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Greenhill & Co., Inc (NYSE:GHL)

Q3 2011 Earnings Call

October 19, 2011 04:30 pm ET

Executives

Richard Lieb - CFO

Scott Bok - CEO

Analysts

Howard Chen - Credit Suisse

Devin Ryan - Sandler O'Neill

Douglas Sipkin - Ticonderoga Securities

Lauren Smith - KBW

Operator

Good day, and welcome to the Greenhill & Co. LLC third quarter earnings conference call and webcast. All participants will be in a listen-only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Richard Lieb, Chief Financial Officer. Mr. Lieb, the floor is yours, sir.

Richard Lieb

(inaudible) quarter 2011 financial results conference call. I'm Richard Lieb, Greenhill's Chief Financial Officer and joining me on the call today is Scott Bok, our Chief Executive Officer.

Today's call may include forward-looking statements. These statements are based on our current expectations regarding future events that by their nature are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions. The firm's actual results and financial condition may differ, possibly materially from what is indicated in these forward-looking statements. For a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

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 any of these forward-looking statements after the date on which they are made.

I would now like to turn the call over to Scott Bok.

Scott Bok

Thank you, Richard. We are quite pleased with the results we announced today. Our Advisory revenue for the quarter was $83.2 million, which is almost identical to our solid second quarter result despite what were some extremely difficult market conditions during the quarter.

Our last two quarters combined our best back-to-back Advisory revenue quarters since 2007 when M&A activity was hitting an all time high. The third quarter Advisory figure is down 14% from the prior year’s third quarter but it’s worth noting that last year’s third quarter was particularly strong, almost double our average of the other three quarters last year.

For the year-to-date, our Advisory revenue is up 11% and when you consider last year’s soft fourth quarter, and what I'm about to say about the outlook for the current quarter and beyond, it’s safe to say that we feel very good about where the full year Advisory revenue growth figure will come out, both, on absolute terms and relative to our analysts who are expecting our large event competitors to end up.

Our total revenue figure for the quarter was heavily impacted by the $23.6 million decline in the value of our stake in Iridium Communications, which is the last significant investment left from the Merchant Banking business that we announced our exit from two years ago.

Suffice it to say that Iridium’s operations have continued to perform very well but that it was one of many victims of the carnage in the financial markets in August and September.

It’s worth noting that the Iridium investment has still been a money maker for the firm since its inception but its volatility and the resulting distraction from our core business or such that we decided to adopt the plan to put the liquidation of that holding on auto-pilot and Richard will provide more detail on that in a moment. The sharp drop in the valuation of Iridium also somewhat distorted our compensation ratio for the quarter and Richard will also give more detail on that.

But stepping back and looking at the big picture, it’s important to note that two years ago we made the move to become a purely Advisory business. We’ve said then that all the principle investments that remained from our prior activities were simply being held until they could be liquidated. Of course, we want to maximize the value of the liquidation proceeds whatever they turn out to be, that liquidation is a one-time, non-recurring event that has no effect on our core Advisory business.

Since the liquidation proceeds are essentially going back to our shareholders, the only real impact of the value achieved is on how much stock we can buyback. What really determines the long-term growth and profitability of the firm is our Advisory business. So let’s turn back to that.

Our strong Advisory revenue for the quarter again demonstrated the breadth of our business. We list nine completed M&A transactions on our press release with the clients for those coming from five different countries. We’ve had a number of good transaction announcements lately as well and those, like wise, demonstrate the strength of our brand across North America, Europe and Australia.

We also noted in our release that our Private Capital Advisory group generated revenue on eight different private capital raisings in the quarter. We’ve made a significant investment in people to develop this business, particularly with the addition of a real estate focus team last year and I am pleased to say that they have now had time to build on a pipeline of projects and are having a meaningful revenue impact.

And apart from all these specifically identified revenue items, it’s worth noting that we continue to generate revenue from a wide variety of corporate, government and institutional clients in ways that are not transaction-based. Year-to-date, we’ve earned at least a $1 million from 51 different clients and that’s up 21% from the prior year. Last year we grew our $1 million dollar or greater fee paying clients 33% for the full year.

