.
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The market price of our common stock is volatile and may decline
The price of our common stock may fluctuate widely, depending upon many factors, including the perceived prospects of
Greenhill and the financial services industry in general, differences between our actual financial and operating results and those
expected by investors, changes in general economic or market conditions, broad market fluctuations, the impact of increased
leverage on our financial position and the reduction in float as a result of our share repurchase plan. Since a significant portion
of the compensation of our managing directors and certain other employees is paid in restricted stock units, and our employees
rely upon the ability of share sales to generate additional cash flow, a decline in the price of our stock may adversely affect our
ability to retain key employees, including our managing directors. Similarly, our ability to recruit managing directors and other
professionals may be adversely affected by a decline in the price of our stock.
Employee misconduct could harm Greenhill and is difficult to detect and deter
There have been a number of highly publicized cases involving fraud, insider trading or other misconduct by employees in
the financial services industry in recent years, and we run the risk that employee misconduct could occur at Greenhill. For
example, misconduct by employees could involve the improper use or disclosure of confidential information, which could result
in regulatory sanctions and material fines, or insider trading, which could lead to criminal charges. Our advisory business often
requires that we deal with highly confidential information of great significance to our clients, the improper use of which may
have a material adverse impact on our clients. Any breach of our clients’ confidences as a result of employee misconduct may
harm our reputation and impair our ability to attract and retain advisory clients, which could adversely affect our business. We
also face the risk that our employees engage in work place misconduct, such as sexual harassment or discrimination, despite our
implementation of policies and training to prevent and detect misconduct. In addition to impairing our ability to attract and
retain clients, such misconduct may also impair our ability to attract and retain talent resulting in a materially adverse effect on
our business. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent
misconduct may not be effective in all cases.
In recent years, the U.S. Department of Justice and the SEC have also devoted greater resources to the enforcement of the
Foreign Corrupt Practices Act. In addition, the United Kingdom has significantly expanded the reach of its anti-bribery laws.
While we have developed and implemented policies and procedures designed to ensure strict compliance with anti-bribery and
other laws, such policies and procedures may not be effective in all instances to prevent violations. Any determination that we
or our employees have violated these laws or other applicable anti-corruption laws could subject us to, among other things, civil
and criminal penalties, material fines, profit disgorgement, injunction on future conduct, securities litigation and reputational
damage, any one of which could adversely affect our business prospects, financial position or the market value of our common
stock.
We may face damage to our professional reputation and legal liability to our clients and affected third parties if our
services are not regarded as satisfactory or if conflicts of interests should arise
As an independent investment banking firm, we depend to a large extent on our relationships with our clients and our
reputation for integrity and high-caliber professional services to attract and retain clients. As a result, if a client is not satisfied
with our services, it may be more damaging in our business than in other businesses. Further, because we provide our services
primarily in connection with significant or complex transactions, disputes or other matters that usually involve confidential and
sensitive information or are adversarial, and because our work is the product of myriad judgments of our financial professionals
and other staff operating under significant time and other pressures, we may not always perform to the standards expected by
our clients. In addition, we may face reputational damage from, among other things, litigation against us, our failure to protect
confidential information and/or breaches of our cybersecurity protections or other inappropriate disclosure of confidential
information, including inadvertent disclosures.
We may experience negative publicity from time to time relating to our business and our people, regardless of whether the
allegations are valid. Our reputation and businesses may be adversely affected by negative publicity or information regarding
our businesses and personnel, whether or not accurate or true, that may be posted on social media or other Internet forums or
published by news organizations. The speed and pervasiveness with which information can be disseminated through these
channels, in particular social media, may magnify risks relating to negative publicity. Such negative publicity may adversely
affect our business in a number of ways, including whether potential clients choose to engage us and our ability to attract and
retain talent.
In addition, our clients are often concerned about conflicts of interest that may arise in the course of engagements. While we
have adopted various policies, controls and procedures to reduce the risks associated with the execution of transactions, the
rendering of fairness opinions and potential conflicts of interest, these policies may not be adhered to by our employees or be
effective in reducing these risks. Failure to adhere to these policies and procedures may result in regulatory sanctions or client
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litigation. We are unable to estimate the amount of monetary damages which could be assessed or reputational harm that could
occur as a result of any such regulatory sanction or client litigation.
As a financial advisor on significant transactions, we face substantial litigation risk
Our role as advisor to our clients on important mergers and acquisitions or restructuring transactions involves complex
analysis and the exercise of professional judgment, including rendering fairness opinions in connection with mergers and other
transactions. Our activities may subject us to the risk of significant legal liabilities to our clients and aggrieved third parties,
including shareholders of our clients, who could bring actions against us. In recent years, the volume of claims and amount of
damages claimed in litigation and regulatory proceedings against financial advisors has been increasing, including claims for
aiding and abetting client misconduct. Moreover, judicial scrutiny and criticism of investment banker performance and
activities has increased, creating risk that our services in a litigated transaction could be criticized by the court. These risks
often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of
time.
Our engagements typically include broad indemnities from our clients and provisions to limit our exposure to legal claims
relating to our services, but these provisions may not protect us fully or may not be enforceable in all cases. The effectiveness
of these indemnities in limiting our financial exposure is also dependent on our client’s capacity to pay the amounts claimed.
As a result, we may incur significant legal expenses in defending against litigation. Substantial legal liability or significant
regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which
could seriously harm our business prospects. We depend to a large extent on our business relationships and our reputation for
integrity and high-caliber professional services to attract and retain clients. As a result, allegations of improper conduct by
private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and
press speculation about us, whether or not valid, may harm our reputation, which may be more damaging to our business than to
other types of businesses.
We are subject to extensive regulation in the financial services industry, which creates risk of non-compliance that could
adversely affect our business and reputation
As a participant in the financial services industry, we are subject to extensive regulation in the United States, Europe,
Australia and Asia. Many of the requirements imposed by our regulators are designed to ensure the integrity of the financial
markets and to protect customers and other third parties who deal with us and are not designed to protect our stockholders.
Consequently, these regulations may serve to limit our activities, including through net capital, customer protection and market
conduct requirements. There can be no assurance that new regulations will not be imposed that may materially adversely affect
our business, financial condition or results of operation.
In addition, as we expand our international operations by opening new offices outside the United States or by carrying out
transactions or private placement activities internationally, we are increasingly subject to new regulatory requirements.
Regulatory and self-regulatory agencies, as well as securities commissions, in various jurisdictions in which we do business are
empowered to conduct periodic examinations and administrative proceedings that can result in censure, fine, issuance of cease
and desist orders or suspension of personnel or other sanctions, including revocation of our license or registration or the
registration of any of our regulated subsidiaries. Even if a sanction imposed against us or our personnel is small in monetary
amount, the adverse publicity arising from the imposition of sanctions against us by regulators could harm our reputation and
cause us to lose existing clients or fail to gain new clients.
Furthermore, if the existing regulations under which we operate are modified or interpreted differently, or new regulations
are issued and we are unable to comply with these regulations or interpretations, our business could be adversely affected or the
cost of compliance may make it difficult to expand into new international markets. Additionally, our competitiveness in
international markets may be adversely affected by regulations requiring, among other things, the awarding of contracts to local
contractors, the employment of local citizens, the purchase of services from local businesses, or requiring local ownership.
Compliance with any new laws or regulations could also make our compliance efforts more difficult and expensive, affect
the manner in which we conduct our business and adversely affect our profitability.
Legal restrictions on our clients may reduce the demand for our services
New laws or regulations, or changes in enforcement of existing laws or regulations, applicable to our clients may also
adversely affect our businesses. For example, changes in antitrust enforcement could affect the level of mergers and
acquisitions activity, and changes in regulation could restrict the activities of our clients and their need for the types of advisory
services that we provide to them.
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Uncertainty regarding Brexit and the outcome of future arrangements between the European Union and the United
Kingdom may adversely affect our business
We have a presence in certain European Union countries, including the U.K. On January 31, 2020, the U.K. withdrew from
the European Union, commonly referred to as "Brexit". The terms of the withdrawal agreement between the European Union
and the U.K. provided for a transition period for the European Union and the U.K. to negotiate and agree to a framework for
their future relationship, which expired on December 31, 2020. While a trade deal was agreed there remains uncertainty with
regards to the nature of the long-term relationship between the European Union and the U.K.. Such uncertainty could adversely
affect European and worldwide economic and market conditions, contribute to instability in global financial and foreign
exchange markets, and introduce significant legal uncertainty and potentially divergent national laws and regulations.
Notwithstanding the agreement reached, conditions arising from Brexit could adversely affect our U.K. business and
operations, including by reducing the volume or size of mergers, acquisitions, divestitures and other strategic corporate
transactions on which we seek to advise, and further, likely increasing our legal, compliance and operational costs. We
incorporated a new German entity in 2019 in order to continue to provide investment banking services throughout the European
Union and submitted an application to BaFin requesting such permission. We received approval of our application from BaFin
and commenced providing investment banking services from our offices in Frankfurt, Madrid and Paris through our new
German partnership, Greenhill Europe GmbH & Co. KG, with effect from October 1, 2020.
The value of our goodwill may decline in the future, which could adversely affect our financial results
A significant decline in our expected future cash flows, a significant adverse change in the business climate, a sustained
economic downturn or slower growth rates, any or all of which could be materially affected by many of the risk factors
discussed herein, may require that we take charges in the future related to the impairment of goodwill. If we were to conclude
that a future write-down of our goodwill and other intangible assets is necessary, we would record the appropriate charge which
could have a material adverse effect on our results of operations, our ability to make share repurchases or pay dividends and the
market value of our common stock.
Our failure to prevent a cyber-security attack may disrupt our businesses, harm our reputation, result in losses or limit
our growth
Our clients typically provide us with sensitive and confidential information, which in the course of due diligence may
include data of customers of our clients, including personal information. We rely heavily on our technological and
communications infrastructure to securely process, transmit and store such information among our locations around the world
and with our professional staff, clients, alliance partners and vendors. If any of our technology systems, or those of our third-
party service providers (or providers to such third-party service providers) do not operate properly or are disabled, we could
suffer financial loss, a disruption of our businesses, regulatory intervention or reputational damage. Our information systems
and technology may not continue to be able to accommodate our growth, and the cost of maintaining such systems may
increase from its current level. Such a failure to accommodate growth, or an increase in costs related to such information
systems, could have a material adverse effect on us.
We may also encounter attempted security breaches and cyber-attacks on our critical data, and we may not be able to
anticipate or prevent all such attacks. We are not aware of any such occurrence that may have had a material impact to date, but
a successful breach of our systems, or the systems used by our clients and other third parties, could lead to shutdowns or
disruptions of our systems or third-party systems on which we rely and potential unauthorized disclosure of sensitive or
confidential information. Breaches of our or third-party network security systems on which we rely could involve attacks that
are intended to obtain unauthorized access to our proprietary information, destroy data or disable, degrade or sabotage our
systems, often through the introduction of computer viruses, cyber-attacks and other means and could originate from a wide
variety of sources, including unknown third parties outside the firm. We may incur increasing costs in an effort to minimize
these risks and could be held liable for any security breach or loss. Although we have policies and procedures designed to
prevent or limit the likelihood and effect of the possible failure, interruption or security breach of our information and
communication systems, there can be no assurance that any such failure, interruption or security breach will not occur or, if
they do occur, that they will be adequately addressed, especially because the cyber-attack techniques used change frequently or
are not recognized until launched. As cyber threats continue to multiply, become more sophisticated and threaten additional
aspects of our businesses, we may also be required to expend additional resources on information security and compliance costs
in order to continue to modify or enhance our protective measures or to investigate and remediate any information security
vulnerabilities or other exposures. The occurrence of any failure, interruption or security breach of our information or
communication systems could damage our reputation, result in a loss of business, subject us to additional regulatory scrutiny, or
expose us to civil litigation and possible financial liability.
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We depend on our headquarters in New York City, where a large number of our personnel are located, for the continued
operation of our business. A disaster or a disruption in the infrastructure that supports our businesses, including catastrophic
events such as hurricanes or other larger scale catastrophes, a disruption involving electronic communications or other services
used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material
adverse impact on our ability to continue to operate our business without interruption. The incidence and severity of
catastrophes and other disasters are inherently unpredictable. Our disaster recovery programs may not be sufficient to mitigate
the harm that may result from such a disaster or disruption. Although we carry insurance to mitigate our exposure to certain
catastrophic events, our insurance and other safeguards might only partially reimburse us for our losses, if at all, and will not
cover related reputational harm.
In response to the COVID-19 pandemic the local governments of most jurisdictions in which we operate enacted “work from
home” requirements for the vast majority of our employees, as well as our clients. Until the health risks related to the pandemic
are mitigated we expect that many of our employees will work remotely and rely heavily on technology to perform their jobs.
As a result we have increased operational risks arising from our reliance on remote communications, virtual meetings and other
forms of technology. These risks include elevated cybersecurity risks, risks associated with the protection of Company and
client confidential communications, and risk of reliance on certain technology we employ for virtual meetings or other remote
communications systems.
Evolving data privacy regulations, including the European Union’s General Data Protection Regulation (“GDPR”), may
subject us to significant penalties
As part of our business, we manage, utilize and store sensitive or confidential client or employee data, including personal
data. As a result, we are subject to various risks and costs associated with the collection, handling, storage and transmission of
sensitive information, including those related to compliance with U.S. and foreign data collection and privacy laws and other
contractual obligations, as well as those associated with the compromise of our systems collecting such information. These laws
and regulations are increasing in complexity and number. For example, in May 2018, the European Union’s GDPR came into
effect, and changed how businesses can collect, use and process the personal data of European Union residents. The GDPR has
extraterritorial effect and imposes a mandatory duty on businesses to self-report personal data breaches to authorities, and,
under certain circumstances, to affected individuals. The GDPR also grants individuals the right to erasure (commonly referred
to as the "right to be forgotten"), which may put a burden on us to erase records upon request. Compliance with the GDPR’s
requirements may increase our legal, compliance, and operational costs. Non-compliance with the GDPR’s requirements can
result in significant penalties, which may have a material adverse effect on our business, expose us to legal and regulatory costs,
and impair our reputation.
Other jurisdictions, including certain U.S. states and non-U.S. jurisdictions where we conduct business, have also enacted or
are considering data privacy legislation. For example, the California Consumer Privacy Act of 2018 which went into effect on
January 1, 2020, imposes certain requirements with respect to personal information of California residents. Increasingly
numerous, fast-changing, and complex legislation related to data privacy may result in greater compliance costs, heightened
regulatory scrutiny, and significant penalties. New and changing regulations may increase compliance costs such that they
hamper our ability to expand into new territories.
We could change our existing dividend policy in the future, which could adversely affect our stock price
We began paying quarterly cash dividends to holders of record of our common stock in June 2004. Since we announced the
recapitalization in 2017, we have made quarterly dividend payments of $0.05 per share. In February 2021, our Board of
Directors declared a dividend of $0.05 per share to be paid on March 17, 2021 to common stockholders of record on March 3,
2021. We intend to continue to pay quarterly dividends, subject to capital availability, cash flows and periodic determinations
that cash dividends are in the best interest of our stockholders. Future declaration and payment of dividends on our common
stock is at the discretion of our Board of Directors and depend upon, among other things, general financial conditions, capital
requirements and surplus, cash flows, debt service obligations, our recent and expected future operations and earnings,
contractual restrictions and other factors as the Board of Directors may deem relevant. For example, in the event that there is
deterioration in our financial performance and/or our liquidity position, a downturn in global economic conditions or
disruptions in the credit markets and our ability to obtain financing, our Board of Directors could decide to further reduce or
even suspend dividend payments in the future. As a Delaware corporation, we are required to meet certain surplus thresholds
for our Board of Directors to declare a dividend in accordance with the Delaware General Corporation Law. We cannot provide
assurance that we will continue to declare dividends at all or in any particular amounts. A reduction or suspension in our
dividend payments could have a negative effect on our stock price.
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The COVID-19 pandemic may exacerbate many of the risks described above
It is uncertain how long and the extent to which our business may be negatively impacted by COVID-19 and the associated
economic and market uncertainty. During periods of unfavorable market or economic conditions it is expected that the volume
of global M&A transactions will be volatile and the timing of transaction closings may be extended. Further, in the period
following an economic downturn, the volume and value of M&A transactions typically takes time to recover and lags a
recovery in market and economic conditions. Our results of operations were impacted during fiscal year 2020 and may be
further adversely affected if there are further disruptions to the financial markets as a result of a prolonged recovery from the
global pandemic.
The extent to which the COVID-19 pandemic and the related global economic crisis further adversely affects our business,
results of operations and liquidity and financial condition, will depend on the future developments that are highly uncertain and
beyond our control. These developments include the duration, spread and severity of the pandemic and any recovery period; the
distribution, public acceptance and widespread use and effectiveness of vaccines against COVID-19; the actions taken to
contain the spread of the disease or mitigate its impact; and future actions taken by governmental authorities, central banks and
other third parties in response to the pandemic. We continue to monitor this dynamic situation, including guidance and
regulations issued by U.S. and other governmental authorities
The failure to contain or the further spread of the COVID-19 outbreak could materially adversely impact us due to a
reduction in the demand for our services, delay of client decisions to transact in an uncertain business environment or possible
deterioration in our clients’ financial condition and their ability to pay for our services. Without adequate generation of
revenues to meet our operating needs, we would not have sufficient cash flow to pay interest and principal on our debt
obligations. Further, due to our existing debt obligations, we have limitations on our additional financial flexibility and our
failure to fund or refinance our existing debt obligations could result in default.
Finally, if the health and welfare of client-facing professionals or executive officers providing critical corporate functions
deteriorates, or the number of employees ill with COVID-19 becomes significant, our ability to win business, provide client
services and manage operations could be materially adversely affected.
