Greenhill 20 th Anniversary: Looking Back, Looking Forward. Scott L. Bok Chief Executive Officer

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1 20 th Anniversary: Looking Back, Looking Forward Scott L. Bok Chief Executive Officer Goldman Sachs Emerging / SMID Cap Growth Conference November 19, 2015

2 Forward-Looking Statements Statements contained in this Presentation that are not based on current or historical fact are forward-looking in nature. Such forwardlooking statements are based on current plans, estimates and expectations and are made pursuant to the Private Securities Litigation Reform Act of Forward-looking statements are based on known and unknown risks, assumptions, uncertainties and other factors. For a further discussion of such factors, you should read the Company s Forms 10-K, Forms 10-Q, subsequent Forms 8-K and other periodic reports filed with the Securities and Exchange Commission. The Company s actual results, performance, or achievements may differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements 1

3 Greenhill Strategic History 1996: Founded as M&A firm in New York 1998: Opened London 2000: Opened Frankfurt 2001: Entered Restructuring business 2004: Initial public offering 2005: Opened Dallas 2006: Opened Toronto 2008: Opened Chicago, San Francisco and Tokyo Entered Capital Advisory business 2009: Opened Los Angeles and Houston 2010: Acquired Australian business 2012: Opened Stockholm 2013: Opened Sao Paulo 2015: Acquired Cogent (Secondary Capital Advisory) Note: In addition to this history of its advisory business, Greenhill was in the private equity investment business from

4 This image cannot currently be displayed. Greenhill Greenhill Client History: M&A Highlights Date Client Role Region Sector Deal Size 2009 Acquisition of Genentech Healthcare $46.9bn 2015 Acquisition of Allergan s Generics business Healthcare $40.5bn 2014 Acquisition of Forest Laboratories Healthcare $25.1bn 2006 Public Offer for Schering Healthcare $21.2bn 2008 Merger with Northwest Airlines Airline $17.7bn 2010 Sale of North American bottling operations / Acquisition of Nordic bottling operations Consumer $14.4bn 2010 Sale of outstanding public interest in Novartis Healthcare $12.9bn 2000 Sale of The Pillsbury Company to General Mills Consumer $10.5bn 1998 Acquisition of Digital Equipment Corporation Technology $9.6bn Yellow shading denotes cross border transaction 3

5 Greenhill Client History: M&A Highlights Date Client Role Region Sector Deal Size 2015 Acquisition of Rexam plc Industrials $8.4bn 2012 Sale to Aetna Healthcare $7.3bn 2003 Sale to Proctor & Gamble Consumer $7.0bn 2007 Recommended cash offer from Terra Firma Media $6.3bn 2001 Merger-of-Equals with The Mead Corporation Industrials $5.9bn 2015 Sale to Equinix Communications $4.1bn 2005 Acquisition of Maytag Industrials $2.7bn 2011 Acquisition of the Timberland Company Consumer $2.3bn 2014 Acquisition of Cars.com Media $1.8bn Yellow shading denotes cross border transaction 4

6 Greenhill Client History: Non-M&A Date Client Role Region Sector Deal Size 2012 U.S. Dept. of Treasury Advisory on full reduction of 92% ownership in AIG through secondary offerings Financial Services $51.6bn 2011 Advisory related to the National Broadband Network Communications $40.0bn 2015 Separation into two publicly-traded companies Metals & Mining $N.A Advisory of the Detroit Retirement System in connection with the City of Detroit s Chapter 9 Government $N.A Advisory on spin-off of its Installation Services business Industrials $N.A Advisory on spin-off of its Publishing business and creation of two separate media companies Media $N.A U.S. Dept. of Energy Advisory for Herb Allison in an independent review of a $35.9 billion energy loan portfolio Energy $N.A Advisory for PBGC in connection with the Chapter 11 filing of AMR Corporation Airline $N.A Advisory on Chapter 11 proceedings Industrials $N.A. 5

7 Greenhill Revenue History 13% CAGR Over 17 Years $400 $34 $221 $291 $81 $222 $4 $299 $83 $278 $26 $294 $285 $287 $0 $275 $152 $79 $367 $37 $39 $37 $39 $86 $1 $85 $112 $113 $100 $5 $5 $5 $107 $95 $107 $126 $21 $5 $121 $131 $142 $210 $218 $216 $252 $303 $292 $287 $281 ($9) ($6) ($5) Advisory Source: Public filings and corporate records Investments 6