Now let’s turn to the outlook. On our last quarterly call, I said that you would have to go back multiple years to find us good a set and large, important and high probability assignments as we had then. Despite what happened in the stock markets around the world in August and September that statement remains true today and perhaps that is now a bit more visible from the outside as a result of a second consecutive strong revenue quarter and some major recent transaction announcements.

Our outlook reflects the continuing higher level of activity in Australia and improving levels of activity in North America, Europe and Japan. The pipeline of fund placement assignments also is continuing to develop favorably after a difficult few years and we’re even seeing a bit of an uptick in restructuring activity after a fairly dormant year or so given the change in credit markets.

I recognize the data for the entire M&A market suggest that what we are seeing is different from what others may be seeing. I think the root causes of that are the continuing trend towards use of independent advisors which is perhaps particularly so in turbulent times like these as well as the fact that our many senior recruits from the 2008 to 2010 period are now hitting their stride after the initial ramp-up period.

I am certainly not saying our pipeline is immune to whatever may happen in the economy or markets globally, but it’s so far so good when it comes to the impact of recent market activity.

Now I’ll turn it over to our CFO Richard Lieb to talk about our costs, profitability and continuing efforts to return excess cash to shareholders.

Richard Lieb

Thank you, Scott. I want to touch on four broad topics today. First, the compensation cost for the year-to-date and importantly for the year as a whole. Second, non-compensation cost including taxes. Third, balance sheet issues including a discussion of the recent 10b5-1 program we filed for Iridium shares. Finally, I will provide some commentary on how we see our operating performance and the continued liquidation of our principal investments driving our share repurchase strategy, our dividend and our debt levels.

First, let's talk about the compensation ratio, and I want to first step back as I did in the last call and discuss our philosophy and our history. The philosophy that we laid out at the time of the IPO is strived to keep the comp ratio below 50%. This is obviously good for shareholders and is also good for employees as we believe it leads to a stronger stock evaluation overtime which is critical as employees have meaningful stock and RSU positions and will continue to receive meaningful levels of RSUs as part of compensation going forward.

For our first six years as a public company, we came in lower than our stated objective with a comp ratio of right around 46% each year. While that level remains our goal, last year we did not achieve it. After three years of meaningful expansion of our professional staff and three very difficult business years in terms of general market transaction activity, our compensation ratio came in at 57%, still strong on a relative basis, but inconsistent with our objective.

So now let's turn to where we stand this year. The third quarter, we were at 50% which is slightly above our historical target. On a year-to-date basis, the comp ratio was 54%, also above the historical target. I do want to stress that those ratios are strongly negatively impacted by the mark-to-market losses and are effectively discontinued in principle businesses particularly the value of our shares in Iridium. We look at our comp ratio as a percentage of our advisory business, which is our sole business going forward, the year-to-date ratio would be just under 50%.

So now the question is where we would be for the full year? The answer is, as it was on the last call, it is going to depend on how the year plays out, but you’ve already heard our comments about a strong level of client activity and you can see how focused we are in this issue, so you can see directionally where we hope to be going.

Let me add to that, in setting our comp ratio we obviously need to plan to pay our employees competitively. Based on our year-to-date results and our expectations for year end, we are quite comfortable we are on track to do that.

Now let’s talk about our non-comp and other expenses. Our quarterly non-comp expenses came in at $16.9 million, about $1 million or 6% higher than last quarter and about $1 million higher than we would like to see it. This quarter was impacted by major quarter-end foreign currency fluctuations and higher travel activity for client development, also had an impact. On the other hand our tax rate of 34% was a bit lower than usual given we generated more revenue in lower tax jurisdictions.

With regard to balance sheet items there are a number of issues I want to address. First, let’s discuss the progress we are making in exiting our principal investments. Just to review, in June we sold substantially all of our limited partnership interest in two of our four funds for approximately $49 million. The proceeds from these sales were used for exactly, as we said they would be, primarily for share repurchases. Over the past two quarters we have repurchased approximately 810,000 shares in the open market.