Cautionary Statement Concerning Forward-Looking Statements
We have made statements under the captions “Business”, “Risk Factors”, and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and in other sections of this Annual Report on Form 10-K that are forward-
looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”,
“should”, “could”, “expect”, “plan”, “outlook”, “potential”, “anticipate”, “believe”, “estimate”, “intend”, “predict”, “potential”
or “continue”, the negative of these terms and other comparable terminology. These forward-looking statements, which are
subject to risks, uncertainties and assumptions about us, may include current views and projections of our operations and future
financial performance, growth strategies and anticipated trends in our business. These statements are only predictions based on
our current expectations and projections about future events. There are important factors that could cause our actual results,
level of activity, performance or achievements to differ materially from the results, level of activity, performance or
achievements expressed or implied by the forward-looking statements including, but not limited to:
• our ability to attract and retain key talent;
• our ability to attract and maintain clients;
• the level of merger and acquisition activity;
• general market or economic conditions (for example, economic developments, changes in government or central bank
policy, or the occurrence of an epidemic or spread of pandemic diseases);
• the competitive environment in our industry;
• our ability to manage and integrate strategic investments and acquisitions;
• political, economic, legal, regulatory, operational, and other risks presented by our foreign business operations;
• risks and uncertainties that affect whether parties are able to complete a given transaction;
• our ability to make payments on, or repay or refinance, our debt, and to fund other contractual obligations;
• events that adversely affect our reputation, such as employee misconduct, litigation, negative press, failure to protect
confidential information, cybersecurity breaches, or conflicts of interest that arise in the course of an engagement;
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• legal and regulatory costs and risks, including those related to litigation, compliance, regulatory proceedings,
enforcement actions, and regulatory scrutiny;
• the impact of any introduction of or any changes in laws, regulations, rules or government policies on our business or
our clients;
• international trade policies and conditions;
• the cost and resilience of our information systems, technology, and communications infrastructure;
• cybersecurity risks;
• catastrophic events, particularly those impacting our headquarters in New York City;
• the impact of the COVID-19 pandemic on our business operations; and
• fluctuations in our stock price due to market conditions or other factors.
The risks presented above are not exhaustive. Other sections of this Annual Report on Form 10-K may include additional
factors which could impact our business and financial performance. In particular, you should consider the numerous risks
outlined in the foregoing paragraphs of this “Risk Factors” section.
Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time
and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot give assurances
that those expectations will be achieved, nor can we guarantee future results, level of activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-
looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty
to update or review any of these forward-looking statements after the date of this filing to conform our prior statements to
actual results or revised expectations, whether as a result of new information, future developments or otherwise.
Item 1B. Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of the year
relating to our periodic or current reports under the Exchange Act.
Item 2. Properties
We do not own any real estate property. Each of our 15 offices occupy leased office space.
Currently our principal executive office is located at 1271 Avenue of the Americas, New York, N.Y.
In terms of square footage, our other large offices include Chicago, London, Frankfurt and Sydney. We also have smaller
leased office space in other cities around the world, and generally these leases may be extended or renewed.
Item 3. Legal Proceedings
We are from time to time involved in legal proceedings incidental to the ordinary course of our business. We do not believe
any such proceedings will have a material effect on our results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS
In 2020, our executive officers were Scott L. Bok (Chief Executive Officer), Kevin M. Costantino (President), David A.
Wyles (President), Harold J. Rodriguez, Jr. (Chief Financial Officer, Chief Operating Officer, Chief Compliance Officer and
Treasurer) and Gitanjali Pinto Faleiro (General Counsel). Set forth below is a brief biography of each executive officer.
Scott L. Bok, 61, has served as Chief Executive Officer since April 2010, served as Co-Chief Executive Officer between
October 2007 and April 2010, and served as our U.S. President between January 2004 and October 2007. He has also served as
a member of our Management Committee since its formation in January 2004. In addition, Mr. Bok has been a director of
Greenhill & Co., Inc. since its incorporation in March 2004. Mr. Bok joined Greenhill as a Managing Director in February
1997. Before joining Greenhill, Mr. Bok was a Managing Director in the mergers, acquisitions and restructuring department of
Morgan Stanley & Co., where he worked from 1986 to 1997, based in New York and London. From 1984 to 1986, Mr. Bok
practiced mergers and acquisitions and securities law in New York with Wachtell, Lipton, Rosen & Katz. Mr. Bok also served
as a member of the Board of Directors of Iridium Communications Inc., from 2009 to 2013.
Kevin M. Costantino, 44, has served as President since 2015, and also is a member of our Management Committee and
serves as Co-Head of U.S. M&A. Prior to his appointment as President, Mr. Costantino served as Co-Head of our Australian
business. Mr. Costantino joined Greenhill’s New York office in 2005, to which he relocated in July 2015 after a second stay in
our Sydney office. He also spent time in our Chicago office following its 2009 opening, and was involved in our expansion to
Brazil two years ago. Before joining Greenhill, Mr. Costantino was a mergers and acquisitions lawyer with Wachtell, Lipton,
Rosen & Katz in New York.
David A. Wyles, 52, has served as President since 2015, and also is a member of our Management Committee. Prior to his
appointment as President, Mr. Wyles served as Co-Head of our European business. Mr. Wyles joined Greenhill in 1998 as part
of the original team from Baring Brothers that founded our London office, and was involved in the opening of our Frankfurt
office two years later. He is one of the leading M&A advisors in the UK market, and has also led numerous major transaction
assignments in Continental Europe and globally, including most of our assignments involving China.
Harold J. Rodriguez, Jr., 65, has served as our Chief Financial Officer since August 2016, as Chief Operating Officer since
January 2012, as Chief Administrative Officer from March 2008 until January 2012 and as Managing Director — Finance,
Regulation and Operations from January 2004 to March 2008. Mr. Rodriguez also serves as our Chief Compliance Officer and
Treasurer and is a member of our Management Committee. Mr. Rodriguez is the Chief Financial Officer of Greenhill’s
operating subsidiaries and from November 2000 through December 2003 was Chief Financial Officer of Greenhill. Mr.
Rodriguez has served as the Chief Financial Officer of Greenhill Capital Partners LLC since he joined Greenhill in June 2000.
Prior to joining Greenhill, Mr. Rodriguez was Vice President — Finance and Controller of Silgan Holdings, Inc., a major
consumer packaging goods manufacturer, from 1987 to 2000. From 1978 to 1987, Mr. Rodriguez worked at Ernst & Young,
where he was a senior manager specializing in taxation.
Gitanjali Pinto Faleiro, 43, was appointed as an executive officer on January 30, 2020 by the Board. Ms. Faleiro joined the
firm in September 2019 and serves as Greenhill's General Counsel and Corporate Secretary. She is also a member of our
Management Committee. Prior to joining Greenhill, Ms. Faleiro was a Vice President and Associate General Counsel in the
Legal department at Goldman Sachs where she advised the Securities Division and Investment Banking Division on
transactional, legal, regulatory and reputational matters in relation to the Volcker Rule and other broker-dealer regulations. Ms.
Faleiro also served as secretary to certain firm-wide and division-wide committees. From 2006 to 2012, Ms. Faleiro was a
trainee solicitor and then Solicitor (England & Wales) at Linklaters, LLP in London, from 2012 to 2015, Ms. Faleiro was an
attorney at Latham & Watkins, LLP in New York, and from 2000 to 2004, Ms. Faleiro was an analyst and then associate in the
Securities Division at Goldman Sachs in New York.
Our Board of Directors currently has six members, two of whom are employees (Robert F. Greenhill and Scott L. Bok) and
four of whom are independent (Steven F. Goldstone, Meryl D. Hartzband, John D. Liu and Karen P. Robards). The Board has
also nominated Kevin Ferro for election by the shareholders at our annual meeting scheduled for April 27, 2021. A brief
biography of each of Messrs. Greenhill, Goldstone and Liu and Mses. Hartzband and Robards is set forth below.
Robert F. Greenhill, 84, our Founder and Chairman Emeritus, served as our Chairman from 1996 to 2018, and as our Chief
Executive Officer from 1996 to 2007. In addition, Mr. Greenhill has been a director of Greenhill & Co., Inc. since its
incorporation in March 2004. Prior to founding and becoming Chairman of Greenhill, Mr. Greenhill was Chairman and Chief
Executive Officer of Smith Barney Inc. and a member of the Board of Directors of the predecessor to the present Travelers
Corporation (the parent of Smith Barney) from June 1993 to January 1996. From January 1991 to June 1993, Mr. Greenhill was
president of, and from January 1989 to January 1991, a vice chairman of, Morgan Stanley Group, Inc. Mr. Greenhill joined
Morgan Stanley in 1962 and became a partner in 1970. In 1972, Mr. Greenhill directed Morgan Stanley’s newly-formed
mergers and acquisitions department. In 1980, Mr. Greenhill was named director of Morgan Stanley’s investment banking
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division, with responsibility for domestic and international corporate finance, mergers and acquisitions, merchant banking,
capital markets services and real estate. Also in 1980, Mr. Greenhill became a member of Morgan Stanley’s management
committee.
Steven F. Goldstone, 75, has served on our Board of Directors since July 2004 and has also served as our Lead Independent
Director since January 2016. He currently manages Silver Spring Group, a private investment firm. From 1995 until his
retirement in 2000, Mr. Goldstone was Chairman and Chief Executive Officer of RJR Nabisco, Inc. (which was subsequently
named Nabisco Group Holdings following the reorganization of RJR Nabisco, Inc.). Prior to joining RJR Nabisco, Inc., Mr.
Goldstone was a partner at Davis Polk & Wardwell, a law firm in New York City. He joined the Board of Directors of
ConAgra Foods, Inc., in 2003 and was appointed the non-executive Chairman in 2005, retaining that position until his
retirement in October 2018. Mr. Goldstone served as a member of the Board of Directors of Trane, Inc. (f/k/a American
Standard Companies, Inc.) from 2002 until 2008 and as a member of the Board of Directors of Merck & Co. from 2008 until
2012. Mr. Goldstone has also served as a member of the Board of Directors of The Chefs’ Warehouse, Inc. since March 2016.
Meryl D. Hartzband, 66, has served on our Board of Directors since July 2018. Ms. Hartzband currently serves on the Board
of Directors of Everest Re Group, Ltd., a publicly-traded insurance and reinsurance company listed on NYSE, and the Board of
Directors of Conning Holdings Limited, a leading global investment management firm. Past directorships include The
Navigators Group, Inc., ACE Limited, Travelers Property Casualty Corp., AXIS Capital Holdings Limited, Alterra Capital
Holdings Limited, and numerous portfolio companies of the Trident Funds. She was a founding partner of Stone Point Capital,
a private equity firm that focuses on investing in the global financial services industry. From 1999 to 2015, she served as the
firm’s Chief Investment Officer and as a member of the Investment Committees of the Trident Funds. Prior to that, she was a
Managing Director at J.P. Morgan Chase & Co., where, during a 16-year career, she specialized in managing private equity
investments in the financial services industry.
John D. Liu, 52, has served on our Board of Directors since June 2017. Since March 2008, Mr. Liu has been the chief
executive officer of Essex Equity Management, a financial services company, and managing partner of Richmond Hill
Investments, an investment management firm. Prior to that time, Mr. Liu was employed for 12 years by Greenhill until March
2008 in positions of increasing responsibility, including as chief financial officer from January 2004 to March 2008 and as co-
head of U.S. Mergers and Acquisitions from January 2007 to March 2008. Earlier in his career, Mr. Liu worked at Wolfensohn
& Co. and was an analyst at Donaldson, Lufkin & Jenrette. Mr. Liu also serves as a member of the Board of Directors of
Whirlpool Corporation.
Karen P. Robards, 70, has served on our Board of Directors since April 2013. Since 1987, Ms. Robards has been a principal
of Robards & Company, LLC, a consulting and private investment firm. From 1976 to 1987, Ms. Robards was an investment
banker at Morgan Stanley where she served as head of its healthcare investment banking activities. Ms. Robards currently
serves as Co-Chair of the Fixed Income Board at BlackRock and a member of the Audit Committee of the BlackRock Fixed
Income Funds. Ms. Robards served as a member of the Board of Directors of AtriCure, Inc., a medical device company, from
2000 to May 2017. From 1996 to 2005, Ms. Robards served as a director of Enable Medical Corporation, a developer and
manufacturer of surgical instruments, which was acquired by AtriCure, Inc. in 2005.
21
PART II
Item 5. Market for Registrant’s Common Stockholders’ Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The New York Stock Exchange is the principal market on which our common stock (ticker: GHL) is traded.
As of February 22, 2021, there were 4 holders of record of our common stock. The majority of our shares are held in street
name by diversified financial broker dealers which are not counted as “record” holders.
22
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with
the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent we specifically
incorporate it by reference into such filing. Our stock price performance shown in the graph below is not indicative of future
stock price performance.
COMPARES 5-YEAR CUMULATIVE TOTAL RETURN AMONG GREENHILL & CO.,
INC., S&P 500 INDEX AND S&P FINANCIAL INDEX
ASSUMES $100 INVESTED ON DECEMBER 31, 2015
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2020
23
GHLS&P 500S&P 500 Financial IndexDec-15Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19Mar-20Jun-20Sep-20Dec-204080120160 Share Repurchases in the Fourth Quarter of 2020
Period
October 1 – October 31..................................
November 1 – November 30..........................
December 1 – December 31...........................
Total...............................................................
Total Number of
Shares Repurchased
(1)
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares that
May Yet Be
Purchased under the
Plans or Programs
(1)
(2)
—
—
—
—
$0.00
$0.00
$0.00
— $
—
—
— $
36,956,193
36,956,193
—
—
_____________________________________________
(1) Excludes 21,185 common stock equivalents (e.g., vesting restricted stock units) that we are deemed to have repurchased
in the fourth quarter of 2020 at an average price of $10.05 per share from employees in conjunction with the payment of
withholding tax liabilities in respect of stock delivered to employees in settlement of restricted stock units. For the fiscal
year 2020, the table excludes 764,529 common stock equivalents we are deemed to have repurchased at an average price
of $19.42 per share from employees in conjunction with the payment of withholding tax liabilities in respect of stock
delivered to employees in settlement of restricted stock units
(2) For the year ended December 31, 2020, the Board of Directors authorized repurchases of our common stock and common
stock equivalents (e.g., vesting restricted stock units) of $60.0 million. That authorization expired as of December 31,
2020. In February 2021, our Board of Directors authorized $50.0 million in purchases of shares and share equivalents (via
tax withholding on vesting of restricted stock units) through January 2022.
24
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Greenhill is a leading independent investment bank that provides financial and strategic advice on significant domestic and
cross-border mergers and acquisitions, divestitures, restructurings, financings, capital raising and other transactions to a diverse
client base, including corporations, partnerships, institutions and governments globally. We serve as a trusted advisor to our
clients throughout the world on a collaborative, globally integrated basis from our offices in the United States, Australia,
Canada, France, Germany, Hong Kong, Japan, Singapore, Spain, Sweden and the United Kingdom.
We were established in 1996 by Robert F. Greenhill, the former President of Morgan Stanley and former Chairman and
Chief Executive Officer of Smith Barney. Since our founding, Greenhill has grown significantly, by recruiting talented
managing directors and other senior professionals, acquiring complementary advisory businesses and training, developing and
promoting professionals internally. We have expanded beyond merger and acquisition advisory services to include financing,
restructuring, and private capital advisory services, and we have expanded the breadth of our sector expertise to cover
substantially all major industries. Since the opening of our original office in New York, we have expanded globally to 15
offices across four continents.
Over our 25 years as an independent investment banking firm, we have sought to opportunistically recruit new managing
directors with a range of industry and transaction specialties, as well as high-level corporate and other relationships, from major
investment banks, independent financial advisory firms and other institutions. We also have sought to expand our geographic
reach both through recruiting managing directors in new locations and through strategic acquisitions, such as our acquisition of
Caliburn Partnership Pty Limited (now Greenhill Australia) in Australia in 2010. Additionally, we expanded the breadth of our
advisory services through our acquisition in 2015 of Cogent, which extended our services to private capital advisory related to
the secondary fund placement market. More recently, we have recruited a number of managing directors focused on financing
and restructuring advisory services. Through our recruiting and acquisition activity, we have significantly increased our
geographic reach by adding offices in the United States, United Kingdom, Germany, Canada, Japan, Australia, Sweden, Hong
Kong, Spain, Singapore and France.
We intend to continue our efforts to recruit new managing directors with industry sector experience and/or geographic reach
who can help expand our advisory capabilities. While we paused our recruiting efforts for most of 2020 due to the uncertainties
associated with COVID-19 and the inability of new hires to travel and actively engage in in-person meetings and other business
development, we enter 2021 with an active pipeline of prospects with industry sector and regional capabilities. It is our
objective to achieve increased productivity by increasing managing director headcount in high fee areas like M&A in the largest
markets. We had 70 client facing managing directors as of December 31, 2020.
Business Environment and Outlook /Factors Affecting Our Results
Impact of COVID-19 and Other Recent Developments. During 2020, COVID-19 became a global pandemic of extraordinary
proportion and impact. In response, most governmental authorities issued stay-at-home orders, proclamations and/or directives
aimed at minimizing the spread of the pandemic. At times these directives were eased in a number of jurisdictions only to have
additional directives issued in response to a resurgence of the pandemic in those same jurisdictions. Globally, the response by
governmental authorities has differed by jurisdiction with some jurisdictions issuing additional and more restrictive
proclamations and/or directives while other jurisdictions are permitting workers back to their workplaces. For us, the majority
of our employees worked remotely during the period from March through June 2020. Since then, some of our employees have
begun a gradual return to our office locations, in compliance with local government guidelines, while in other jurisdictions our
employees continued to work from home. For those employees who have been working remotely, they have successfully
utilized technology to employ virtual and secure cloud-based systems to continue communicating, collaborating and conducting
client business in this new environment. We continue to monitor local government mandates in determining our office re-
openings, re-closures and work-related travel.
As a result of the global pandemic, there was significant disruption and volatility in the domestic and international
economies and financial markets from early 2020 until the third quarter. As a financial services firm, we are materially affected
by conditions in the global financial markets and economic conditions throughout the world. During periods of unfavorable
market or economic conditions it is expected, and we have seen, that the volume of global M&A transactions can be volatile
and the timing of transaction closings may be extended or disrupted, with some announced transactions being terminated.