8 Greenhill Profit History (Since IPO) Cumulative (1) Revenue $152 $221 $291 $400 $222 $299 $278 $294 $285 $287 $275 $3,190 Pre-Tax Profit $64 $90 $119 $177 $78 $114 $59 $69 $71 $71 $68 $1,008 % of Revenue 41.8% 40.7% 41.0% 44.3% 35.1% 38.1% 21.2% 23.4% 24.7% 24.8% 24.5% 31.6% Dividends $5 $14 $21 $37 $50 $54 $57 $58 $57 $56 $56 $506 % of Revenue 3.2% 6.2% 7.3% 9.2% 22.5% 18.0% 20.4% 19.6% 20.0% 19.6% 20.4% 15.9% (1) Includes 2015 YTD 7

9 Stock Price History: First 10 Years Greenhill 300% 270% 200% 100% 88% 83% 0% (20%) (20%) (21%) (33%) (51%) (53%) (100%) (86%) (88%) (100%) Note: Total compounded shareholder return, including reinvested dividends, from 5/5/2004 to 5/5/2014 Source: FactSet and Capital IQ 8

10 Moments of Irrational Exuberance in Greenhill Stock History April 2006 Valued at $75.70 ($2.2 billion) $59.5 mm per Managing Director, $13.1mm per employee November 2008 Stock hits all-time high (1) of $85 the week Lehman collapses (1) All-time high as of that date Source: FactSet 9

11 Moments of Irrational Anxiety in Greenhill Stock History Greenhill Two Lowest Points of Past Ten Years October 2011 Weak quarter followed by misleading news story on personnel matters Stock closes at $27.31 Then rebounds 47% in less than a month, 95% within a year October 2015 Weak quarter followed by misleading news story on personnel matters Stock closes at $

12 Factors in Stock Underperformance Since 10 th Anniversary of IPO Narrow recovery in M&A activity disadvantages a truly global firm US focused recovery Primarily $10 billion+ deals Anomaly in timing of deal closings 2014 top deals: large majority closed same year 2015 top deals: large majority delayed beyond year end Increased number of Independent Advisory Firm (IAF) competitors and publicly traded peers 11

13 Life Cycle of IAFs: Founding Phase Founding partner group with small supporting cast Long-term lockups of Managing Directors Initially reliant on historic client relationships Promises of aggressive expansion To be followed by high revenue Then to be followed by high profitability Costs initially understated given RSU amortization rampup Little investor focus on GAAP earnings, share count, etc. 12

14 Hurdles IAFs Face Post Founding Phase (Which Greenhill Has Already Overcome) Lockups expire Some Managing Directors leave Retired? Made enough money? Lacked effectiveness on IAF platform? Recruiting more challenging Allure of IPO fades Law of large numbers Goals and promises less relevant than actual results True profitability and return of capital become more important 13

15 Factors That Will Determine Long Term Success for IAFs Right strategy to maximize returns, minimize risk Strong culture of integrity, excellence, teamwork Established in key sectors / geographies Recognized brand in boardrooms Strong base of repeat clients Still attracting new clients Demonstrable track record of real profitability Demonstrable track record of returning capital Still attracting new senior recruits Developing senior talent internally 14

16 Greenhill is Well Positioned for Long Term Success Right strategy Established in all the key places Brand externally strong and durable True profitability is core management philosophy Strong track record of returning capital Active manager of talent Culture internally is strong 15

17 Greenhill Strategy is Based on Proven Principles Pure advisory is best Peers have yet to prove success in other areas Minimizes capital needs and regulation, maximizes profit margin Global footprint is necessary, fully integrated global team is best Focus primarily on developed markets Most fees are generated there Emphasis on larger transactions Same amount of work as smaller deals, but much larger fees 16

18 Well Established In All the Key Places San Francisco (2008) Chicago (2008) Toronto (2006) New York (1996) London (1998) Stockholm (2012) Frankfurt (2000) Los Angeles (2009) Dallas (2005) Houston (2009) Tokyo (2008) Singapore (2015) São Paulo (2013) Sydney (2010) Melbourne (2010) 17

19 Strong Brand Repeat Transaction Clients in Note: Not a comprehensive list 18

20 Strong Brand New Transaction Clients in Greenhill Note: Not a comprehensive list 19

21 Strong Track Record of True Profitability Pre-Tax Margin (Including All GAAP Compensation Costs) GHL 41% 44% 35% 38% 21% 23% 25% 25% 25% LAZ 22% 22% 2% (12%) 8% 13% 6% 11% 23% EVR 33% 27% (5%) 7% 9% 7% 11% 18% 19% MC n.a. n.a. n.a. 12% 16% (2%) 10% 18% 9% HLI n.a. n.a. n.a. n.a. n.a. n.a. n.a. 18% 19% 8 Years of 25%+ GAAP Pre-Tax Margins vs. Only 2 for Peer Group Collectively Note: GHL 2005 pre-tax margin was 41%. Source: Public filings 20