Continuing our exit in the principal investment business, earlier this month, we initiated a 10b5-1 program for our shares in Iridium. Just as a reminder, as a result of our successful completion of our stock in 2009, we own just under 10 million shares in Iridium or approximately 13% of shares outstanding. Our 10b5-1 program represents the way to slowly sell our Iridium position with what we believe to be the least amount of impact on Iridium stock price.

At the pace we have designated in the program, we would expect it would take approximately two years or longer for us to sell our full position. We intentionally stretched it out and hope of achieving higher prices overtime. But as Scott noted, this is a one-time event and the ultimate proceeds will be what they will be.

Our net cash position remains strong. At the end of the quarter, we had approximately $62 million in cash and approximately $25 million drawn in our line. Even though our line was in place historically primarily to fund capital costs from our now mostly exited fund business, we would expect to continue maintain a strong net cash position.

To have all of this fit together, we believe that the market is presenting us with a great opportunity now. We have the ability to generate meaningful cash first from our operations and second from the continued liquidation of our principal investments, including both or nearly 10 million shares in Iridium that I just spoke about, as well as our remaining fund investments worth approximately $28 million net to us today.

Given our meaningfully reduced capital commitments going forward, the cash generated can be utilized to continue to both pay a strong cash dividend and to continue our program of share repurchases while still keeping our debt levels low.

Now let me turn it back to Scott for some final comments.

Scott Bok

Thanks, Richard. I think it’s important for us to regularly reiterate what we are trying to achieve as a firm and then measure how we are doing versus those objectives. Our four stated objectives are to continually increase our share of the global advisory people, to have lower cost than our peers and to maintain a flat share account and a strong dividend.

As we come down the home stretch of 2011, we feel on-track with respect to each of these objectives. You’ve heard how our advisory business is continuing to grow in breadth and scale, you’ve heard that our costs are below our closest peers with the objective of going still lower and as for dividends and share repurchases, you’ve seen the continuation of our strong dividend as well as $36.7 million spent on open market share repurchases for the year-to-date.

Our actual results for the year are turning out quite satisfactorily. Perception has sometimes been different as various market commentators have raised a variety of questions over the year. I think it’s worth briefly responding to those now the more actual data is out.

First, we read or heard claims that we couldn’t maintain our dividend and sometimes even extending a modest line of credit would be a problem. The continuation of our dividend along with significant share repurchases all the while reducing our debt to a minimal level hopefully clarifies those issues.

Second, we heard a variety of people related comments, for example, that we were loosing a lot of key people and that our new recruits weren’t as productive as our earlier partners. And the first of those, the fact is that this is another year of strong continuity in terms of our senior bankers and I don’t think there is a region or an industry sector where we’re not least as strong today as we were at the beginning of the year.

Well broadly on people, we will end the year with only a slightly smaller headcount when we started with without the pain of widespread lay-offs that many firms are having to deal with. We will continue to fine tune and upgrade our roster of talent overtime as we’ve always done in order to build the best possible teams. And speaking of upgrades, our newer partners are proving their capabilities this year as demonstrated by our great success in newer offices like Chicago, Houston and Sydney as well as newer businesses like fund placement.

Third, we heard that our compensation cost have grown too high, and while they did get out of line with our history and last year’s fourth quarter and this year’s first, the data for the full year 2010 as well as for the year-to-date 2011, reflects lower compensation costs on our closest peers on a comparable GAAP basis. And as Richard said our goal is to get all the way back to our historically low cost levels as soon as market conditions allow and I think that intention is evident in our last two quarterly results.

Lastly, perhaps as a result of the combination of the various concerns noted above we heard that our business model was flawed and that it was both, non diversified enough and no longer capable of generating the growth it had historically. The short answer is that our 7.5 year record on market share cost, share account and dividend proved the attractiveness of our business model. But to answer the question more directly, the fact is that the continuing strength of our Advisory business across different geographies, industry sectors and types of advice, demonstrate the diversity of our revenue sources and we can achieve that diversity without entering businesses that have significant capital requirement or regulatory issues or create conflicts with our clients.