In response to the impact that the global pandemic had on global economies both the U.S. federal government and most
foreign governmental institutions undertook unprecedented fiscal and monetary stimulus which resulted in a broad recovery of
all financial markets by mid year. Although we were impacted beginning in the first quarter of 2020 and continuing into the
third quarter by the unfavorable market conditions that COVID-19 caused on our business, starting in the third quarter we have
25
seen an increase in new assignment activity for M&A as compared to the same period last year. We currently see a favorable
environment for our M&A business due to high equity valuations, low borrowing costs, substantial corporate and private equity
buying power and a variety of other factors. However, we cannot estimate the speed at which the transactions will occur or the
stability of the financial markets given the expected challenges of a recovery from the global pandemic.
Since the early stages of the global pandemic the activity of our financing advisory and restructuring business, which
provides financing, restructuring and bankruptcy advice to companies in financial distress or their creditors or other
stakeholders, has increased substantially compared to prior years. This increase in activity resulted from both an increase in
assignments due to greater market opportunities arising as a result of the pandemic’s impact on many businesses and an
increase in the size of our restructuring team, which was significantly expanded over the past two years. While we have
realized an increase in restructuring advisory and completion fees in 2020 as compared to the prior year, we have far fewer
restructuring bankers than M&A bankers and the additional revenue generated by the restructuring team was not enough to
offset the decline in M&A transaction revenue. Although the pace of restructurings has subsided from the frenetic pace in the
first half of 2020, as we look forward to 2021 we expect to benefit from the completion of numerous restructuring assignments
and expect our activities to be more focused on those industries and companies adversely affected by the continuing pandemic.
In addition, we are observing significant opportunities to advise on various kinds of debt and equity financings and expect those
assignments to provide meaningful revenue in 2021.
Our private capital advisory business was significantly impacted by the pandemic during 2020 and our transaction volume
was far below its level for 2019. The private capital advisory business is typically adversely impacted during periods of market
volatility which we experienced in the second and third quarters of 2020. Additionally, in late 2020, a number of managing
directors in our private capital advisory group, primarily in the U.S, departed the Firm. Our smaller European and Asian
operations, where we have seen a recent increase in activity, remain mostly unaffected by these departures. As we seek to
rebuild our U.S. team, we plan to focus on higher value added transactions with financial sponsors. Over the longer term, we
cannot be certain whether we will be able to recruit sufficient additional personnel to return the secondary market private capital
advisory business to pre-pandemic revenue levels.
The extent to which the COVID-19 pandemic and the related global economic crisis further adversely affects our business,
results of operations and liquidity and financial condition, will depend on the future developments that are highly uncertain and
beyond our control. These developments include the duration, spread and severity of the pandemic and any recovery period; the
distribution, public acceptance and widespread use and effectiveness of vaccines against COVID-19; the actions taken to
contain the spread of the disease or mitigate its impact; and future actions taken by governmental authorities, central banks and
other third parties in response to the pandemic. We continue to monitor this dynamic situation, including guidance and
regulations issued by U.S. and other governmental authorities.
In mid 2020, we exited Brazil by selling our business there to the local team for a nominal sum. In Brazil, we did not find the
kind of larger cross border opportunities we have found in other markets. As a result, particularly given the weakness of the
Brazilian currency, we generated modest dollar revenue and proved unable to generate a return on our investment in that
market. Accordingly, we expect this move to be modestly accretive to our productivity and profitability statistics going forward.
Global and Regional Transaction Activity. Economic conditions and global financial markets can materially affect our
financial performance. We are solely an advisory firm and our revenues are derived from fees we earn on advisory services
related to M&A, financing advisory and restructuring, and private capital advisory transactions. Throughout the global
pandemic, we have remained fully operational and continue to maintain client dialogues, win new assignments and assist clients
in getting to agreement and completion of important transactions.
The volume of global and regional transactional activity typically has a significant impact on our results of operations.
During 2020, we benefited from particularly strong results in our European M&A business and our U.S. restructuring business,
partially offset by a reduction in private capital advisory fees and lower transaction announcement and opinion fees. We also
benefited from a number of financing advisory roles that are neither traditional M&A nor traditional restructuring roles. Our
revenue for the year was highly concentrated in a few regions and sectors, as many regions and sectors were heavily impacted
by the pandemic and related constraints on economic activity. At the same time, the volume of announced and completed
transactions globally decreased by 8% and 5%, respectively, in 2020 as compared to 2019, while the number of announced and
completed transactions globally both increased by 6% in the same period, indicating that there was a greater volume of smaller
transactions in 2020 as compared to 2019.(1) Although transaction volume was down from last year, it increased significantly as
financial markets stabilized in the second half of the year and as we enter 2021 we have a favorable outlook for our business in
most of the jurisdictions in which we operate.
Competition. We operate in a highly competitive environment where there are generally no long-term contracted sources of
revenue. Each revenue-generating engagement is separately awarded and negotiated. Our list of clients with whom there are
26
active engagements changes continually. To develop new client relationships, and to develop new engagements from historic
client relationships, we maintain, on an ongoing basis, active business dialogues with a large number of clients and potential
clients. We gain new clients each year through our business development initiatives, through recruiting additional senior
investment banking professionals who bring with them client relationships and expertise in certain industry sectors or
geographies, and through referrals from members of boards of directors, attorneys and other parties with whom we have
relationships. At the same time, we lose clients each year as a result of the sale or merger of a client, bankruptcy, a change in a
client’s senior management team, turnover of our senior banking professionals, competition from other investment banks and
other similar reasons.
For 2021, we are aiming to enhance our focus on advising financial sponsors on a wide variety of transactions. Historically
we focused heavily on serving public companies, and we have enjoyed great success with that constituency. However, over
time we have increased interaction with financial sponsors across our M&A, restructuring and private capital advisory
businesses. We are now aiming to organize those efforts in a more systematic way designed to generate more revenue, and we
have already put significant resources into this initiative. We are hopeful that it will be at least as successful as the restructuring
advisory team expansion that was our primary strategic focus of the past couple years.
_______________
(1) Excludes transactions less than $100,000 and withdrawn/canceled deals. Source: Thomson Financial as of January 31,
2021.
Results of Operations
The results of operations below focuses on the results of 2020 versus 2019. For a discussion of 2019 versus 2018, refer to
"Results of Operations" in our Form 10-K for the year ended December 31, 2019.
Revenues
The following table sets forth data relating to the Firm’s sources of revenues by client location.
North America......................................................................................
Europe...................................................................................................
Rest of World........................................................................................
For the Years Ended December 31,
2020
2019
2018
61 %
35 %
4 %
71 %
15 %
14 %
56 %
32 %
12 %
Sources of Revenues. Our revenues are derived from both corporate advisory services related to M&A, financings and
restructurings and private capital advisory services related to sales or capital raises pertaining to alternative assets. A majority of
our revenue is contingent upon the closing of a merger, acquisition, financing, restructuring, or other advisory transaction.
While fees payable upon the successful conclusion of a transaction generally represent the largest portion of our corporate
advisory fees, we also earn other fees, including on-going retainer fees, substantially all of which relate to non-success-based
strategic advisory, financing advisory and restructuring assignments, and fees payable upon the commencement of an
engagement or upon the achievement of certain milestones (such as the announcement of a transaction or the rendering of a
fairness opinion). Additionally, we generate private capital advisory revenues from sales of alternative assets in the secondary
market and from capital raises.
We do not allocate our revenue by type of advice rendered (M&A, financing advisory and restructuring, strategic advisory,
or other) because of the complexity of the assignments for which we earn revenue and because a single transaction can
encompass multiple types of advice. For example, a restructuring assignment can involve, and in some cases end successfully
in, a sale of all or part of the financially distressed company. Likewise, an acquisition assignment can relate to a financially
distressed target involved in or considering a restructuring, and an M&A assignment can develop from a relationship that we
had on a prior restructuring assignment, and vice versa. Further, debt and equity financing assignments can include participation
of both M&A and restructuring personnel. While we do separately allocate private capital advisory revenue, we expect
involvement of our M&A team as we increase our focus to higher value added assignments.
2020 versus 2019. For the year ended December 31, 2020, revenues were $311.7 million compared to $301.0 million in
2019, an increase of $10.7 million, or 4%. The increase in our 2020 revenues, as compared to 2019, resulted from an increase
in the number and scale of merger and acquisition transaction completion fees, particularly in Europe, and restructuring
27
advisory fees, partially offset by a reduction in private capital advisory fees and lower transaction announcement and opinion
fees.
By geographic region in 2020, North America, where we generated 61% of our revenues, remained our largest contributor.
Revenue from our North American clients decreased year over year on an absolute dollar basis and decreased as a percentage of
total revenues as a result of stronger performance in Europe in 2020 as compared to 2019. We derived 35% of our revenues in
Europe in 2020, and our absolute revenues in Europe more than doubled from 2019. We generated 4% of our revenues from
clients located in the rest of the world, reflecting decreases in both the percentage and absolute dollar amount of total revenues
due to both the impact of the pandemic in the Australian market and to a lesser exit from our exit of South America with our
sale of our Brazilian business in June 2020.
The ten largest fee-paying clients contributed 43% of our total revenues in 2020 and 35% in 2019. In 2020 one client
represented greater than 10% of our revenues. In 2019, a different client represented greater than 10% of our revenues.
Operating Expenses
We classify operating expenses as employee compensation and benefits expenses and non-compensation operating expenses.
Non-compensation operating expenses include the costs for occupancy and equipment rental, communications, information
services, professional fees, recruiting, travel and entertainment, insurance, depreciation and amortization, and other operating
expenses.
For the year ended December 31, 2020, total operating expenses were $256.4 million compared to $255.2 million in 2019.
The slight increase of $1.2 million principally resulted from an increase in our compensation and benefits expenses, nearly
offset by a decrease in our non-compensation expenses, both as described in more detail below. Our operating profit margin
was 18% for 2020 as compared to 15% in 2019.
The following table sets forth information relating to our operating performance metrics.
Employee compensation and benefits expenses................................... $
% of revenues........................................................................................
Non-compensation operating expenses.................................................
% of revenues........................................................................................
Total operating expenses.......................................................................
% of revenues........................................................................................
Total operating income.........................................................................
Operating profit margin........................................................................
Number of employees at year end........................................................
% increase (decrease) in employee count.............................................
Compensation and Benefits Expenses
For the Years Ended December 31,
2020
2019
2018
(in millions, except employee data)
194.1
$
178.9
$
195.2
62 %
62.3
20 %
256.4
82 %
55.2
18 %
358
(12) %
59 %
76.2
25 %
255.2
85 %
45.8
15 %
405
11 %
55 %
75.9
22 %
271.1
77 %
80.9
23 %
365
5 %
The largest component of our operating expenses is employee compensation and benefits expenses, which we determine
annually based on a percentage of revenues. The actual percentage of revenues, which we refer to as our compensation ratio, is
determined by management in consultation with the Compensation Committee at each year end and is based on factors such as
the relative level of revenues, anticipated compensation requirements to retain and reward our employees, the cost to recruit and
exit employees, the charge for amortization of restricted stock and deferred cash compensation awards and related forfeitures,
among others.
Our compensation and benefits expenses principally consist of base salary and benefits, annual incentive compensation
payable as cash bonus awards, including certain amounts that may be subject to clawback, and amortization of long-term
incentive compensation awards of restricted stock units and deferred cash compensation. Base salary and benefits are paid
ratably throughout the year. Annual cash bonuses, which are accrued throughout the year, are discretionary and dependent
upon a number of factors, including our financial performance, and are generally paid in the first quarter in respect of the
preceding year. Awards of restricted stock units and deferred cash compensation are discretionary and are amortized into
compensation expense (based upon the fair value of the award at the time of grant) during the service period over which the
28
award vests, which is generally three to five years for the majority of the awards. We estimate forfeitures as part of our
amortized deferred compensation cost based on an estimated rate of forfeitures which we periodically adjust to the actual rate of
forfeited awards. As we expense the restricted stock awards, the portion of the restricted stock units amortized is recorded
within stockholders’ equity in the consolidated statements of changes in stockholders' equity. The expense associated with our
annual and long-term incentive compensation can have a significant impact on compensation expense and may vary from year
to year.
2020 versus 2019. For the year ended December 31, 2020, our employee compensation and benefits expenses were $194.1
million, which reflected a 62% ratio of compensation to revenues. This amount compared to $178.9 million for 2019, which
reflected a 59% ratio of compensation to revenues. The increase in expense of $15.2 million, or 8%, was principally
attributable to higher incentive compensation. The increase in the ratio of compensation to revenues for 2020 as compared to
2019 principally resulted from an increase in the amount of accrued year-end bonuses.
As our compensation expense can fluctuate materially in any particular year depending upon the changes in headcount,
amount of revenues recognized, as well as other factors, the amount of compensation expense we recognize in any particular
year may not be indicative of compensation expense in future years.
Non-Compensation Operating Expenses
Our non-compensation operating expenses such as occupancy, depreciation, and information services are relatively fixed
year to year although they may vary depending upon changes in headcount, geographic locations and other factors. Other
expenses such as travel, professional fees and other operating expenses vary dependent on the level of business development,
recruitment, foreign currency movements and the amount of reimbursable client expenses, which are reported in full in both our
revenues and our operating expenses. It is management's objective to maintain consistent comparable non-compensation cost
year over year for each jurisdiction in which we operate. We monitor costs based on actual costs incurred in prior periods and
on headcount and seek to gain operating efficiencies when possible.
In 2020, we had minimal travel expenditures beginning in March and through year-end due to travel restrictions imposed as a
result of the COVID-19 pandemic. We expect that our travel spend will continue at a reduced level of travel for most of 2021.
Over the longer term we expect an increase in our aggregate travel spend but at a reduction from pre-COVID-19 levels and with
a higher rate of recovery through reimbursed client expenses. Effective January 2021, we relocated our New York
headquarters' location, which provided us with higher quality, more efficient, yet lower cost space. During the build out period
in 2020, we incurred rental expense on both our former space and our new space, which increased our aggregate occupancy
costs. Taking into account both the redundant rent costs and the rent expense reduction we incurred in 2020, we expect our
occupancy expense will decrease by approximately $7.0 million in 2021 as compared to 2020.
2020 versus 2019. For the year ended December 31, 2020, our non-compensation operating expenses of $62.3 million
compared to $76.2 million in 2019, representing a decrease of $13.9 million, or 18%. The decrease in non-compensation
expenses charges principally resulted from lower travel costs as a result of the global pandemic, lower recruiting costs as we
paused recruiting and the benefit of foreign currency gains, partially offset by the duplicate rent charge for new headquarters'
space during a portion of 2020 and a loss on the sale of our Brazilian business. Non-compensation operating expenses as a
percentage of revenues for 2020 decreased to 20% as compared to 25% in 2019 as a result of spreading lower non-
compensation operating costs over moderately higher revenues.
Non-compensation operating expenses can fluctuate as a result of a variety of factors referred to above. Accordingly, the
non-compensation operating expenses in any particular year may not be indicative of the non-compensation operating expenses
in future years.
Interest Expense
As part of our 2017 recapitalization plan we substantially increased our leverage and interest expense through the borrowing
of $350.0 million under a secured term loan facility, which bore interest at LIBOR plus 3.75%. On April 12, 2019, we
refinanced the term loan facility and increased the borrowing amount to $375.0 million and lowered our borrowing rate by 50
basis points to LIBOR plus 3.25% and eliminated the LIBOR floor.
2020 versus 2019. For the year ended December 31, 2020, we incurred interest expense of $15.5 million as compared to
$27.4 million in 2019. The decrease in interest expense of $11.9 million during 2020 related to decreases in the market
borrowing rate and our interest rate spread (which was reduced as part of our term loan refinancing in April 2019) and lower
average borrowings outstanding. Additionally, in 2019 we also incurred a non-recurring refinancing charge of $4.8 million.
29
The rate of interest on our borrowing is based on LIBOR and is variable. Accordingly, the amount of interest expense in any
particular year may not be indicative of the amount of interest expense in future years. After, 2021, the FCA will no longer
compel panel banks to contribute to LIBOR and there cannot be any assurance that the LIBOR phase out will not increase our
borrowing costs, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operation —
Liquidity and Capital Resources”.
Provision for Income Taxes
We are subject to federal, state and local corporate income taxes in the United States. In addition, our non-U.S. subsidiaries
are subject to income taxes in their local jurisdictions.
Since 2018 our U.S. federal income tax rate has been 21%. In addition to U.S. federal taxes, our effective tax rate is
comprised of foreign, state and local taxes. While state and local taxes generally increase our effective tax rate nominally,
foreign taxes can more substantially increase or decrease our effective tax rate depending on the amount of earnings we
generate in each jurisdiction. We have historically generated substantial earnings in low tax jurisdictions such as the United
Kingdom, and we have historically generated a smaller portion of our annual earnings in high tax jurisdictions such as
Australia, Germany and Japan.
Our effective rate is also impacted positively or negatively upon the vesting of restricted stock awards by a charge or benefit
for the tax effect of the difference between the grant price value and market price value at vesting of the awards. Based on the
market price on the date of the vesting of our annual awards, which represent a substantial portion of our awards vesting during
each year, the average grant price of the awards vesting in 2020 and 2019 exceeded the market price of our shares and we
incurred income tax charges of $3.3 million and $1.2 million for the years ended December 31, 2020 and 2019, respectively.
Further, during the first quarter of 2021, we incurred an income tax charge of approximately $0.8 million related to the vesting
of restricted stock units at a market price less than the average grant price. We are not able to predict our future share price, as a
consequence, we are not able to estimate the impact that this benefit or charge will have on our provision for income taxes in
future periods.
Although we cannot predict our estimated effective tax rate for future periods primarily due to the jurisdiction and amount of
earnings, which varies year over year, we expect that our effective tax rate will be around 25% over the next few years,
assuming our historical mix of foreign earnings and no changes in the existing tax law, and excluding the impact of the tax
charge/benefit resulting from the vesting of restricted stock awards.
In March 2020, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) was enacted in
response to the COVID-19 pandemic and included temporary changes to income and non-income based tax laws relating to net
operating loss carrybacks, increased interest deductibility and the timing of certain tax payments. We benefited from certain
provisions of the CARES Act in 2020, which slightly reduced our effective tax rate, but since these changes are temporary we
do not expect the CARES Act to impact our effective rate in future years.
