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Greenhill

Greenhill (NYSE: GHL) is an independent investment banking firm that provides financial advice on major mergers, acquisitions, restructurings and similar corporate finance matters; and manages merchant banking funds and commits capital to those funds.

Company Description

Greenhill is an independent investment banking firm that

(i) provides financial advice on significant mergers, acquisitions, restructurings and similar corporate finance matters as well as fund placement services for private equity and other financial sponsors and

(ii) manages merchant banking funds and similar vehicles and commits capital to those funds and vehicles.

They act for clients located throughout the world from offices in New York, London, Frankfurt, Toronto, Tokyo, Chicago, Dallas, and San Francisco. Their activities constitute a single business segment with two principal sources of revenue:

  • Financial advisory, which includes engagements relating to mergers and acquisitions, financing advisory and restructuring, and fund placement advisory; and
  • Merchant banking, which includes the management of outside capital invested in the firm’s merchant banking funds and other similar vehicles, primarily Greenhill Capital Partners (“GCP I”), Greenhill Capital Partners II (“GCP II”), Greenhill Capital Partners Europe (“GCP Europe”), and Greenhill SAV Partners (“GSAVP” together with GCP I, GCP II, and GCP Europe, the “Greenhill Funds”), and the firm’s principal investments in the Greenhill Funds and other merchant banking funds and similar vehicles.

Historically, Greenhill's financial advisory business has accounted for the majority of our revenues. However, there have been periods, such as the second quarter of 2008 and the first quarter of 2006, in which the revenues of their merchant banking business outweighed our financial advisory revenues. Since the initial public offering the financial advisory business has generated 84% of total revenues and their merchant banking and other business has generated approximately 16% of our total revenue.

The main driver of the financial advisory business is overall mergers and acquisitions, or M&A, and restructuring volume, particularly in the industry sectors and geographic markets in which they focus.

The principal drivers of their merchant banking revenues are management fees paid by the Greenhill funds and realized and unrealized gains on investments and profit overrides, the size and timing of which are tied to a number of different factors including the performance of the particular companies in which they invest, general economic conditions in the debt and equity markets and other factors which affect the industries in which they invest, such as commodity prices.

Source: Greenhill May 7th, 2009 10-Q

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