And as to growth, the resilience of our Advisory business in the face of this year's choppy market demonstrates our ability to generate growth. We will confess to being opportunistic on how we pursue growth, which explains our aggressive hiring in the financial crisis and almost no hiring during this year, which initially looked like it will be a good one for both market and our large competitors.

Now with renewed concerns about the big bank model, we are again seeing high quality recruits come our way and we will look to selectively capitalize on those opportunities in the months to come. With that let me open it up for questions.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions.) The first question we have comes from Howard Chen of Credit Suisse. Please go ahead.

Howard Chen - Credit Suisse

Macro uncertainties heightened, markets are pretty volatile. As you said, Scott, you remain pretty constructive on the revenue backlog. As you in the team, stand in front of corporate boards and CEOs, what do you think is maybe driving some of that disconnect for us that just obviously aren’t in the room?

Scott Bok

I think it comes from really who our client base is and that, we know, I think everybody knows we don’t do a lot of work for private equity funds. We also don’t do a lot for smaller or mid-sized companies that maybe are more dependent, have more leverage or dependant on their banking relationships. We tend to work with the biggest companies in each market that we’re in and I think while we can all agree that governments right now are quite weak in many ways, their consumers are quite weak but the major corporations are really still quite strong.

I mean, you see even the earnings begin announced over the last week or so, earnings look pretty good, the leverage still looks quite low, capital was incredibly available for major companies that want to borrow it and I think as a result of all of that, at least what we are seeing is that our client base appears to want to proceed with their strategic objectives of acquiring things, or divesting things, not withstanding the facts that there is a lot of bad news in markets.

Howard Chen - Credit Suisse

And then I think you had made some commentary about some of the early, your early view of a hiring outlook for 2012 potentially being a big one for you all, just any above thoughts on that?

Scott Bok

I mean I don’t think its going to be huge in the way that 2008 or ‘09 or ‘10 were but I have seen, I would say, frankly, a marked change since around Labor Day. I mean, obviously August was a horrific month in the market and a horrific month for our big bank competitors and it looks like we’re seeing some very high quality talent that looks like it may flush out of those banks again. So I don’t think it’s going to be a giant year for recruiting but I’ll be certainly surprised that we don’t add some really high quality people in the months to come.

Howard Chen - Credit Suisse

Great, thanks and then I just had two quick ones on the numbers, Richard,. First, can you just let us know the impact of the RSU amortization on the comp this quarter?

Richard Lieb

Just to make sure, I just want to see what’s out there right now versus what’s going to be in the Q.

Scott Bok

I think that’s there, we just put in the 10-Q.

Richard Lieb

Yeah, I think that’s going to be in the filing because right now all that’s out there was actually in the press release, which I was just going back to check for a moment. So that information would wait till it’s filed for everyone in the queue.

Howard Chen - Credit Suisse

Okay, great. And then just the second one that’s helpful commentary on just going through the state of the balance sheet as you see it. I guess, before we think about any proceeds from Iridium, how do you all think about the pace of share repurchase from here? Is there a way for us to kind of frame the dry powder as you see it? Thanks.

Scott Bok

That’s a hard one to quantify because it’s for us, frankly we hope that will be quite meaningful and maybe flat will be an understatement, frankly if trends continue when we continue to see a strong Advisory business, but essentially what we do is we do on a very regular basis. We do cash flow forecasting. Again, we don’t have a lot of uses for cash, our debts nearly paid down to zero. We don’t have much in the way of capital investment at all. We have minimal commitments left to our funds. So we kind of look out at what we’re working on, what the receivables are, what the pipeline looks like, what the asset sale proceeds are going to be going forward and it’s kind of continually recalculate what we can afford to buy back without leveraging out, which is what our objective is. We don’t intend to borrow lot of money to buy back stock, but we do, we are hopeful there would be meaningful cash we can use to buy back shares without levering up.