2020 versus 2019. For the year ended December 31, 2020, the provision for income taxes was $8.4 million, reflecting an
effective rate of 21%, as compared to a provision for income taxes for the year ended December 31, 2019 of $7.4 million,
reflecting an effective rate of 40%. Our effective tax rate for 2020 benefited from the generation of a substantial portion of our
earnings from the U.K., which is a lower tax jurisdiction, and certain provisions of the CARES Act, partially offset by charges
related to the vesting of restricted stock unit awards vesting at a value less than the grant price. For 2019, our effective tax rate
was negatively impacted by our relatively low amount of pre-tax income, charges related to the vesting of restricted stock unit
awards vesting at a value less than the grant price, and the generation of a larger proportion of our earnings than usual from
foreign jurisdictions subject to higher tax rates.
The effective tax rate can fluctuate as a result of variations in the relative amounts of income earned and the tax rate imposed
in the tax jurisdictions in which we operate, among other factors. Accordingly, the effective tax rate in any particular year may
not be indicative of the effective tax rate in future years.
Geographic Data
For a summary of the total revenues, income before taxes and total assets by geographic region, see “Note 18 — Business
Information” to the consolidated financial statements.
30
Liquidity and Capital Resources
Our liquidity position, which consists of cash and cash equivalents, other significant working capital assets and liabilities,
debt and other matters relating to liquidity requirements and current market conditions, is monitored by management on a
regular basis. We retain our cash in financial institutions with high credit ratings and/or invest in short-term investments that are
expected to provide liquidity and as permitted under our credit facility. It is our objective to retain a global cash balance
adequate to service our forecast operating and financing needs. At December 31, 2020, we had cash and cash equivalents of
$112.7 million.
We generate substantially all of our cash from advisory fees. We use our cash primarily for recurring operating expenses, the
service of our debt, the repurchase of our common shares and other capital needs. Our recurring monthly operating
disbursements principally consist of base compensation expense, occupancy, travel and entertainment, and other operating
expenses. In addition, we generally make interest payments on our debt on a monthly basis. Our recurring quarterly and annual
disbursements consist of cash bonus payments, tax payments, debt service payments, dividend payments, and repurchases of
our common stock from our employees in conjunction with the payment of tax liabilities incurred on vesting of restricted stock
units. These amounts vary depending upon our profitability and other factors.
Because a portion of the compensation we pay to our employees is distributed in annual cash bonus awards (usually in the
first quarter of each year), our net cash balance is typically at its lowest level during the first quarter of each year and generally
accumulates from our operating activities throughout the remainder of the year. Our current liabilities primarily consist of
accounts payable, which are generally paid monthly, accrued compensation, which includes accrued cash bonuses that are
generally paid in the first quarter of the following year to the large majority of our employees, and current taxes payable. Our
current assets include accounts receivable, which we generally collect within 60 days, except for certain restructuring
transactions, where collections may take longer due to court-ordered holdbacks. At December 31, 2020, we had fees receivable
of $80.9 million.
In 2017, we announced a leveraged recapitalization to put in place a capital structure designed to enhance long term
shareholder value. In 2019, we refinanced the credit facility that was put in place at the time of the recapitalization and entered
into a $375.0 million five-year term loan B facility (“TLB”). We used a portion of the proceeds to repay in full the outstanding
principal balance of the existing credit facility of $319.4 million and pay fees and expenses, and received remaining net
proceeds of $48.3 million. We did not incur a prepayment premium in conjunction with the refinancing.
Borrowings under the TLB bear interest at either the U.S. Prime Rate plus 2.25% or LIBOR plus 3.25%. Our borrowing rates
in 2020 ranged from 3.4% to 5.0%. The FCA, which regulates LIBOR, has announced that it will not compel panel banks to
contribute to LIBOR after 2021. In November 2020, the ICE Benchmark Administration Limited announced a plan to extend
the date as of which most U.S. LIBOR values would cease being computed from December 31, 2021 to June 30, 2023.
Although financial regulators and industry working groups have suggested alternative reference rates, global consensus on
alternative rates is lacking. It is not possible to predict whether LIBOR will continue to be viewed as an acceptable market
benchmark or what rate or rates may become accepted alternatives to LIBOR. Although our credit agreement includes
alternative rate fallback provisions, there can be no assurance the LIBOR phase out will not increase the cost of capital.
The TLB requires quarterly principal amortization payments of $4.7 million (or $18.8 million annually), which began on
September 30, 2019 and continue through March 31, 2024, with the remaining balance ($285.9 million assuming the payment
of only quarterly principal amortization payments during the term) due at maturity on April 12, 2024. During the year ended
December 31, 2020, the Company made aggregate principal payments on the TLB of $38.8 million. Such payments were
applied to and made in advance of the quarterly installments due in 2020 and 2021. As of December 31, 2020, the TLB had an
outstanding principal balance of $326.9 million. The next quarterly principal installment payment is due on March 31, 2022. In
addition to the required quarterly principal amortization we may be required to make annual repayments of principal on the
TLB within 90 days of year-end of up to 50% of our excess cash flow as defined in the credit agreement. For the year ended
December 31, 2020, an excess cash flow payment was not required. Such payment, if any, would be applied to the next
quarterly principal installment payment. We are also required to repay certain amounts of the TLB in connection with the non-
ordinary course sale of assets, receipt of insurance proceeds, and the issuance of debt obligations, subject to certain exceptions.
All repayments of the TLB will be applied without penalty or premium. Subject to market conditions and other relevant
factors, we may seek to reprice, modify and/or amend the loan facility to further reduce our borrowing rate, modify restricted
payment covenants and take other actions to increase our flexibility with respect to our uses of free cash flow.
In 2017, as part of the recapitalization we also entered into a three-year secured revolving credit facility (“Revolving Loan
Facility”) for $20.0 million. The Revolving Loan Facility matured in October 2020. During the three year period that the
Revolving Loan Facility was outstanding, there were no drawings on it and based on our forecast future needs for the facility
we elected not to renew or extend it.
31
The TLB is guaranteed by our existing and subsequently acquired or organized wholly-owned U.S. restricted subsidiaries
(excluding any registered broker-dealers) and secured with a first priority perfected security interest in certain domestic assets,
100% of the capital stock of each U.S. subsidiary and 65% of the capital stock of each non-U.S. subsidiary, subject to certain
exclusions which, for the avoidance of doubt, such security interest shall not include any assets of regulated subsidiaries that are
not permitted to be pledged by law, statute or regulation, including cash held by regulated subsidiaries and any other capital
required to meet and maintain regulatory capital requirements. The credit facility contains certain covenants that limit our
ability above certain permitted amounts to incur additional indebtedness, make certain acquisitions, pay dividends and
repurchase shares. The TLB does not have financial covenants, however, we are subject to certain non-financial covenants such
as repayment obligations, restricted payment limitations, financial reporting requirements and others. Our failure to comply
with the terms of these covenants may adversely affect our operations and could permit lenders to accelerate the maturity of the
debt and to foreclose upon any collateral securing the debt. At December 31, 2020, we were compliant with all loan covenants
under the credit agreement and we expect to continue to be compliant with all loan covenants in future periods.
Since we announced our recapitalization in 2017 through December 31, 2020, we have repurchased 15,040,528 common
shares through open market purchases (including pursuant to 10b5-1 plans) and tender offers at an average price of $21.03 per
share, for a total cost of $316.3 million. This included 489,704 shares of our common stock we repurchased in the open market
during 2020 for $8.4 million, which was less than we typically repurchase in an annual period given the uncertainly on the
financial markets created by the global pandemic. In addition to open market purchases, we also repurchase common stock
equivalents from employees at the time of vesting of RSUs to settle withholding tax liabilities subject to limits imposed by our
credit agreement. During 2020, we are deemed to have repurchased 764,529 shares of common stock equivalents in conjunction
with the payment of tax liabilities in respect of stock delivered to our employees in settlement of restricted stock units that
vested for $14.8 million. In February 2021, our Board of Directors authorized the repurchase of our common stock and
common stock equivalents of up to $50.0 million for the period ended January 31, 2022. There can be no assurances of the
price at which we may be able to repurchase our shares or that we will repurchase the full amount authorized for the period
ending January 31, 2022 or the amount authorized in any future period. Since our Board authorization in 2021 (as of February
22, 2021), we have repurchased 337,739 shares of our common stock for $5.0 million and we are deemed to have repurchased
635,027 shares of common stock equivalents in conjunction with the payment of tax liabilities in respect of stock delivered to
our employees in settlement of restricted stock units that vested for $9.6 million and have $35.4 million remaining and
authorized for repurchase through January 2022.
Under our credit agreement, we are restricted in the amount of cash we may use to repurchase our common stock and
common stock equivalents and/or to make dividend distributions. As we generate cash from operations and subject to our
expected operating needs, we intend to focus the use of our cash generated primarily on deleveraging, along with prudent share
(and share equivalent) repurchases subject to market conditions and other factors, such as our results of operations, financial
position and capital requirements, general business conditions, legal, tax and regulatory constraints or restrictions, any
contractual restrictions and other factors deemed relevant. There can be no assurances of the price at which we may be able to
repurchase our shares or that we will repurchase the full amount authorized for the period ending January 31, 2022 or the
amount authorized in any future period.
Since we announced the recapitalization in 2017, we have made quarterly dividend payments of $0.05 per share. Under the
credit agreement we are permitted to make aggregate annual dividend distributions of up to $10.0 million, with any amounts not
distributed in any particular year available for carryover to future years. We intend to continue to pay quarterly dividends and
may increase the dividend payment amount, subject to capital availability and periodic determinations that cash dividends are in
the best interest of our stockholders. Future declaration and payment of dividends on our common stock is at the discretion of
our Board of Directors and depends upon, among other things, our future operations and earnings, capital requirements and
surplus, general financial condition, restrictions under the credit agreement, and other factors as our Board of Directors may
deem relevant.
As part of our long term incentive award program, we may award restricted stock units to managing directors and other
employees at the time of hire and/or as part of annual compensation. Awards of restricted stock units generally vest over a three
to five-year service period, subject to continued employment on the vesting date. Each restricted stock unit represents the
holder’s right to receive one share of our common stock (or at our election, a cash payment equal to the fair value thereof) on
the vesting date. Under the terms of our equity incentive plan, we generally repurchase from our employees that portion of
restricted stock unit awards used to fund income tax withholding due at the time the restricted stock unit awards vest and pay
the remainder of the award in shares of our common stock. Based upon the number of restricted stock unit grants outstanding at
February 22, 2021, which takes into account both the early February 2021 vesting of annual awards and the grant of new
awards made as part of our 2020 compensation, we estimate repurchases of our common stock from our employees in
conjunction with the cash settlement of tax liabilities incurred on vesting of restricted stock units of approximately $48.0
million (as calculated based upon the closing share price as of February 22, 2021 of $15.10 per share and assuming a
withholding tax rate of 41% consistent with our recent experience) over the next five years, of which an additional $3.1 million
32
will be payable in 2021, $17.5 million will be payable in 2022, $11.3 million will be payable in 2023, $7.7 million will be
payable in 2024, $6.4 million will be payable in 2025, and $2.0 million will be payable in 2026. In addition, we expect to make
additional restricted stock unit awards related to 2020 in late March 2021 and the estimated repurchase amount for 2022 and
beyond will increase. We will realize a corporate income tax deduction concurrently with the vesting of the restricted stock
units. While we expect to fund future repurchases of our common stock equivalents (if any) with operating cash flow, we are
unable to predict the price of our common stock, and as a result, the timing or magnitude of our share repurchases, which may
be limited under the credit agreement. To the extent future repurchases are expected to exceed the amount permitted under the
credit agreement we may seek to modify the credit agreement to increase the amount or seek other means to settle the
withholding tax liability incurred on the vesting of the restricted stock units.
Also, as part of our long-term incentive award program, we may also award deferred cash compensation to managing
directors and other employees at the time of hire and/or as part of annual compensation. Awards of deferred cash compensation
generally vest over a three to four year service period, subject to continued employment. Each award provides the employee
with the right to receive future cash compensation payments, which are non-interest bearing, on the vesting date. Based upon
the value of the deferred cash awards outstanding at February 22, 2021, which takes into account both the early February 2021
vesting of annual awards and the grant of new awards made as part of our 2020 compensation, we estimate payments of $23.9
million over the next four years, of which $0.9 million remains payable in 2021, $8.3 million will be payable in 2022, $6.7
million will be payable in 2023, $4.8 million will be payable in 2024, and $3.3 million will be payable in 2025. We will realize
a corporate income tax deduction at the time of payment.
Our capital expenditures relate primarily to technology systems and periodic refurbishment of our leased premises, which
generally range from $2.0 million to $3.0 million annually. During 2020, we relocated our headquarters office to new office
space in New York City and incurred build out costs, net of the tenant improvement allowance, of approximately $8.4 million.
As a result of U.S. tax law change in 2017, we can repatriate foreign cash with minimal or no incremental U.S. tax burden.
Subject to any limitations imposed by the Treasury Department and any future changes made to current tax law, we intend to
repatriate our foreign cash subject to our estimated operating needs in our foreign jurisdictions, our needs for additional cash in
the U.S. and other global cash management purposes.
While we believe that the cash generated from operations will be sufficient to meet our expected operating needs, which
include, among other things, our tax obligations, interest and principal payments on our loan facilities, dividend payments,
share repurchases related to the tax settlement payments upon the vesting of the restricted stock units, deferred cash
compensation payments, we may adjust our variable expenses and other disbursements, if necessary, to meet our liquidity
needs. However, there is no assurance that our cash flow will be sufficient to allow us to meet our operating obligations and
make timely principal and interest payments under the credit agreement. Further, while we do not anticipate the impact of the
COVID-19 pandemic will have a material effect on our business we will continue to evaluate its impact on our business and
make adjustments as may be necessary to preserve capital and maintain business operations. If we are unable to fund our
operating and debt obligations, we may need to consider taking other actions, including issuing additional securities, seeking
strategic investments, reducing operating costs or a combination of these actions, in each case on terms which may not be
favorable to us. Further, failure to make timely principal and interest payments under the credit agreement could result in a
default. A default of our credit agreement would permit lenders to accelerate the maturity for the debt and to foreclose upon any
collateral securing the debt. In addition, the limitations imposed by the financing agreements on our ability to incur additional
debt and to take other actions might significantly impair our ability to obtain other financing.
Cash Flows
2020. Cash and cash equivalents decreased by $1.3 million from December 31, 2019, including a decrease of $1.0 million
resulting from the effect of the translation of foreign currency amounts into U.S. dollars at the year-end foreign currency
conversion rates. We generated $84.0 million from operating activities, which consisted of $68.3 million from net income after
giving effect to the non-cash items, $9.7 million of tenant incentive reimbursement received from a landlord, and a net decrease
in working capital of $6.1 million, principally due to increases in accounts payable and accrued expenses and compensation
payable. We used $18.1 million for investing activities, principally to fund equipment purchases and leasehold improvements.
We used $66.1 million for financing activities, including $8.4 million for market purchases of our common stock, $14.8 million
for the repurchase of our common stock from employees in conjunction with the payment of tax liabilities in settlement of
restricted stock units, $38.8 million for the repayments of term loans, and $4.1 million for the payment of dividends.
2019. Cash and cash equivalents decreased by $42.4 million from December 31, 2018, including an increase of $1.6 million
resulting from the effect of the translation of foreign currency amounts into U.S. dollars at the year-end foreign currency
conversion rates. We generated $14.3 million from operating activities, which consisted of $64.4 million from net income after
giving effect to the non-cash items partially offset by a net increase in working capital of $50.1 million, principally due to a
33
decrease in compensation payable. We used $1.4 million for investing activities, principally to fund equipment purchases and
leasehold improvements. We used $56.9 million for financing activities, including $55.5 million for market purchases of our
common stock, $14.0 million for the repurchase of our common stock from employees in conjunction with the payment of tax
liabilities in settlement of restricted stock units, $13.1 million for the payment of the contingent obligation due selling
unitholders of Cogent (an additional $5.7 million is classified as an operating outflow for a total payment of $18.9 million),
$18.1 million for the quarterly principal term loan payments and $4.4 million for the payment of dividends, offset, in part, by
net proceeds of $48.3 million from the refinancing of the 2017 TLB.
Contractual Obligations
The following table sets forth information relating to our contractual obligations as of December 31, 2020:
Contractual Obligations
Operating lease obligations.............................................
Secured term loan............................................................
Total ............................................................................... $
Payment Due by Period
Total
Less than
1 year
Years 2-3
Years 4-5
More than
5 years
128.0
326.9
(in millions)
21.4
36.3
11.7
—
18.1
290.6
455.0 $
11.7 $
57.7 $
308.7 $
76.9
—
76.9
Off-Balance Sheet Arrangements
We do not invest in any off-balance sheet vehicles that provide financing, liquidity, market risk or credit risk support, or
engage in any leasing or hedging activities that expose us to any liability that is not reflected in our consolidated financial
statements, except for those as described under “Contractual Obligations” above.
Market Risk
Our business is not capital-intensive and as such, is not subject to significant market or credit risks. Notwithstanding, the
COVID-19 global health crisis and its impact on the U.S. and global economies could have a material adverse effect on the
Company’s consolidated financial statements.
Risks Related to Cash and Short-Term Investments
Our cash and cash equivalents are principally held in depository accounts and money market funds and other short-term
highly liquid investments with original maturities of three months or less. We maintain our depository accounts with financial
institutions with high credit ratings. Although these deposits are generally not insured, management believes we are not
exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
Further, we do not believe our cash equivalent investments are exposed to significant credit risk or interest rate risk due to the
short-term nature and high quality of the underlying investments in which the funds are invested.
Credit Risk
We regularly review our accounts receivable and allowance for doubtful accounts by considering factors such as historical
experience, credit quality, age of the accounts receivable, and the current economic conditions that may affect a customer’s
ability to pay such amounts owed to the Company. We maintain an allowance for doubtful accounts that, in our opinion,
provides for an adequate reserve to cover losses that may be incurred.