22 Strong Track Record of Returning Capital Aggregate Dividends Paid ($MM) Current Dividend Yield (1) GHL $21.2 $36.9 $50.0 $53.6 $56.9 $57.7 $57.1 $56.2 $56.3 (2) (2) LAZ EVR n.a MC n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a HLI n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. (3) 7.1% 3.2% 2.3% 4.3% n.a. (4) Returned $500mm in Dividends (15%+ of Total Revenue) Since IPO Note: Includes dividends and dividend equivalents (1) Calculated based on current quarterly dividend and 11/13/2015 closing share price (2) Includes special dividend of $0.20 per share (~$25mm) and an accelerated dividend of $0.20 per share (~$25mm) in 2012; includes special dividend of $0.25 per share (~$32mm) in 2013 (3) Reflects all dividends paid in 2014 (since IPO in April 2014), including special dividend of $1.00 per share (~$54mm) (4) Announced plan for $0.15 dividend per share to begin in Q3 FY2016 Source: Public filings 21

23 Strong Track Record of Returning Capital Slight increase at Greenhill this year from Cogent acquisition % Change in Share Count Since Q Advisory Focused Firms Greenhill 2% (1) Lazard 33% (1) Evercore 78% Diversified Large Banks BofAML 171% Barclays 164% Citigroup 476% Credit Suisse 37% Deutsche Bank 156% Goldman Sachs (11%) JPMorgan 82% Morgan Stanley 76% UBS 246% Large Bank Average 155% Note: Share count growth based on reported average fully diluted shares outstanding in Q to Q (1) Share count growth based on shares outstanding since IPO Source: Company Filings and Releases 22

24 Actively Managing Talent: "Money Ball Comes to Wall Street" Greenhill Managing talent so as to maximize the team s win rate is the manager s primary job A team's "roster" should never be static: continual improvement is the goal of any good manager The press covers personnel moves on the GHL team almost as closely as it does for the But press views in our case are uninformed and often misleading 23

25 Understanding Individual GHL Personnel Moves The complexities around moving to a new team (gardening leave, disruption to active client assignments, role overlaps with players on new team, etc.) mean that there is always a high degree of long term player retention Players on our team batting circa.300 (or home run hitters with lower averages) will be well compensated and can typically be expected to remain happily on the team Work ethic, teamwork and other qualitative factors are also factors in compensation / retention at all levels Players on our team not batting at those averages will be coached towards improvement 24

26 Understanding Individual GHL Personnel Moves (cont.) Players who continue to underperform relative to our standards will be actively managed by the front office Veterans moved to part-time status or retired, or Cut from the team as quietly as possible out of respect for the player Meanwhile, promising rookies are regularly being drafted and advanced through our farm system, and talent scouts are always looking for additional players in their primes (we found 13 this year alone) Bottom Line: Talent Management is an Active and Complex Process: Rely on Manager, not Speculating Journalists, to Know What s Best for the Team 25

27 Strong Culture Despite Active Talent Management Greenhill 13 Managing Directors new to Firm in 2015 Two-thirds of Managing Directors joined 5 or more years ago (1) 4 Managing Directors promoted from farm system in 2015 A quarter of Managing Directors are internal promotes (2) Aiming for the Right Mix of Team Continuity and Continuous Improvement (1) Includes both Greenhill and Greenhill Cogent Managing Directors who joined prior to 1/1/2011 (2) Includes both Greenhill and Greenhill Cogent Managing Directors Source: Company Filings and Releases 26

28 Summary of Reasons for Confidence in Greenhill s Future (or, Why the CEO Invested $5mm+) Greenhill 1. Strategy of prudent growth, productivity, profitability and return of capital 2. Huge dividend yield that all analysts agree looks sustainable 3. Market overreacted to a weak quarter that should have been easily foreseeable (not many deal closings) 4. Market overreacted to misleading news story on personnel matters revenue pipeline looks much better, given backlog of large M&A deals and strength in Capital Advisory 6. M&A cycle should still be a positive for Greenhill: rebound ex US, or for deals sub $5bn, has barely started 7. Long history of high profitability 8. Long history of strong dividend and avoiding dilution of shareholders 9. Strong culture of excellence, collegiality and teamwork built over 20 years will continue to attract and retain talented bankers 10. Greenhill is a sustainable brand and business, one of few IAFs well past founding era risks 27