Operator

The next question we have comes from Devin Ryan of Sandler O'Neill.

Devin Ryan - Sandler O'Neill

Just to be a little more clear on the comments about the impact of, I guess, that you’re not seeing much of an impact of the book of active advisory assignment, just want to get a sense of, are you seeing any impact on the timing of when the deals are being announced versus maybe what you had previously expected or I’m seeing an impact on maybe the pace of new deals filling in to the backlog relative to what you had been expecting prior to the market volatility picking up?

Scott Bok

Devin, I said, it kind of surprises me every time I am able to say this, but we really have not seen a big impact on timing. I won’t say we have seen no impact. Certainly some deals need to be renegotiated or restructured given changing stock prices or changing credit markets, but there’s not been a big impact and frankly, there have been other things that, frankly, have been somewhat accelerated by varying some ends in the market around the world. So I don’t see a big impact on timing. Obviously, if things get worse certainly there could be, but so far we have not seen it. And on the new assignments, frankly, again I would say no. We’ve not really seen any kind of slowdown in that, I mean at a firm our size that comes in fits and starts all the time, but it’s, certainly, many times in my career I can remember, post 9/11, post the long-term capital failure, post the stock market crash of ‘87 where things kind of went quite for a couple of months. I would not say things have gone anything like quiet in terms of new opportunities as a result of August, September.

Devin Ryan - Sandler O'Neill

Okay. Good to hear and then just on, I guess, the fourth quarter and given, what to me sounded like positive expectations for the fourth quarter, are there more substantial deals that need to be announced to maybe fulfill that or is it just more function of deals that are already out there just being closed or getting closed as expected?

Scott Bok

I probably can't comment momentarily specifically on that, I mean, obviously when we talk about how the future looks we’re not sort of making raw assumptions. But when we do that we try to be pretty realistic about what's going to happen and clearly we are at a time of the year where there aren't going to be a whole lot of transactions announced by anybody in this market in the remaining 10 weeks or whatever it is of the year that that are going to close this year. There will be some because some private company deals or asset sales you can’t close also within a month or so but there won’t be a huge amount more of those if that’s helpful to you.

Devin Ryan - Sandler O'Neill

That is helpful, I just want to make sure. And then lastly, I apologize if you guys touched on this, but getting back just to uses of capital and cash how much – it sounded like acquisitions in the Latin America that may be seem to be on the radar in the recent quarters. I just want to get a sense of any change in appetite there or getting any closer to may be finding something on that front?

Scott Bok

I think no, no certainly no change in strategic appetite at all, but still on objective to expand further geographically. But frankly, and you’ve heard in our comments about share repurchases given where our share price has been and is we’re not excited about issuing stock, even when I am talking about huge amounts, but even in small amounts we’re not excited about issuing at this kind of level. So we would rather be a buyer than a seller of our stock and we’ll revisit, I would expect, even in the fairly near-to-medium term going ahead with those expansion plans, but not immediately.

Devin Ryan - Sandler O'Neill

Okay, got it.

Richard Lieb

And one thing I would add there is, because you kind of link that with uses of cash even if we were to go ahead with something like that consistent with how we've done other things in the past, I don't think that those would be big uses of cash anyway of what we want to restructure it in a very different way.

Devin Ryan - Sandler O'Neill

Sure, okay. Fair enough. And then just lastly back to the comp expense and the amortization, I know you guys don’t want to give that number, but just as we think about the impact going forward is there going to be a material impact on, I guess the fixed amortization expense, was it enough on the reversal to help materially I guess in future quarters?

Scott Bok

I mean clear -- it’s hard there are so many -- we’ve kind said what our “fixed compensation cost” is for this year and there really are no material change at all. And I think as you look forward to next year, I mean, clearly there is an ongoing benefit to the extent that somebody who had RSUs are there are a couple of people you are aware of gave those back and the effect of that clearly that has some kind of a long-term impact.