Exchange Rate Risk
We are exposed to the risk that the exchange rate of the U.S. dollar relative to other currencies may have an adverse effect on
the reported value of our non-U.S. dollar denominated assets and liabilities. Non functional currency related transaction gains
and losses are recorded in the consolidated statements of operations.
In addition, the reported amounts of our revenues may be affected by movements in the rate of exchange between the
currency in which an invoice is issued and paid and the U.S. dollar, in which our financial statements are denominated. We do
not currently hedge against movements in these exchange rates through the use of derivative instruments or other methods. We
analyze our potential exposure to a decline in exchange rates by performing a sensitivity analysis on our net income in those
jurisdictions in which we have generated a significant portion of our foreign earnings, which generally include the United
Kingdom, Europe, and Australia. During the year ended December 31, 2020, as compared to 2019, the average value of the
U.S. dollar weakened relative to the pound sterling, euro and Australian dollar. In aggregate, there was a slight positive impact
on our revenues in 2020 as compared to 2019 as a result of the timing of recognition of foreign revenues. Even if the currency
34
rates had changed more materially, the impact would not have been significant to our foreign operations because our operating
costs in foreign jurisdictions are denominated in local currency, and consequently we are effectively internally hedged to some
extent against the impact in the movements of foreign currency relative to the U.S. dollar. While our earnings are subject to
volatility from changes in foreign currency rates, we do not believe we face any material risk in this respect.
Interest Rate Risk
Our TLB bears interest at the U.S. Prime Rate plus 2.25% or LIBOR plus 3.25%. Because we have indebtedness which bears
interest at variable rates, our financial results will be sensitive to changes in prevailing market rates of interest. As of
December 31, 2020, we had $326.9 million of indebtedness outstanding, all of which bears interest at floating rates. The rate of
interest varies from period to period and our interest rate exposure is not currently hedged to mitigate the effect of interest rate
fluctuations. Depending upon future market conditions and our level of outstanding variable rate debt, we may enter into
interest rate swap or other hedge arrangements (with counterparties that, in our judgment, have sufficient creditworthiness) to
hedge our exposure against interest rate volatility. As of December 31, 2020, a 100 basis point increase in LIBOR would have
increased our annual borrowing expense by $3.3 million.
The FCA, which regulates LIBOR, has announced that it will not compel panel banks to contribute to LIBOR after 2021. In
November 2020, the ICE Benchmark Administration Limited announced a plan to extend the date as of which most U.S.
LIBOR values would cease being computed from December 31, 2021 to June 30, 2023. Although financial regulators and
industry working groups have suggested alternative reference rates, global consensus on alternative rates is lacking. It is not
possible to predict whether LIBOR will continue to be viewed as an acceptable market benchmark or what rate or rates may
become accepted alternatives to LIBOR. Although our credit agreement includes alternative rate fallback provisions, there can
be no assurance the LIBOR phase out will not increase the cost of capital.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of its results of operation and financial condition is based on our consolidated
financial statements that have been prepared in accordance with GAAP in the United States, which requires management to
make estimates and assumptions regarding future events that affect the amounts reported in the consolidated financial
statements. Management employs judgment in making these estimates in consideration of historical experience, currently
available information and various other assumptions that we believe to be reasonable under the circumstances. Actual results
could differ from our estimates and assumptions, and any such differences could be material to the consolidated financial
statements. Descriptions of our critical accounting policies and estimates, which we believe are those that are most important to
the presentation of our financial condition and results of operations and require management’s most difficult, subjective and
complex judgments, are set forth below in “Part IV — Item 15 — Notes to consolidated financial statements, Note 2 —
Summary of Significant Accounting Policies” and are incorporated by reference herein.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are set forth above in “Item 7 — Management’s Discussion and
Analysis of Financial Condition and Results of Operation — Market Risk”.
Item 8. Financial Statements and Supplementary Data
The financial statements required by this item are listed in “Item 15 — Exhibits and Financial Statement Schedules”.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Based upon their evaluation of the Firm’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the
end of the year covered by this Annual Report on Form 10-K, the Firm’s Chief Executive Officer and Chief Financial Officer
have concluded that such controls and procedures are effective. There were no changes in our internal controls over financial
reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Management’s report on the Firm’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act), and the related report of our independent public accounting firm, are included on pages F-2 through F-4 of
this report.
35
Item 9B. Other Information
None.
36
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information required by this Item will be presented in Greenhill’s definitive proxy statement for its 2021 annual meeting of
stockholders, which will be held on April 27, 2021, and is incorporated herein by reference. Information regarding our
executive officers is included on pages 22 and 23 of this Annual Report on Form 10-K under the caption “Executive Officers
and Directors.”
Our Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors, and
employees, which is available on our website (www.greenhill.com/investor) under “Corporate Governance.” We intend to
satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our
Code of Business Conduct and Ethics by posting such information on the website address and location specified above.
Item 11. Executive Compensation
Information required by this Item will be presented in Greenhill’s definitive proxy statement for its 2021 annual meeting of
stockholders, which will be held on April 27, 2021, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information required by this Item will be presented in Greenhill’s definitive proxy statement for its 2021 annual meeting of
stockholders, which will be held on April 27, 2021, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this Item will be presented in Greenhill’s definitive proxy statement for its 2021 annual meeting of
stockholders, which will be held on April 27, 2021, and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information required by this Item will be presented in Greenhill’s definitive proxy statement for its 2021 annual meeting of
stockholders, which will be held on April 27, 2021, and is incorporated herein by reference.
37
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Financial Statements
Consolidated Financial Statements of Greenhill & Co., Inc. and Subsidiaries
INDEX TO FINANCIAL STATEMENTS
Management’s Report on Internal Control over Financial Reporting......................................................................
Report of Independent Registered Public Accounting Firm.....................................................................................
Consolidated Statements of Financial Condition.....................................................................................................
Consolidated Statements of Operations....................................................................................................................
Consolidated Statements of Comprehensive Income...............................................................................................
Consolidated Statements of Changes in Stockholders' Equity ................................................................................
Consolidated Statements of Cash Flows...................................................................................................................
Notes to Consolidated Financial Statements............................................................................................................
2
3
6
7
8
9
10
11
F-1
Management’s Report on Internal Control Over Financial Reporting
Management of Greenhill & Co., Inc. and Subsidiaries (the “Company”) is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed
under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting
purposes in accordance with generally accepted accounting principles in the United States of America.
As of December 31, 2020, management conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting based on the framework established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Based upon this assessment,
management has determined that the Company’s internal control over financial reporting as of December 31, 2020 was
effective.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial statements.
The Company’s independent registered public accounting firm has issued their auditors’ report appearing on page F-4
which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
F-2
To the Shareholders and the Board of Directors of Greenhill & Co., Inc. and Subsidiaries
Report of Independent Registered Public Accounting Firm
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Greenhill & Co., Inc. and
Subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations,
comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended
December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,
2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the account or disclosure to which it relates.
F-3
Revenue Recognition of Greenhill & Co., Inc.
Description of the Matter At December 31, 2020, the aggregate advisory fee revenue was $311.7 million. As explained in
Note 2 to the consolidated financial statements, the Company earns its revenue by providing
services under contracts with its clients in one primary revenue stream: advisory fee revenues for
mergers and acquisitions engagements, financing advisory and restructuring engagements, and
private capital advisory.
For performance obligations related to services that are either required to be recognized over-time
or at a point in time, there is judgment involved in determining the most appropriate measure of
progress towards satisfaction of each performance obligation or in determining that the fees are no
longer constrained. Auditing the Company’s evaluation of performance obligations being met
required a high degree of auditor judgment due to the subjectivity in determining the measure that
most faithfully depicts the entity’s performance in satisfying performance obligations within the
Company’s primary revenue streams and consistently applying the selected measure across similar
arrangements.
How We Addressed the
Matter in Our Audit
We tested controls that address the risks of material misstatement relating to recognition of
advisory fee revenue. For example, we tested controls over management’s review around
identifying performance obligations for advisory related engagements and concluding on the
recognition criteria based on the satisfaction of those obligations.
To test the recognition of advisory fee revenue, our audit procedures included, among others,
evaluating the measures used by management in identifying performance obligations and allocating
the engagement fee. We compared the revenue recognized by management to executed engagement
letters and other external documentation. For example, we evaluated management’s methodology
for assessing performance obligations and the application of that methodology across a variety of
different revenue arrangements. As part of this assessment, we compared the types of advisory fees
recognized against the accounting treatment applied, overtime vs. point in time. We also tested the
completeness and accuracy of the revenue transactional data recorded in the general ledger.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1997.
New York, New York
February 26, 2021
F-4
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Greenhill & Co., Inc. and Subsidiaries
Opinion on Internal Control Over Financial Reporting
We have audited Greenhill & Co., Inc. and Subsidiaries internal control over financial reporting as of December 31,
2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Greenhill & Co., Inc. and
Subsidiaries (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2020 and 2019, the
related consolidated statements of operations, comprehensive income, cash flows and changes in stockholders’ equity for each
of the three years in the period ended December 31, 2020, and the related notes of the Company and our report dated
February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements’
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
February 26, 2021
F-5
Greenhill & Co., Inc. and Subsidiaries
Consolidated Statements of Financial Condition
As of December 31,
(in thousands except share and per share data)
Assets
Cash and cash equivalents ($7.2 million and $9.8 million restricted from use at December 31,
2020 and 2019, respectively)................................................................................................... $
112,703 $
113,975
2020
2019
Fees receivable, net of allowance for doubtful accounts of $0.5 million and $1.1 million at
December 31, 2020 and 2019, respectively.............................................................................
Other receivables............................................................................................................................
Property and equipment, net of accumulated depreciation of $17.5 million and $47.7 million at
December 31, 2020 and 2019, respectively.............................................................................
Operating lease right-of-use asset...................................................................................................
Goodwill.........................................................................................................................................
Deferred tax asset, net.....................................................................................................................
Other assets.....................................................................................................................................
Total assets............................................................................................................................... $
Liabilities and Equity
Compensation payable.................................................................................................................... $
Accounts payable and accrued expenses........................................................................................
Current income taxes payable.........................................................................................................
Operating lease obligations.............................................................................................................
Secured term loan payable..............................................................................................................
Deferred tax liability.......................................................................................................................
Total liabilities.........................................................................................................................
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 48,701,743 and
46,801,812 shares issued as of December 31, 2020 and 2019, respectively; 19,001,605 and
18,355,907 shares outstanding as of December 31, 2020 and 2019, respectively...................
Restricted stock units......................................................................................................................
Additional paid-in capital...............................................................................................................
Retained earnings............................................................................................................................
Accumulated other comprehensive income (loss)..........................................................................
Treasury stock, at cost, par value $0.01 per share; 29,700,138 and 28,445,905 shares as of
80,919
5,285
21,242
76,440
215,936
65,033
8,241
585,799 $
34,061 $
15,424
6,031
95,097
321,046
26,073
497,732
487
59,412
937,025
95,424
77,766
2,519
6,281
28,346
205,992
51,278
8,218
494,375
26,878
12,412
9,653
30,750
358,003
12,004
449,700
468
77,657
887,095
69,093
(25,501)
(34,115)
December 31, 2020 and 2019, respectively.............................................................................
Stockholders’ equity................................................................................................................
Total liabilities and equity....................................................................................................... $
(978,780)
(955,523)
88,067
44,675
585,799 $
494,375
See accompanying notes to consolidated financial statements.
F-6
Greenhill & Co., Inc. and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31,
(in thousands except share and per share data)
Revenues............................................................................................................... $
311,678 $
301,012 $
351,985
2020
2019
2018
Operating Expenses
Employee compensation and benefits...................................................................
Occupancy and equipment rental..........................................................................
Depreciation and amortization..............................................................................
Information services..............................................................................................
Professional fees....................................................................................................
Travel related expenses.........................................................................................
Other operating expenses......................................................................................
Total operating expenses................................................................................
Total operating income...................................................................................
Interest expense.....................................................................................................
Income before taxes.......................................................................................
Provision for taxes.................................................................................................
194,084
25,175
2,168
10,083
9,618
2,848
12,454
256,430
55,248
15,487
39,761
8,427
178,946
22,289
2,565
9,940
10,017
13,523
17,889
195,195
21,933
2,870
9,898
10,465
13,483
17,273
255,169
271,117
45,843
27,420
18,423
7,445
80,868
22,438
58,430
19,208
39,222
Net income..................................................................................................... $
31,334 $
10,978 $
Average shares outstanding:
Basic...............................................................................................................
18,939,210
24,024,674
26,813,285
Diluted............................................................................................................
23,078,451
24,272,479
27,637,720
Earnings per share:
Basic............................................................................................................... $
Diluted............................................................................................................ $
1.65 $
1.36 $
0.46 $
0.45 $
1.46
1.42
See accompanying notes to consolidated financial statements.
F-7
Greenhill & Co., Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31,
(in thousands)
Consolidated net income ...................................................................................... $
Currency translation adjustment, net of tax...........................................................
31,334 $
10,978 $
39,222
8,614
1,590
(13,483)
Comprehensive income ................................................................................. $
39,948 $
12,568 $
25,739
2020
2019
2018
See accompanying notes to consolidated financial statements.
F-8
Greenhill & Co., Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
Years Ended December 31,
(in thousands)
Common stock, par value $0.01 per share
Common stock, beginning of the year.................................................................. $
Common stock issued...........................................................................................
Common stock, end of the year....................................................................................
Restricted stock units
Restricted stock units, beginning of the year........................................................
Restricted stock units recognized, net of forfeitures............................................
Restricted stock units delivered............................................................................
Restricted stock units, end of the year..........................................................................
Additional paid-in capital
Additional paid-in capital, beginning of the year.................................................
Common stock issued...........................................................................................
Tax effect of issuance of contingent equity earnout.............................................
Additional paid-in capital, end of the year...................................................................
Exchangeable shares of subsidiary
Exchangeable shares of subsidiary, beginning of the year...................................
Exchangeable shares of subsidiary delivered.......................................................
Exchangeable shares of subsidiary, end of the year.....................................................
Retained earnings
Retained earnings, beginning of the year.............................................................
Cumulative effect of the change in accounting principle related to credit losses
Cumulative effect of the change in accounting principle related to revenue
recognition............................................................................................................
Retained earnings, beginning of the period, as adjusted......................................
Dividends..............................................................................................................
Net income ...........................................................................................................
Retained earnings, end of the year...............................................................................
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss), beginning of the year............
Currency translation adjustment, net of tax..........................................................
Accumulated other comprehensive income (loss), end of the year..............................
Treasury stock, at cost, par value $0.01 per share
2020
2019
2018
468 $
19
487
450 $
18
468
438
12
450
77,657
31,950
(50,195)
59,412
887,095
49,930
—
937,025
—
—
—
69,093
(123)
—
68,970
(4,880)
31,334
95,424
71,596
46,382
(40,321)
77,657
846,721
41,582
(1,208)
887,095
1,958
(1,958)
—
63,427
—
—
63,427
(5,312)
10,978
69,093
80,512
37,941
(46,857)
71,596
800,806
45,915
—
846,721
1,958
—
1,958
37,595
—
(7,645)
29,950
(5,745)
39,222
63,427
(34,115)
8,614
(25,501)
(35,705)
1,590
(34,115)
(22,222)
(13,483)
(35,705)
Treasury stock, beginning of the year...................................................................
Repurchased..........................................................................................................
Treasury stock, end of the year....................................................................................
Total stockholders’ equity......................................................................................... $
(955,523)
(23,257)
(978,780)
88,067 $
(886,084)
(69,439)
(955,523)
44,675 $
(690,785)
(195,299)
(886,084)
62,363
See accompanying notes to consolidated financial statements.
F-9
Greenhill & Co., Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,
(in thousands)
Operating activities:
Net income................................................................................................................... $
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items included in net income:
Depreciation and amortization..............................................................................
Net investment (gains) losses...............................................................................
Restricted stock units recognized, net..................................................................
Allowance for doubtful accounts..........................................................................
Deferred taxes, net................................................................................................
Loss (gain) on fair value of contingent obligation................................................
Non-cash portion of loss on refinancing...............................................................
Loss (gain) on sales of property and equipment...................................................
Changes in operating assets and liabilities:
Tenant incentive reimbursement from landlord...................................................
Fees receivable......................................................................................................
Other receivables and assets.................................................................................
Payment of contingent obligation due selling unitholders of Cogent...................
Compensation payable..........................................................................................
Accounts payable and accrued expenses..............................................................
Current income taxes payable...............................................................................
Net cash provided by operating activities.....................................................
Investing activities:
Purchases of investments..............................................................................................
Proceeds from sales of investments..............................................................................
Distributions from investments, net.............................................................................
Purchases of property and equipment...........................................................................
Sales of property and equipment..................................................................................
Net cash used in investing activities.............................................................
Financing activities:
Payment of contingent obligation due selling unitholders of Cogent..........................
Proceeds from secured term loan, net .........................................................................
Repayment of secured term loan..................................................................................
Dividends paid..............................................................................................................
Purchase of treasury stock............................................................................................
Net cash used in financing activities.............................................................
Effect of exchange rate changes...................................................................................
Net decrease in cash and cash equivalents...................................................................
Cash and cash equivalents, beginning of year..............................................................
Cash and cash equivalents, end of year........................................................................ $
Supplemental disclosure of cash flow information:
Cash paid for interest.................................................................................................... $
Cash paid for taxes, net of refunds............................................................................... $
2020
2019
2018
31,334 $
10,978 $
39,222
3,951
495
31,950
263
(8)
—
—
267
9,663
(3,578)
(2,162)
—
6,412
9,042
(3,623)
84,006
(2,050)
847
81
(17,015)
—
(18,137)
—
—
(38,750)
(4,108)
(23,257)
(66,115)
(1,026)
(1,272)
113,975
112,703 $
4,487
(113)
46,382
1,197
(815)
575
1,759
—
—
(17,170)
(143)
(5,724)
(30,939)
1,690
2,168
14,332
—
—
239
(1,648)
—
(1,409)
5,175
210
37,941
—
5,435
4,531
—
(777)
—
2,451
(836)
—
30,313
(9,546)
2,175
116,294
—
—
149
(2,124)
1,357
(618)
(13,144)
48,248
(18,125)
(4,417)
(69,439)
(56,877)
1,555
(42,399)
156,374
113,975 $
—
—
(21,875)
(5,158)
(195,299)
(222,332)
(4,616)
(111,272)
267,646
156,374
14,386 $
13,515 $
21,511 $
6,201 $
20,945
10,299
See accompanying notes to Consolidated Financial Statements.