But there are lots of factors that come into as well in terms of how much stock we pay out at year end, how many recruits we bring in and what stock we give them, whether we do a deal and in Latin America or something like that. So it’s really premature for us to say anything about what we think that the dollar to amortization or in fact the “fixed compensation cost” will be for 2012.

Certainly our hope is and it’s always sort of kind of more normal positive environment is that you don’t spend a whole lot of time thinking about what’s your kind of minimal fixed compensation cost I mean for the first (inaudible) we went public we never thought on those terms. It was only when things got very difficult for a very long period that you start bumping up against what the minimum. Hopefully, if things continue to evolve that’s not going to be a focus of ours next year.

Operator

The next question we have comes from Douglas Sipkin of Ticonderoga. Please go ahead.

Douglas Sipkin - Ticonderoga Securities

Three questions: First, can you maybe go into little bit more detail about the private placement business, I mean, it really looks like that business is finally starting to hit its stride. Is there something in the market or is there more just you guys just added and finally just really knocking down the doors of clients? And then maybe give us the outlook for that business. It just seems like more and more people are looking to diversify until alternatives private equity what have you, so it seems to make sense that the outlook is pretty good there. And that’s just question one?

Scott Bok

Sure, okay. Clearly, we are picking up some good traction there and I would say it’s for two reasons. Remember we have kind of two halves of really the same group. One was private equity fund and they have been with us a few years, but it’s been a brutally difficult few years I mean and there was a kind of a backlash again still liquid investments by institutions, many of whom would become overcommitted before the bubble effectively burst and the financial crisis came. So it’s a very difficult period for them.

And then the second half of that group was the real estate groups that only joined us at the end of last June. And if you think about how long it takes to raise these funds, I think, the sort of the databases will tell you the average fund was like, I think 15 months or something like that raising fund now.

So even if they got hired on something six weeks after arriving and then they went on broader perspectives and then they started marketing clearly it’s only really in this quarter – in this third quarter that you would have started to see any kind of meaningful impact even in a positive scenario. And just, as what had happened really at that same time the market was loosening up and our longer term private equity team which obviously been there longer started to get better results.

So I think in our recent investor presentations and the number that we listed by type, the various deals by distress debt, healthcare in Asia whatever that we’re working on, and I think that’s a pretty good representation. I think there are about a dozen deals on that list and that’s probably a decent representation of how many we have in the market at any given time.

The revenue was as we said on those pages, it kind of ranged from as little as $1 million if somebody wants you to raise money may be in this one region of the world or may be to top-up on a fund that already exists up to something like $10 million or potentially more for our big funds where you have a solid global advisor.

On average, it’s probably sort of toward the middle of that and again those fees as we’ve said don’t all come in one lump. Even the most successful fund, I would say, probably ends up having three or four closes so you get paid a third or quarter of your fee when each one of those kind of closings or commitments takes place.

So we are quite hopeful as we always have been, but now the hope is kind of coming to fruition that this will become quite a meaningful business for us and when you look at sort of the productivity of the people in that area that ultimately there is no reason it should look that different from the productivity of people who do M&A.

Douglas Sipkin - Ticonderoga Securities

Got you. Okay, second question I know you guys don’t do IPOs or secondaries or anything like that, but I mean, is there an opportunity for you guys in Europe to serve as an advisor; I know you guys have done more of that, I mean obviously the papers are suggesting some significant capital raises there, rights offerings what have you, I mean, is there an opportunity for you guys or is that more going to be a function of sort of the big banks who can underwrite stuff?

Scott Bok

We certainly do have a history mostly outside the U.S., a few examples in U.S., but mostly in the UK and in Australia where we have advised on rights issues or on equity offerings where the client wanted an independent advisor alongside the underwriters. And I think there is some scope for that and clearly that’s part of what is kind of the revenue that you don’t see through your Dealogic databases. I don’t think it’s probably an enormous one, but having said that, I think, our sort of non-M&A business seems to be continuing to grow and I think that's an important part of it.