F-10
Greenhill & Co., Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 — Organization
Greenhill & Co., Inc. and subsidiaries (the “Company” or “Greenhill”) is a leading independent investment bank that
provides financial and strategic advice on significant domestic and cross-border mergers and acquisitions, restructurings,
financings, capital raisings and other strategic transactions to a diverse client base, including corporations, partnerships,
institutions and governments globally. The Company acts for clients located throughout the world from our global offices in
the United States, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Spain, Sweden, and the United
Kingdom.
The Company’s wholly-owned subsidiaries provide advisory services in various jurisdictions. Our most significant
operating entities include: Greenhill & Co., LLC (“G&Co”), Greenhill & Co. International LLP (“GCI”), Greenhill & Co.
Europe GmbH & Co. KG (“Greenhill Europe”) and Greenhill & Co. Australia Pty Limited (“Greenhill Australia”).
G&Co is engaged in investment banking activities principally in the United States. G&Co is registered as a broker-dealer
with the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”), and is
licensed in all 50 states and the District of Columbia. GCI is engaged in investment banking activities in the United Kingdom
and Europe and is subject to regulation by the U.K. Financial Conduct Authority (“FCA”). Greenhill Europe engages in
investment banking activities in Europe (other than the U.K.) and is subject to regulation by Bundesanstalt für
Finanzdienstleistungsaufsicht (“Bafin”), Greenhill Australia engages in investment banking activities in Australia and New
Zealand and is licensed and subject to regulation by the Australian Securities and Investment Commission (“ASIC”).
The Company also operates in other locations throughout the world, which are subject to regulation by other governmental
and regulatory bodies and self-regulatory authorities.
Note 2 — Summary of Significant Accounting Policies
Basis of Financial Information
These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the
United States (U.S. GAAP), which require management to make estimates and assumptions regarding future events that affect
the amounts reported in our financial statements and these footnotes, including compensation accruals and other matters.
Management believes that it has made all necessary adjustments so that the consolidated financial statements are presented
fairly and that the estimates used in preparing its consolidated financial statements are reasonable and prudent. Actual results
could differ materially from those estimates. Certain reclassifications have been made to prior year information to conform to
current year presentation.
Given the uncertainty of the COVID-19 pandemic and resulting economic impact on the Company, estimates may need
to be revised in the future, which could materially impact the Company's future results of operations and/or financial condition.
The consolidated financial statements of the Company include all consolidated accounts of Greenhill & Co., Inc. and all
other entities in which the Company has a controlling interest after eliminations of all significant inter-company accounts and
transactions.
Revenue Recognition
The Company recognizes revenue when (or as) services are transferred to clients. Revenue is recognized based on the
amount of consideration that management expects to receive in exchange for these services in accordance with the terms of the
contract with the client. To determine the amount and timing of revenue recognition, the Company must (1) identify the
contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the Company
satisfies a performance obligation.
The Company generally recognizes revenues for mergers and acquisitions engagements at the earlier of the
announcement date or transaction date, as the performance obligation is typically satisfied at such time. Upfront fees and certain
retainer fees are generally deferred until the announcement or transaction date, as they are considered constrained (subject to
significant reversal) prior to the announcement or transaction date. Fairness opinion fees are recognized when the opinion is
delivered.
F-11
The Company recognizes revenues for financing advisory and restructuring engagements as the services are provided to
the client, based on the terms of the engagement letter. In such arrangements, the Company’s performance obligations are to
provide financial and strategic advice throughout an engagement.
The Company recognizes revenues for private capital advisory fees when (1) the commitment of capital is secured
(primary capital raising transactions) or the sale or transfer of the capital interest occurs (secondary market transactions) and (2)
the fees are earned from the client in accordance with terms of the engagement letter. Upfront fees and certain retainer fees are
deferred until the commitment is secured or the sale or transfer of the capital interest occurs, as the fees are considered
constrained (subject to significant reversal) prior to such time.
As a result of the deferral of certain fees, deferred revenue (also known as contract liabilities) was $7.1 million and $3.9
million as of December 31, 2020 and December 31, 2019, respectively. Deferred revenue is included in accounts payable and
accrued expenses in the consolidated statements of financial condition. During the years ended December 31, 2020, 2019 and
2018, the Company recognized $2.3 million, $4.7 million and $9.3 million of revenues, respectively, that were included in the
deferred revenue (contract liabilities) balance at the beginning of each respective period.
The Company’s clients reimburse certain expenses incurred by the Company in the conduct of advisory engagements.
Client reimbursements totaled $2.7 million, $6.4 million and $7.0 million for the years ended December 31, 2020, 2019, and
2018, respectively. Such reimbursements are reported as revenues and operating expenses with no impact to operating income.
Cash and Cash Equivalents
The Company’s cash and cash equivalents consist of (i) cash held on deposit with financial institutions, (ii) cash
equivalents and (iii) restricted cash. The Company maintains its cash and cash equivalents with financial institutions with high
credit ratings. The Company considers all highly liquid investments with an original maturity date of three months or less, when
purchased, to be cash equivalents. Cash equivalents primarily consist of money market funds and other short-term highly liquid
investments with original maturities of three months or less and are carried at cost, plus accrued interest, which approximates
the fair value due to the short-term nature of these investments.
Management believes that the Company is not exposed to significant credit risk due to the financial position of the
depository institutions in which those deposits are held. See “Note 3 — Cash and Cash Equivalents”.
Fees Receivable
Receivables are stated net of an allowance for doubtful accounts. The estimate for the allowance for doubtful accounts is
derived by the Company by utilizing past client transaction history and an assessment of the client’s creditworthiness. The
Company recorded bad debt expense of $0.3 million, $1.2 million and $0.3 million for the years ended December 31, 2020,
2019 and 2018, respectively.
Credit risk related to fees receivable is dispersed across a large number of clients located in various geographic areas.
The Company controls credit risk through credit approvals and monitoring procedures but does not require collateral to support
accounts receivable.
On January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) -
Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") under the modified retrospective approach. ASU
2016-13 replaces the incurred loss impairment methodology for financial instruments with the current expected credit loss
(CECL) model which requires an estimate of future credit losses. Upon adoption, a cumulative adjustment was recorded which
decreased retained earnings by $0.1 million, net of tax, as of January 1, 2020.
Goodwill
Goodwill is the cost in excess of the fair value of identifiable net assets at the acquisition date. The Company tests its
goodwill for impairment annually or more frequently where certain events or changes in circumstances indicate that goodwill
may more likely than not that impairment may have occurred. An impairment loss is triggered if the estimated fair value of an
operating unit is less than the estimated net book value. Such loss is calculated as the difference between the estimated fair
value of goodwill and its carrying value. See “Note 5 — Goodwill”.
Goodwill is translated at the rate of exchange prevailing at the end of the periods presented in accordance with the
accounting guidance for foreign currency translation. Any translation gain or loss is included in the foreign currency translation
adjustment, which is included as a component of other comprehensive income (loss) in the consolidated statements of changes
in stockholders’ equity.
F-12
Compensation Payable
Included in compensation payable are discretionary compensation awards comprised of accrued cash bonuses and long-
term incentive compensation, consisting of deferred cash retention awards, which are non-interest bearing, and generally
amortized ratably over a three to five year service period after the date of grant. See “Note 13 — Deferred Compensation”.
Restricted Stock Units
The Company accounts for its share-based compensation payments by recording the fair value of restricted stock units
(RSUs) granted to employees as compensation expense. The restricted stock units are generally amortized ratably over a three
to five-year service period following the date of grant. Compensation expense is determined based upon the fair value of the
Company’s common stock at the date of grant. In certain circumstances the Company issues share-based compensation, which
is contingent on achievement of certain performance targets. Compensation expense for performance-based awards begins at
the time it is deemed probable that the performance target will be achieved and is amortized into expense over the remaining
service period. The Company includes a forfeiture estimate in the aggregate compensation cost to be amortized.
As the Company expenses the awards, the restricted stock units recognized are recorded within stockholders’ equity.
The restricted stock units are reclassified into common stock and additional paid-in capital upon vesting. The Company records
as treasury stock the repurchase of stock delivered to its employees in settlement of tax liabilities incurred upon the vesting of
restricted stock units. The Company records dividend equivalent payments on outstanding restricted stock units eligible for
such payment as a dividend payment and a charge to stockholders’ equity.
Earnings per Share
The Company calculates basic earnings per share (“EPS”) by dividing net income by the weighted average number of
shares outstanding for the period. The Company calculates diluted EPS by dividing net income by the sum of (i) the weighted
average number of shares outstanding for the period and (ii) the dilutive effect of the common stock deliverable pursuant to
restricted stock units for which future service is required as calculated using the treasury stock method. See “Note 11 —
Earnings per Share”.
Provision for Taxes
The Company accounts for taxes in accordance with the accounting guidance for income taxes which requires the
recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets
and liabilities.
The Company follows the guidance for income taxes in recognizing, measuring, presenting and disclosing in its financial
statements uncertain tax positions taken or expected to be taken on its income tax returns. Income tax expense is based on pre-
tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions. The
recognition or derecognition of income tax expense related to uncertain tax positions is determined under the guidance, and the
Company’s policy is to treat interest and penalties related to uncertain tax positions as part of pre-tax income.
Deferred tax assets and liabilities are recognized for the future tax attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in earnings in the period of change. Management applies the “more-likely-than-not criteria” when
determining tax benefits.
The realization of deferred tax assets arising from timing differences and net operating losses requires taxable income in
future years in order to deduct the reversing timing differences and absorb the net operating losses. We assess positive and
negative evidence in determining whether to record a valuation allowance with respect to deferred tax assets. This assessment is
performed separately for each taxing jurisdiction.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies have been translated at rates of exchange prevailing at the end of
the periods presented in accordance with the accounting guidance for foreign currency translation. Income and expenses
transacted in foreign currency have been translated at average monthly exchange rates during the period. Translation gains and
losses are included in the foreign currency translation adjustment, which is included as a component of other comprehensive
income (loss) in the consolidated statements of changes in stockholders’ equity. Foreign currency transaction gains and losses
are included in the consolidated statements of operations in other operating expenses.
F-13
Financial Instruments and Fair Value
The Company accounts for financial instruments measured at fair value in accordance with accounting guidance for fair
value measurements and disclosures which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy under the pronouncement are described below:
Basis of Fair Value Measurement
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are
observable, either directly or indirectly; and
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and
unobservable.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant
to the fair value measurement. In determining the appropriate levels, the Company performs an analysis of the assets and
liabilities that are subject to these disclosures. At each reporting period, all assets and liabilities for which the fair value
measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no
price transparency are classified as Level 3. Transfers between levels are recognized as of the end of the period in which they
occur. See “Note 7 — Fair Value of Financial Instruments”.
Leases
The Company leases office space for its operations around the globe. Certain leases include options to renew, which can
be exercised at the Company’s sole discretion. The Company determines if a contract contains a lease at contract inception.
Operating lease assets represent the Company’s right to use the underlying asset and operating lease liabilities represent the
Company’s obligation to make lease payments. Operating lease assets and liabilities are recognized at the lease commencement
date based on the present value of lease payments over the lease term. When determining the lease term, the Company generally
does not include options to renew as it is not reasonably certain at contract inception that the Company will exercise the
option(s). The Company uses the implicit rate when readily determinable and its incremental borrowing rate when the implicit
rate is not readily determinable. The Company’s incremental borrowing rate is determined using its secured borrowing rate and
giving consideration to the currency and term of the associated lease as appropriate.
The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent
increases and escalation clauses linked to rates of inflation when determinable and are recognized in operating lease assets in
the consolidated statement of financial condition. Lease expense for minimum lease payments is recognized on a straight-line
basis over the lease term. The straight-lining of rent expense results in differences in the operating lease right-of-use asset and
operating lease obligations on the consolidated statement of financial condition. Temporary differences are recognized for tax
purposes and reflected separately in the consolidated statement of financial condition as deferred lease assets and lease
liabilities within deferred tax assets and deferred tax liabilities.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using
the straight-line method over the life of the assets. Amortization of leasehold improvements is computed using the straight-line
method over the lesser of the life of the asset or the remaining term of the lease. Estimated useful lives of the Company’s fixed
assets are generally as follows:
Equipment – 5 years
Furniture and fixtures – 7 years
Leasehold improvements – the lesser of 15 years or the remaining lease term
F-14
Business Information
The Company’s activities as an investment banking firm constitute a single business segment, with substantially all
revenues generated from advisory services, which includes engagements relating to mergers and acquisitions, financing
advisory and restructuring, and private capital advisory services.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of
Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU changes how companies measure credit losses on most
financial instruments, including accounts receivable. Companies will be required to estimate lifetime expected credit losses,
which is generally expected to result in earlier recognition of credit losses. The Company adopted this standard effective on
January 1, 2020 under a modified retrospective approach. The cumulative effect of adopting this ASU was a net decrease to
retained earnings of $0.1 million.
In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which requires the recognition of lease
assets and lease liabilities for operating leases, among other changes. The Company adopted this standard on January 1, 2019
utilizing a modified retrospective approach. The Company elected to apply practical expedients provided in the standard that
allowed the Company to not reassess whether expired or existing contracts are or contain leases, not reassess lease classification
for expired or existing leases (e.g., pre-existing operating leases are classified as operating leases under the new standard), and
not reassess initial direct costs for existing leases. The impact of adopting ASU 2016-02 was an increase of $38.1 million to the
Company’s assets and liabilities for the operating lease right-of-use assets and operating lease obligations on the consolidated
statement of financial condition as of January 1, 2019. Upon adoption, the Company also reclassified $3.2 million of deferred
rent from accounts payable and accrued expenses to operating lease obligations on the condensed consolidated statement of
financial condition. Differences in the operating lease right-of-use asset and operating lease obligations are due to straight-
lining rent expense and the resulting deferred rent. There was no net impact to the consolidated statement of operations.
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” codifying ASC 606, Revenue
Recognition — Revenue from Contracts with Customers, which supersedes the guidance in former ASC 605, Revenue
Recognition. The Company adopted this standard on January 1, 2018 utilizing the modified retrospective approach and applied
the standard to contracts that were not completed at this time. Upon adoption, certain revenues that were previously recognized
as services were provided changed to either point in time recognition or over the term of an engagement. This change in the
Company’s revenue recognition policy created deferred revenues (also known as contract liabilities) that will be recognized at a
point in time as performance obligations are met. The cumulative effect of adopting this ASU on January 1, 2018 was a net
decrease to retained earnings of $7.6 million. The Company also changed the presentation of certain reimbursed costs from a
net presentation prior to adoption to a gross presentation following adoption.
Accounting Developments
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes. Under the new guidance, companies will reflect the effect of an enacted change in tax law or rates in the period
that includes the enactment date of the new legislation, among other changes. This will align the timing of recognizing the
effects of new tax law or rates on the effective tax rate with the effect on the deferred tax assets and liabilities. The Company
adopted this standard on January 1, 2021 under a prospective approach. The impact could be material to the Company's
consolidated financial statements in future periods of enactment of new tax laws or rates.
Note 3 — Cash and Cash Equivalents
The carrying values of the Company’s cash and cash equivalents are as follows:
Cash................................................................................................................................................... $
Cash equivalents...............................................................................................................................
Restricted cash - letters of credit.......................................................................................................
Total cash and cash equivalents........................................................................................................ $
As of December 31,
2020
2019
(in thousands)
52,335 $
53,198
7,170
59,455
44,751
9,769
112,703 $
113,975
F-15
The Company's standby letter of credit of $5.9 million for its new headquarters' location may be periodically reduced
under certain circumstances to approximately $3.5 million. During 2020, the standby letter of credit of $2.3 million for its
former headquarters' space expired undrawn. See “Note 16 — Leases”.
The carrying value of the Company’s cash equivalents approximates fair value. See “Note 7 — Fair Value of Financial
Instruments”.
Letters of credit were secured by cash held on deposit. See “Note 14 — Commitments and Contingencies”.
Note 4 — Property and Equipment
Property and equipment consist of the following:
Equipment....................................................................................................................................... $
Furniture and fixtures......................................................................................................................
Leasehold improvements................................................................................................................
Total property and equipment, gross
As of December 31,
2020
2019
(in thousands)
11,503 $
22,452
6,396
20,797
38,696
7,758
23,806
54,016
Less accumulated depreciation and amortization...........................................................................
Total property and equipment, net.................................................................................................. $
(17,454)
(47,735)
21,242 $
6,281
In 2020, the Company incurred costs for leasehold improvements and other equipment related to its new headquarters'
space. In 2020, the Company also disposed of leasehold improvements and certain other fixed assets related to the expiration of
the lease of its former headquarters' space, most of which were fully depreciated, which resulted in reductions of gross property
and equipment and accumulated depreciation.
Note 5 — Goodwill
Goodwill consists of the following:
As of December 31,
2020
2019
(in thousands)
Balance, January 1.................................................................................................................................. $
Foreign currency translation adjustments...............................................................................................
Balance, December 31............................................................................................................................ $
205,992 $
205,922
9,944
70
215,936 $
205,992
The Company reviews goodwill annually for potential impairment and determined that the fair value of goodwill
exceeded the carrying value for each of the years ended December 31, 2020, 2019 and 2018.
Note 6 — Other Assets
Other assets consist of the following:
Prepaid expenses and other assets............................................................................................................ $
Rent deposits............................................................................................................................................
Other tangible assets................................................................................................................................
Total other assets...................................................................................................................................... $
As of December 31,
2020
2019
(in thousands)
6,533 $
1,631
77
6,098
1,856
264
8,241 $
8,218
F-16
Note 7 — Fair Value of Financial Instruments
Assets and liabilities are classified in their entirety based on their lowest level of input that is significant to the fair value
measurement. As of December 31, 2020 and 2019, the Company had Level 1 assets measured at fair value.
Assets Measured at Fair Value on a Recurring Basis
The following tables set forth the measurement at fair value on a recurring basis of the investments in money market
funds, short-term cash instruments and U.S. government securities. The securities are categorized as a Level 1 asset, as their
valuation is based on quoted prices for identical assets in active markets. See “Note 3 — Cash and Cash Equivalents”.
Assets Measured at Fair Value on a Recurring Basis as of December 31, 2020
Quoted Prices in
Active
Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance as of
December 31,
2020
(in thousands)
Assets
Cash equivalents.......................................................... $
Total............................................................................. $
53,198 $
53,198 $
— $
— $
— $
— $
53,198
53,198
Assets Measured at Fair Value on a Recurring Basis as of December 31, 2019
Quoted Prices in
Active
Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance as of
December 31,
2019
(in thousands)
Assets
Cash equivalents.......................................................... $
Total............................................................................. $
Liabilities Measured at Fair Value on a Recurring Basis
44,751 $
44,751 $
— $
— $
— $
— $
44,751
44,751
In connection with the acquisition in April 2015 of Cogent Partners, LP and its affiliates (“Cogent,” now known as the
secondary private capital advisory business), the Company agreed to pay to the sellers in the future $18.9 million in cash and
334,048 shares of Greenhill common stock if certain agreed revenue targets are achieved (the “Earnout”). The Earnout for the
period ended March 31, 2019 was achieved. The fair value of the contingent cash consideration was valued on the date of the
acquisition at $13.1 million and was remeasured quarterly based on a probability weighted present value discount that the
revenue target may be achieved. In April 2019, the liability was paid in full. Due to the remeasurement of the Earnout, the
Company recognized increases in other operating expenses of $0.6 million and $4.5 million for the years ended December 31,
2019 and 2018, respectively.
The following tables set forth the measurement at fair value on a recurring basis of the contingent cash consideration due
to the selling unitholders of Cogent related to the Earnout prior to its settlement in April 2019. The liability arose as a result of
the acquisition of Cogent and was categorized as a Level 3 liability. Through March 31, 2019, the liability was remeasured each
quarter based on the probability of achieving the target revenue threshold and weighted average discount rate as discussed
below. During 2018, the liability was transferred to Level 2 as the only remaining fair value input was the present value
discount.
F-17
Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2018
Total
realized
and
unrealized
gains
(losses)
included in
Net Income
Unrealized
gains
(losses)
included in
Other
Comprehen
sive Income
Opening
Balance as
of January
1, 2018
Purchases
Issues
Sales
(in thousands)
Closing
Balance as
of
December
31, 2018
Transfers
Out
Unrealized
gains
(losses) for
Level 3
liabilities
outstanding
at December
31, 2018
Liabilities
Contingent obligation
due selling unitholders
of Cogent...................... $ 13,763 $ (4,021) $
Total.............................. $ 13,763 $ (4,021) $
— $ — $ — $ — $ (17,784) $
— $ — $ — $ — $ (17,784) $
— $
— $
—
—
Realized and unrealized gains (losses) are reported as a component of other operating expenses in the consolidated
statements of operations.
There were no Level 3 liabilities at December 31, 2020 or 2019.
Valuation Processes - Level 3 Measurements - The Company utilizes a valuation technique based on a present value
method applied to the probability of achieving a range of potential revenue outcomes. The valuation was conducted by the
Company. The Company updates unobservable inputs each reporting period and has a formal process in place to review
changes in fair value.
Sensitivity Analysis - Level 3 Measurements - The significant unobservable inputs used in determining fair value are the
discount rate and forecast revenue information. Significant increases (decreases) in the discount rate would have resulted in a
lower (higher) fair value measurement, respectively. Significant increases (decreases) in the forecast revenue information would
result in a higher (lower) fair value measurement, respectively. For all significant unobservable inputs used in the fair value
measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar
change in the other inputs.
Note 8 — Related Parties
At December 31, 2020 and 2019, the Company had no amounts receivable from or payable to related parties.
Note 9 — Loan Facilities
In October 2017, as part of a recapitalization plan, the Company entered into a credit agreement with a syndicate of
lenders, who lent a face amount of $350.0 million under a five-year secured term loan facility (“2017 Term Loan Facility”).
On April 12, 2019, the Company refinanced its 2017 Term Loan Facility with borrowings of $375.0 million from a new
five-year secured term loan facility (“Term Loan Facility”). These borrowings were used to repay in full the $319.4 million
outstanding principal balance of the 2017 Term Loan Facility, pay fees and expenses and resulted in net cash proceeds of $48.2
million, which increased the Company’s cash balance. At the time of refinancing the Company was eligible to repay, refinance
or reprice the outstanding principal amount of the loan facility without any incremental premium or other charge.
Term Loan Facility carrying value.................................................................................................... $
Unamortized discount.......................................................................................................................
Unamortized debt issuance costs.......................................................................................................
Total Term Loan Facility ..........................................................................................................
Current maturities of Term Loan Facility.........................................................................................
As of December 31,
2020
2019
(in thousands)
321,046 $
358,003
1,809
4,020
326,875
—
2,365
5,257
365,625
(18,750)
Total long-term debt................................................................................................................... $
326,875 $
346,875
F-18
Effective with the refinancing in April 2019, borrowings under the Term Loan Facility bear interest at either the U.S.
Prime Rate plus 2.25% or LIBOR plus 3.25%, which represents a 50 basis point reduction from the applicable borrowing rates
of the 2017 Term Loan Facility. Borrowings under the Term Loan Facility and 2017 Term Loan Facility had a weighted
average interest rate for the years ended December 31, 2020 and 2019 of 3.8% and 5.7%, respectively (with the borrowing rate
ranging from 3.4% to 5.0% and from 5.0% to 6.6%, respectively).
The Term Loan Facility requires quarterly principal amortization payments of $4.7 million (or $18.8 million annually),
from September 30, 2019 through March 31, 2024, with the remaining outstanding balance due at maturity on April 12, 2024.
In addition, beginning for the year ended December 31, 2019, the Company may be required to make annual repayments of
principal on the Term Loan Facility within ninety days of year-end of up to 50% of its annual excess cash flow as defined in the
credit agreement based on a calculation of net leverage. For each of the years ended December 31, 2020 and 2019, based upon
the Company’s financial results, an excess cash flow payment was not required. The Company is also required to repay certain
amounts of the Term Loan Facility in connection with the non-ordinary course sale of assets, receipt of insurance proceeds, and
the issuance of debt obligations, subject to certain exceptions.
During the year ended December 31, 2020, the Company made principal payments on the Term Loan Facility of
$38.8 million. Such payments were applied to and made in advance of the quarterly installments due in 2020 and 2021. The
next quarterly principal payment is due in March 2022. During the year ended December 31, 2019, the Company made
mandatory principal payments on the 2017 Term Loan Facility of $8.8 million and on the Term Loan Facility of $9.4 million,
or $18.1 million in total. All mandatory repayments of the Term Loan Facility are applied without penalty or premium.
Effective April 14, 2020, all voluntary prepayments, including refinancing of all or part of the borrowings, under the Term
Loan Facility are permitted to be made without penalty.
In October 2017, the Company also arranged as part of the credit agreement a three-year secured revolving credit
facility (“Revolving Loan Facility”) for $20.0 million, which was undrawn at closing. The Revolving Loan Facility matured on
October 12, 2020. During the three year period that the Revolving Loan Facility was outstanding, there were no drawings on it.
The Term Loan Facility is guaranteed by the Company’s existing and subsequently acquired or organized wholly-owned
U.S. restricted subsidiaries (excluding any registered broker-dealers) and secured with a first priority perfected security interest
in certain domestic assets, 100% of the capital stock of each U.S. subsidiary and 65% of the capital stock of each non-U.S.
subsidiary, subject to certain exclusions which, for the avoidance of doubt, such security interest shall not include any assets of
regulated subsidiaries that are not permitted to be pledged by law, statute or regulation, including cash held by regulated
subsidiaries and any other capital required to meet and maintain regulatory capital requirements. The credit facility contains
certain covenants that limit the Company’s ability above certain permitted amounts to incur additional indebtedness, make
certain acquisitions, pay dividends and repurchase shares. The Term Loan Facility does not have financial covenants but is
subject to certain other non-financial covenants. At December 31, 2020 and 2019, the Company was compliant with all loan
covenants.
In conjunction with the refinancing of the 2017 Term Loan Facility in April 2019, the Company incurred fees of
$5.7 million, of which $2.7 million was recorded as deferred financing costs and $3.0 million was expensed. In addition, as a
result of the refinancing, $1.8 million of previously deferred fees, or fees in aggregate of $4.8 million, were charged to expense
and recorded as interest expense in the consolidated statements of operations. The deferred financing costs incurred in
connection with the refinancing, along with the remaining unamortized costs from the 2017 Term Loan Facility which, as of the
date of the refinancing, were $9.0 million, are being amortized into interest expense over the remaining life of the obligation
and recorded as a reduction in the carrying value of the Term Loan Facility in the consolidated statement of financial condition.
For the years ended December 31, 2020 and 2019, in addition to the charge related to the refinancing in 2019, the Company
incurred incremental interest expense of $1.8 million and $1.9 million, respectively, related to the amortization of these costs.
As of December 31, 2020, the carrying value of the Term Loan Facility, excluding the unamortized debt issuance costs
and discount that are presented as a reduction to the debt principal balance, approximated the fair value. Since the borrowing is
not accounted for at fair value, the fair value is not included in the Company’s fair value hierarchy in “Note 7 — Fair Value of
Financial Instruments,” however, had the borrowing been included, it would have been classified in Level 2.
Note 10 — Equity
In September 2017, the Company announced plans for a leveraged recapitalization to use a portion of the proceeds of the
term loan borrowings to repurchase shares of the Company's common stock. Since that announcement the Company has
repurchased 15,040,528 shares of common stock in open market purchases or tender offers for $316.3 million.
During the year ended December 31, 2020, the Company repurchased 489,704 shares of common stock through open
market transactions at an average price of $17.18 per share, for a total cost of $8.4 million. During the year ended December 31,
F-19
2019, the Company repurchased 3,275,641 shares of common stock through open market transactions at an average price of
$16.93 per share, for a total cost of $55.5 million. During the year ended December 31, 2018, the Company repurchased
7,497,635 shares of common stock through a modified Dutch auction tender and open market transactions at an average price of
$24.89 per share, for a total cost of $186.6 million. In addition, the Company incurred fees and expenses relating to the tender
offer of $0.2 million during the year ended December 31, 2018.
In connection with the acquisition of Cogent, the Company issued 779,454 shares of common stock on the acquisition
date, April 1, 2015. In addition, during 2019 the Company issued 334,048 shares of common stock shortly after the revenue
target for the Earnout was achieved. The fair value of the contingent issuance of common shares related to the Earnout was
valued on the date of the acquisition at $11.9 million and was recorded as additional paid in capital in the consolidated
statements of financial condition. Upon delivery of the shares the par value of the shares was transferred to common stock in
the consolidated statement of financial condition. In addition, $1.2 million was reflected as an adjustment to additional paid-in
capital in the consolidated statement of financial condition for the tax effect of the difference in the acquisition date value of
the contingently issuable shares and the fair value of the shares when issued. See “Note 7 — Fair Value of Financial
Instruments” and “Note 11 — Earnings per Share”.
During 2020, 1,863,885 restricted stock units vested and were settled in shares of common stock, of which the Company
is deemed to have repurchased 764,529 shares at an average price of $19.42 per share for a total cost of $14.8 million in
conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock
units.
During 2019, 1,407,095 restricted stock units vested and were settled in shares of common stock, of which the Company
is deemed to have repurchased 573,472 shares at an average price of $24.37 per share for a total cost of $14.0 million in
conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock
units.
Dividends declared and paid on outstanding common share were $0.20 for each of the years ended December 31, 2020,
2019 and 2018, respectively. In addition, dividend equivalent payments of $1.1 million, $1.3 million and $1.1 million were paid
to or accrued for holders of restricted stock units for the years ended December 31, 2020, 2019 and 2018, respectively. See
“Note 13 — Deferred Compensation — Restricted Stock Units”.
Note 11 — Earnings per Share
The computations of basic and diluted EPS are set forth below:
For the Years Ended
December 31,
2020
2019
2018
(in thousands, except per share amounts)
Numerator for basic and diluted EPS — net income................................... $
Denominator for basic EPS — weighted average number of shares...........
31,334
18,939
$
10,978
$
39,222
24,025
26,813
Add — dilutive effect of:
Restricted stock units...................................................................................
Denominator for diluted EPS — weighted average number of shares and
dilutive securities.........................................................................................
Earnings per share:
Basic EPS..................................................................................................... $
Diluted EPS.................................................................................................. $
4,139
(1)
247
(1)
825
(1)
23,078
24,272
27,638
1.65
1.36
$
$
0.46
0.45
$
$
1.46
1.42
________________________
(1) Excludes 0, 1,480,056 and 672,518 outstanding restricted stock units that were antidilutive under the treasury stock method for the years ended
December 31, 2020, 2019 and 2018, respectively, and thus were not included in the above calculation. The incremental shares that are included in the diluted
EPS calculation will vary based on a variety of factors, including the average share price during the period and the amount of unrecognized compensation cost.
The incremental shares included, if any, would be less than the number of outstanding restricted stock units.
For the year ended December 31, 2018, the weighted average number of shares and dilutive potential shares included 334,048 shares of common stock that
were to be issued to certain selling unitholders of Cogent in April 2019 as the revenue target related to the Earnout was achieved during the quarter ended
September 30, 2018. See “Note 7 — Fair Value of Financial Instruments”.
F-20
Note 12 — Retirement Plan
The Company sponsors qualified defined contribution plans in certain jurisdictions. Qualified plans comply with
applicable local laws and regulations. The Company incurred costs of $1.3 million, $1.0 million and $1.3 million for
contributions to the retirement plans for the years ended December 31, 2020, 2019 and 2018, respectively. There was $0.1
million related to contributions due to the retirement plans included in compensation payable on the consolidated statements of
financial condition at both December 31, 2020 and 2019.
Note 13 — Deferred Compensation
Restricted Stock Units
The Company has an equity incentive plan to motivate its employees and allow them to participate in the ownership of
its stock. Under the Company’s plan, restricted stock units, which represent a right to a future payment equal to one share of
common stock, may be awarded to employees, directors and certain other non-employees as selected by the Compensation
Committee. Awards granted under the plan are generally amortized ratably over a three to five-year service period following the
date of the grant. Holders of restricted stock units are entitled to receive dividends declared on the underlying common stock to
the extent the restricted stock units ultimately vest.
The activity related to the restricted stock units is set forth below:
Restricted Stock Units Outstanding
2020
2019
Grant Date
Weighted
Average Fair
Value
Units
Grant Date
Weighted
Average Fair
Value
Units
Outstanding, January 1,.......................................................
6,781,475
$
Granted................................................................................
Delivered.............................................................................
Forfeited .............................................................................
Outstanding, December 31,.................................................
3,921,260
(1,895,249)
(1,220,408)
7,587,078
$
21.60
8.82
26.44
15.72
14.68
6,210,282
$
2,294,967
(1,468,700)
(255,074)
6,781,475
$
22.73
22.55
27.58
22.84
21.60
For the years ended December 31, 2020, 2019 and 2018, the Company recognized compensation expense from the
amortization of restricted stock units, net of forfeitures, of $31.8 million, $45.8 million and $38.4 million, respectively.
The weighted-average grant date fair value for restricted stock units granted during the years ended December 31, 2020,
2019 and 2018 was $8.82, $22.55 and $18.94, respectively. As of December 31, 2020, unrecognized restricted stock units
compensation expense was $42.2 million, with such unrecognized compensation expense expected to be recognized over a
weighted average period of approximately 1.6 years.
The Company awards restricted stock units to employees under the equity incentive plan, primarily in connection with its
annual bonus awards and compensation agreements for new hires. In certain jurisdictions, the Company may settle share-based
payment awards in cash in lieu of shares of common stock to obtain tax deductibility. In these circumstances, the awards are
settled in the cash equivalent value of the Company’s shares of common stock based upon their value at settlement date. These
cash-settled share-based awards are remeasured at fair value at each reporting period.
The Company also awards performance-based restricted stock units as part of long-term incentive compensation to a
limited number of key employees. The actual performance relative to target performance is measured quarterly and the
probability-weighted likelihood of achievement is recorded.
Deferred Cash Compensation
As part of its long-term incentive award program, the Company grants deferred cash retention awards to certain eligible
employees. The deferred awards, which generally vest ratably over a three to five year service period, provide the employee
with the right to receive future cash compensation payments, which are non-interest bearing. Deferred cash compensation of
$10.0 million and $14.5 million as of December 31, 2020 and 2019, respectively, is included in compensation payable in the
consolidated statements of financial condition. As of December 31, 2020, total unrecognized deferred cash compensation (prior
to the consideration of forfeitures) was approximately $5.5 million and is expected to be recognized over a weighted-average
period of 1.4 years.
F-21
For the years ended December 31, 2020, 2019 and 2018, the Company recognized compensation expense from the
amortization of deferred cash compensation, net of estimated forfeitures, of $7.2 million, $8.9 million and $7.7 million,
respectively.
Note 14 — Commitments and Contingencies
Diversified financial institutions in certain jurisdictions in which we operate issued four and six letters of credit on behalf
of the Company to secure office space leases, which totaled $7.2 million and $9.8 million at December 31, 2020 and 2019,
respectively. These letters of credit were secured by cash held on deposit. At December 31, 2020 and 2019, no amounts had
been drawn under any of the letters of credit. See “Note 3 — Cash and Cash Equivalents”.
The Company leases office space for its operations around the globe. See “Note 16 — Leases”.
The Company is from time to time involved in legal proceedings incidental to the ordinary course of its business. The
Company does not believe any such proceedings will have a material adverse effect on its results of operations.
Note 15 — Income Taxes
The Company is subject to U.S. federal, state and local, as well as foreign, corporate income taxes.
The components of the provision for income taxes reflected on the consolidated statements of operations are set forth
below:
Current taxes:
U.S. federal..................................................................................................... $
State and local................................................................................................
Foreign...........................................................................................................