Douglas Sipkin - Ticonderoga Securities

And then just finally, I am just curious, I mean did you guys ever disclose sort of a separation agreement in terms of how should we be thinking about future stock, sales for certain critically important former employees, I am just trying to gauge how do we think about that over time as it may impacting the stock or maybe an opportunity for you guys to buy that over time?

Scott Bok

We certainly haven't, and at this stage I really wouldn't worry about that. I mean there certainly was a day when a lot of stock was held by a small number of people, but if I just look at what the current holdings are for people like myself and some of the people who moved on or retired have holdings similar to mine, the percentages are really quite small, and I think if you look at it relative to the trading volume of our stock I don't think, frankly, even if somebody wanted to sell a whole bunch of it in a hurry, which I would be surprised if anyone wanted to do, but if they did, I can't see that having some big impact. But it would have been different two or three years ago. But I mean that's the reason we did those various secondaries to get a much more liquid stock and to reduce the overhang from the top six or eight individuals.

Douglas Sipkin - Ticonderoga Securities

Got you. And then just finally, I know I have a bunch, I mean nothing happened with boards or the like in like early October, I mean it just sort of seems like we are still dealing with all this uncertainty but yet M&A seemed to really perk up here in the last two weeks. Is that just a coincidence? I mean not just for you, for the whole industry.

Scott Bok

I know, I think my argument that the big companies, the sort of Fortune 250 and the global equivalent of them are still kind of steadfastly pursuing their strategic objectives. I actually think it’s true. And maybe some of those deals, it’s probably fair to say, would have been announced in the second week of September and got pushed back a little bit because there was just such crazy volatility in August and September, but obviously those time delays didn’t turn out to be very meaningful because again it’s not just as you’ve said, but they’re really quite a lot of good announcements, and all you did was watch CNBC in August and September, you think everybody would have put their pencils down but clearly that’s not what we’ve seen and now that we see more announcements come out, that’s clearly not was happening.

Operator

And the next question we have comes from Lauren Smith of KBW.

Lauren Smith - KBW

I guess we’ve covered most things here. So, one, just really kind of housekeeping, and then just one other question. What was your MD headcount at the end of the quarter and total headcount?

Scott Bok

MDs is I think 65, total headcount, as I said, is very modestly down from where it was. I think in the beginning there was 323 as I said we will probably end the year-end maybe 315 or something like that. I mean it’s really modestly down from where we started the year.

Lauren Smith - KBW

Okay. Great. And then I was interested in, Scott, in your opening commentary where you mentioned that restructuring is beginning to pick up again and maybe if you could just elaborate a little bit what you are hearing and seeing and was there any thing meaningful in the quarter related to restructuring or was it all really peer, advisory, private fund placement, etcetera?

Scott Bok

I would say, it was really to take the last part of your question, that was a really a minimal impact in Q3. I think what I am saying, and I don't want to play this stuff as kind of a huge factor yet which is why I said there's a slight uptick because again M&A still feels like it’s developing quite nicely for us and that usually that's kind of counter cycle to the restructuring activity.

But given what happened in credit markets, sort of closing in the high-yield market effectively and things like that. We did certainly see some new assignments pop-up which really when credit markets were kind of wide, wide open, you really weren’t seeing most of all and those, what that means is some retainers for Q4 and beyond that that wasn’t like we kind of how long these things take with that I mean excess fees in September or something.

But it was, I mean it’s a good thing for us because it’s I think the biggest swing factor between, for example, the results we had last year and what we hope to have this year and what we hope to have next year is some of the more dormant areas like a little more restructuring activity, a more upon placement activity, more out of Europe, I mean it’s those kind of things where the comparison is so, so low last year where there is the most upside for us to get meaningful improvement overall.

Lauren Smith - KBW

Great, thanks a lot. That’s very helpful. I appreciate it.

Scott Bok

Okay. I think that’s our final question. Thank you all for your time and we’ll speak to you again in the quarter. Thank you.

Operator

And we thank you gentlemen for your time. Today’s conference call is now concluded and we thank you all for participating in today’s presentation. At this time, you may disconnect your lines. Thank you.

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