Total current tax expense........................................................................
Deferred taxes:
U.S. federal.....................................................................................................
State and local................................................................................................
Foreign...........................................................................................................
Total deferred tax (benefit) expense.......................................................
For the Years Ended December 31,
2020
2019
2018
(in thousands)
(2,794) $
2,868 $
(306)
11,535
8,435
1,245
264
(1,517)
(8)
410
4,982
8,260
293
(534)
(574)
(815)
1,868
1,937
9,968
13,773
202
50
5,183
5,435
Total tax expense................................................................................................... $
8,427 $
7,445 $
19,208
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for
financial accounting and reporting for income taxes. Deferred taxes are provided for the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
These deferred taxes are measured using the enacted tax rates and laws that will be in effect when such differences are expected
to reverse.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted in response to the
COVID-19 pandemic. The CARES Act, among other things, modifies the allowable amount of business interest deductions for
the 2019 and 2020 tax years and allows net operating loss carryovers and carrybacks available for the three years preceding the
2021 tax year to be carried back up to five years to offset taxable income. As a result of the CARES Act, it is anticipated the
Company will fully utilize its interest expense in the current year along with all deferred interest expense from prior years and
be able to currently utilize the benefit of an operating loss by carrying it back to a previous year with taxable income. The
currently enacted territorial-type tax system is not expected to have a significant impact to the income tax provision for the year
ended December 31, 2020 or materially impact in future years. As such, the Company does not intend to indefinitely reinvest
its non-U.S. subsidiary earnings outside of the United States.
Effective in 2019, the Company adopted ASU No. 2016-02, Leases, requiring the recognition of lease assets and
liabilities for operating leases. As part of the adoption of this new accounting standard, temporary differences are recognized for
F-22
tax purposes and reflected separately in the balance sheet as deferred lease assets and lease liabilities. During 2020, the
Company relocated its headquarters office to new office space in New York City and entered into a new lease effective April 1,
2020. This new lease had a significant effect on the operating lease right-of-use deferred tax asset and related operating lease
deferred tax liability for the year ended December 31, 2020.
Significant components of the Company’s net deferred tax assets and liabilities are set forth below:
Deferred tax assets:
Compensation and benefits............................................................................................................. $
Depreciation and amortization........................................................................................................
Cumulative translation adjustment.................................................................................................
Operating loss carryforwards..........................................................................................................
Capital loss carryforwards..............................................................................................................
Lease asset......................................................................................................................................
Other financial accruals..................................................................................................................
Valuation allowances......................................................................................................................
Total deferred tax assets.............................................................................................................
Deferred tax liabilities:
Lease liability..................................................................................................................................
Other financial accruals..................................................................................................................
Total deferred tax liabilities.......................................................................................................
Net deferred tax asset...................................................................................................................... $
As of December 31,
2020
2019
(in thousands)
18,261 $
21,706
642
10,079
11,736
2,298
23,867
448
(2,298)
65,033
19,139
6,934
26,073
38,960 $
1,816
12,235
4,644
1,874
7,652
3,760
(2,409)
51,278
6,959
5,045
12,004
39,274
Aside from the required reporting of its lease asset for ASU No. 2016-02, the Company’s largest deferred tax asset
principally relates to compensation expense deducted for book purposes but not yet deducted for tax purposes. Based on the
Company’s historical taxable income and its expectation for taxable income in the future, management expects this deferred tax
asset related to compensation will be realized as offsets to future taxable income.
The Company’s deferred taxes for operating loss carryforwards relate to a loss incurred in the United States in the
current year along with losses incurred in foreign jurisdictions. The United States and its more established foreign jurisdictions
have been profitable in prior years and the Company believes it is more likely than not they will be profitable in future years.
However, management has carefully considered the need for a valuation allowance by evaluating each jurisdiction separately
and considering items such as historical and estimated future taxable income, cost bases, and other various factors including the
ability to carryback operating losses. Based on all available information, the Company has determined that it is more likely than
not that it will realize the full benefit of these operating loss carryforwards and other deferred tax assets in the United States and
its foreign jurisdictions. As of December 31, 2020, the Company had operating loss carryforwards which in aggregate totaled
$36.5 million, and the Company intends to utilize $19.6 million of these aggregate losses by carrying them back to prior years
with taxable income. Depending on the jurisdiction, these operating loss carryforwards may be carried forward five years or
longer.
In addition to operating loss carryforwards, the Company has capital loss carryforwards related to the sale of its
investments, and these capital loss carryforwards can only be utilized against capital gains in the same jurisdiction.
Approximately $2.1 million of the deferred tax asset related to capital loss carryforwards can be carried forward indefinitely
and $0.2 million can be carried forward for five years. However, since the Company has nominal remaining investments and
considers it more likely than not that the Company will generate capital gains, the Company has established a full valuation
allowance against the deferred tax assets related to these capital losses.
The Company is subject to the income tax laws of the United States, its states and municipalities, and those of the foreign
jurisdictions in which the Company operates. These laws are complex, and the manner in which they apply to the taxpayer’s
facts is sometimes open to interpretation. Management must make judgments in assessing the likelihood that a tax position will
be sustained upon examination by the taxing authorities based on the technical merits of the tax position. In the normal course
F-23
of business, the Company may be under audit in one or more of its jurisdictions in an open tax year for that particular
jurisdiction. As of December 31, 2020, the Company does not expect any material changes in its tax provision related to any
current or future audits.
The Company recognizes tax positions in the financial statements only when management believes it is more likely than
not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the
position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be
realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized
in the financial statements. The Company performed an analysis of its tax positions as of December 31, 2020, and determined
that there was no requirement to accrue any material additional liabilities. Also, when present as part of the tax provision
calculation, interest and penalties have been reported as other operating expenses in the consolidated statements of operations.
A reconciliation of the statutory U.S. federal income tax rate of 21% to the Company’s effective income tax rates is set
forth below:
For the Years Ended December 31,
2020
2019
2018
U.S. statutory tax rate........................................................................................
21.0 %
Increase related to state and local taxes, net of U.S. income tax benefit...........
Benefits and taxes related to foreign operations................................................
Charge related to Global Intangible Low-Taxed Income..................................
RSU vesting and dividend discrete accounting charge or benefit.....................
Charge related to non-deductible compensation................................................
Tax Benefits Related to CARES Act.................................................................
Other..................................................................................................................
(3.0)
(7.3)
—
13.3
2.4
(4.6)
(0.6)
Effective income tax rate...................................................................................
21.2 %
21.0 %
(0.5)
8.8
2.0
6.3
3.3
—
21.0 %
2.6
(1.5)
1.3
8.0
1.8
—
(0.5)
40.4 %
(0.3)
32.9 %
Note 16 — Leases
The Company leases office space for its operations around the globe.
All of the Company’s leases are operating leases and have remaining lease terms ranging from less than 1 year to 15
years. The Company incurred operating lease cost, excluding property taxes, utilities and other ancillary costs, of $18.5 million
(including $4.9 million related to the free rent period on the new headquarters' location), $15.3 million and $15.0 million for the
years ended December 31, 2020, 2019 and 2018, respectively, which is included in occupancy and equipment rental in the
consolidated statements of operations.
The undiscounted aggregate minimum future rental payments as of December 31, 2020 are as follows:
2021.................................................................................................................................................................. $
2022..................................................................................................................................................................
2023..................................................................................................................................................................
2024..................................................................................................................................................................
2025..................................................................................................................................................................
Thereafter..........................................................................................................................................................
Total lease payments.........................................................................................................................................
Plus: tenant incentive utilized to finance leasehold improvements..................................................................
Less: Interest.....................................................................................................................................................
Present value of operating lease liabilities for which the Company has a right-of-use asset and
corresponding liability...................................................................................................................................... $
(in thousands)
11,671
11,190
10,171
9,329
8,756
76,875
127,992
11,302
(44,197)
95,097
F-24
The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:
Weighted average remaining lease term in years, including the lease for which the right to use
has not commenced.......................................................................................................................
Weighted average discount rate....................................................................................................
As of December 31,
2020
2019
12.7
6.8 %
12.1
5.8 %
Note 17 — Regulatory
Certain subsidiaries of the Company are subject to various regulatory requirements in the United States, United
Kingdom, Germany, Australia and certain other jurisdictions, which specify, among other requirements, minimum net capital
requirements for registered broker-dealers.
G&Co is subject to the SEC’s Uniform Net Capital requirements under Rule 15c3-1 (the “Rule”), which specifies,
among other requirements, minimum net capital requirements for registered broker-dealers. The Rule requires G&Co to
maintain a minimum net capital of the greater of $5,000 or 1/15 of aggregate indebtedness, as defined in the Rule. As of
December 31, 2020 and 2019, G&Co’s net capital was $17.3 million and $24.5 million, respectively, which exceeded its
requirement by $14.7 million and $23.2 million, respectively. G&Co’s aggregate indebtedness to net capital ratio was 2.2 to 1
and 0.8 to 1 at December 31, 2020 and 2019, respectively. Certain distributions and other capital withdrawals of G&Co are
subject to certain notifications and restrictive provisions of the Rule.
At December 31, 2020, GCI is subject to capital requirements of the FCA. Greenhill Europe is subject to capital
requirements of Bafin. Greenhill Australia is subject to capital requirements of the ASIC. We are also subject to certain capital
regulatory requirements in other jurisdictions. As of December 31, 2020 and 2019, GCI, Greenhill Europe, Greenhill Australia
and our other regulated operations were in compliance with local capital adequacy requirements.
Note 18 — Business Information
The Company’s activities as an investment banking firm constitute a single business segment, with substantially all
revenues generated from advisory services, which includes engagements relating to mergers and acquisitions, financing
advisory and restructuring, and private capital advisory services.
The Company principally earns its revenues from advisory fees upon the successful completion of the client’s transaction
or restructuring. In 2020, there was one client that accounted for approximately 14% of total revenues. In 2019, there was one
client that accounted for approximately 11% of revenues. In 2018, there were no clients that accounted for more than 10% of
total revenues.
Since the financial markets are global in nature, the Company generally manages its business based on the operating
results of the enterprise taken as whole, not by geographic region. For reporting purposes, the geographic regions are the North
America, Europe, and the rest of the world, which are the locations where the Company retains substantially all of its
employees.
F-25
The following table presents information about the Company by geographic region, after elimination of all significant
inter-company accounts and transactions:
As of or for the Years Ended
December 31,
2020
2019
2018
(in thousands)
Revenues...............................................................................................................
North America................................................................................................ $
Europe............................................................................................................
Rest of World.................................................................................................
Total............................................................................................................... $
167,038 $
127,631
17,009
311,678 $
212,916 $
46,827
41,269
301,012 $
193,707
125,149
33,129
351,985
Operating income (loss) .......................................................................................
North America................................................................................................ $
Europe............................................................................................................
Rest of World.................................................................................................
Total............................................................................................................... $
(5,238) $
62,603
(2,117)
55,248 $
38,116 $
(9,964)
17,691
45,843 $
16,472
57,736
6,660
80,868
Total assets............................................................................................................
North America................................................................................................ $
Europe............................................................................................................
Rest of World.................................................................................................
Total............................................................................................................... $
297,579 $
138,632
149,588
585,799 $
196,603 $
129,725
168,047
494,375 $
198,313
152,478
134,909
485,700
The Company's revenues are based on the country where the services were derived. For the years ended December 31,
2020, 2019 and 2018, the Company generated 52%, 67%, and 52%, respectively, of its total revenues from the United States
and 36%, 12% and 29% respectively, of its total revenues from the United Kingdom. No other country had revenues which
individually represented more than 10% of the Company’s total revenues during the years ended December 31, 2020, 2019 and
2018, respectively.
Included in the Company’s total assets are long-lived assets, excluding deferred tax assets, lease right-of-use assets and
intangible assets, located in the United States of $29.4 million and $22.8 million at December 31, 2020 and 2019, respectively.
No other country had long-lived assets, which individually represented more than 10% of the Company’s total long-lived assets
at December 31, 2020 and 2019.
Note 19 — Subsequent Events
The Company evaluates subsequent events through the date on which the financial statements are issued.
On February 3, 2021, the Board of Directors of the Company declared a quarterly dividend of $0.05 per share. The
dividend will be payable on March 17, 2021 to the common stockholders of record on March 3, 2021.
F-26
(b) Exhibits
Exhibit
Number
3.1
3.2
4.1
4.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14**
21.1**
23.1**
31.1***
31.2***
32.1***
32.2***
EXHIBIT INDEX
Description
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s
registration statement on Form S 1/A (No. 333-113526) filed on May 5, 2004).
Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on
Form 8-K filed on March 5, 2020).
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s registration
statement on Form S-1/A (No. 333-113526) filed on April 30, 2004).
Description of Greenhill & Co., Inc.'s Common Stock (incorporated by reference to Exhibit 4.2 to the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2019)
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s registration
statement on Form S-1/A (No. 333-113526) filed on April 30, 2004).
*Amended and Restated Equity Incentive Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive
Proxy Statement on Schedule 14A, filed on March 13, 2015).
*Form of Greenhill & Co. Equity Incentive Plan Restricted Stock Award Notification (MDs) — Five Year Ratable
Vesting (incorporated by reference to Exhibit 10.45 to the Registrant’s Quarterly Report on Form 10-Q for the
period ended March 31, 2009).
*Form of Greenhill & Co. Equity Incentive Plan Restricted Stock Award Notification (MDs) — Five Year Cliff
Vesting (incorporated by reference to Exhibit 10.46 to the Registrant’s Quarterly Report on Form 10-Q for the
period ended March 31, 2009).
*Employment, Non-Competition and Pledge Agreement dated as of May 11, 2004 between Scott L. Bok and
Greenhill & Co., Inc. (incorporated by reference to Exhibit 10.60 to the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2012)
*Employment, Non-Competition and Pledge Agreement dated as of May 11, 2004 between Harold J. Rodriguez, Jr.
and Greenhill & Co., Inc. (incorporated by reference to Exhibit 10.61 to the Registrant’s Annual Report on Form 10-
K for the year ended December 31, 2012)
*Form of Greenhill & Co. Equity Incentive Plan Restricted Stock Unit Award Notification – Three Year Cliff
Vesting (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on January
29, 2016).
*Form of Greenhill & Co. Equity Incentive Plan Restricted Stock Unit Award Notification (MDs) – Four Year 20%,
20%, 30% and 30% Vesting (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2016).
*Form of Greenhill & Co., Inc. Equity Incentive Plan Restricted Stock Unit Award Notification (incorporated by
reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 26, 2017).
Credit Agreement, dated October 12, 2017, by and among Greenhill & Co., Inc., the lenders party thereto and
Goldman Sachs Bank USA, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on October 13, 2017).
Amendment No. 1 to Credit Agreement, dated April 12, 2019, by and among Greenhill & Co., Inc., the lenders party
thereto and Goldman Sachs Bank USA, as administrative agent (incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on April 17, 2019).
*Greenhill & Co., Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 2019).
Lease between Rockefeller Center North, Inc. and Greenhill & Co., Inc. dated May 16, 2019 (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 21, 2019).
Form of Greenhill & Co., Inc. Equity Incentive Plan RSU MD Award Notification Template
List of Subsidiaries of the Registrant.
Consent of Ernst & Young LLP.
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
E-1
101.INS
The following financial information from Greenhill & Co., Inc's Annual Report on Form 10-K for the year ended
December 31, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the
Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the
Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders'
Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
104
The cover page of Greenhill's Form 10-K Report for the year ended December 31, 2020, formatted in Inline XBRL
(included within the Exhibit 101 attachments).
_____________________________________________
*
Management contract or compensatory plan or arrangement required to be filed as an Exhibit to Form 10-K pursuant
to Item 15(b) of this report.
**
Filed herewith.
***
This information is furnished and not filed herewith for purposes of Sections 11 and 12 of the Securities Act of 1933,
as amended, and Section 18 of the Exchange Act.
E-2
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 26, 2021
GREENHILL & CO., INC.
By:
/s/ SCOTT L. BOK
Scott L. Bok
Chairman and Chief Executive Officer
II -1
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the
following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature
/s/ SCOTT L. BOK
Scott L. Bok
/s/ ROBERT F. GREENHILL
Robert F. Greenhill
/s/ HAROLD J. RODRIGUEZ, JR.
Harold J. Rodriguez, Jr.
/s/ STEVEN F. GOLDSTONE
Steven F. Goldstone
/s/ MERYL D. HARTZBAND
Meryl D. Hartzband
/s/ JOHN D. LIU
John D. Liu
/s/ KAREN P. ROBARDS
Karen P. Robards
Capacity
Date
Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
February 26, 2021
Senior Chairman and Director
February 26, 2021
Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer and Principal Accounting
Officer)
February 26, 2021
Director
Director
Director
Director
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
II -2
[This page intentionally left blank]
Board of Directors
Scott L. Bok
Chairman & Chief Executive Officer
Robert F. Greenhill
Chairman Emeritus
Steven F. Goldstone
Lead Independent Director
Meryl D. Hartzband
Independent Director
John D. Liu
Independent Director
Karen P. Robards
Independent Director
Corporate Headquarters
1271 Avenue of the Americas
New York, New York 10020
(212) 389-1500
Independent Auditors
Ernst & Young LLP
5 Times Square
New York, New York 10036
(212) 773-3000
Executive Officers
Scott L. Bok
Chief Executive Officer
Kevin M. Costantino
President
David A. Wyles
President
Harold J. Rodriguez
Chief Operating Officer
Chief Financial Officer
Gitanjali Pinto Faleiro
General Counsel
Investor Relations
Patrick J. Suehnholz
Director of Investor Relations
(212) 389-1700
Registrar and Transfer Agent
American Stock Transfer & Trust Co.
59 Maiden Lane
New York, New York 10038
Annual Meeting
Tuesday, April 27, 2021, at
11:00 a.m. Eastern Time
Remote meeting link:
www.virtualshareholdermeeting.com/GHL2021
This document does not constitute or represent an offer to buy or sell any security or to participate in any trading
strategy.
Greenhill & Co., Inc.
(NYSE: GHL)
1271 Avenue of the Americas
New York, New York 10020
(212) 389-1500
www.greenhill.com