UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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):  

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 United States Securities and Exchange Commission (the “SEC”). You may read and copy any document the company files at the SEC's public reference room located at 100 F Street, N.E., Washington, D.C. 20549, U.S.A. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The company'sOur SEC filings are also available to the public from the SEC'sSEC’s internet site at http://www.sec.gov. Copies of these reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, U.S.A.

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'sSEC’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 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. You may need to have Adobe Acrobat Reader software installed on your computer to view these documents, which are in PDF format. 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.

Part I. Financial Information

Item 1. Financial Statements

(in thousands except share and per share data)

See accompanying notes to condensed consolidated financial statements (unaudited).

(in thousands except share and per share data)

See accompanying notes to condensed consolidated financial statements (unaudited).

(in thousands)

See accompanying notes to condensed consolidated financial statements (unaudited).

(in thousands, except per share data)

See accompanying notes to condensed consolidated financial statements (unaudited).

(in thousands)

See accompanying notes to condensed consolidated financial statements (unaudited).

Note 1 — Organization

The Company'sCompany’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 LLP (“GCE”), and Greenhill & Co. Australia Pty Limited (“Greenhill Australia”) and Greenhill Cogent, LP (“GC LP”).

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 and GCE are engaged in investment banking activities in the United Kingdom and Europe, respectively, and are subject to regulation by the U.K. Financial Conduct Authority (“FCA”). 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”). GC LP is engaged in capital advisory services to institutional investors principally in the United States and is registered as a broker-dealer with the SEC and FINRA.

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

These condensed 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 investment valuations, compensation accruals, income tax expense related to the Tax Cuts and Jobs Act, and other matters. Management believes that the estimates used in preparing its condensed 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.

The condensed 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.

These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 20172018 included in the Company'sCompany’s Annual Report on Form 10-K filed with the SEC. The condensed consolidated financial information as of December 31, 20172018 has been derived from audited consolidated financial statements not included herein. The results of operations for interim periods are not necessarily indicative of results for the entire year.

Cash and Cash Equivalents

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“Note 3 — Cash and Cash Equivalents"Equivalents”.

Advisory 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 $0.0$0.1 million and $0.3 million for the three and nine month periods ended SeptemberJune 30, 2019 and June 30, 2018, respectively. The Company recorded bad debt expense of $0.3respectively, and $0.4 million and $1.1$0.3 million for the three and ninesix month periods ended SeptemberJune 30, 2017,2019 and June 30, 2018, respectively.

Included in the advisory fees receivable balance at SeptemberJune 30, 20182019 and December 31, 20172018 were $24.6$15.9 million and $29.3$20.0 million, respectively, of long term receivables related to primary capital advisory engagements which are generally paid in installments over a period of three years.

Credit risk related to advisory fees receivable is disbursed 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.

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 at least annually. 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.

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 condensed consolidated statements of changes in stockholders'stockholders’ equity.

Other Assets

Included in other assets in the condensed consolidated statements of financial condition are the Company'sCompany’s investments in merchant banking funds, which are recorded under the equity method of accounting based upon the Company'sCompany’s proportionate share of the estimated fair value of the underlying merchant banking fund'sfund’s net assets. Other assets also include prepaid compensation awards that require a future service period and are subject to clawbacks if the individual ceases employment prior to a determined date. The awards are amortized over the required service period, which generally does not exceed one year. Other prepaid expenses, rent deposits, intangible assets and other tangible assets are also included in other assets.

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.

Restricted Stock Units

The Company accounts for its share-based compensation payments by recording the fair value of restricted stock units granted to employees as compensation expense. The restricted stock units are generally amortized ratably over a fourthree 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'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'stockholders’ equity.

Earnings per Share

The Company calculates basic earnings per share (“EPS”) by dividing net income by the sum of (i) the weighted average number of shares outstanding for the period and (ii) the weighted average number of shares deemed issuable due to the vesting of restricted stock units for accounting purposes. See "Note“Note 7 — Equity"Equity”.

The Company calculates diluted EPS by dividing net income by the sum of (i) basic shares per above and (ii) the dilutive effect of the common stock deliverable pursuant to restricted stock units for which future service is required. Under the treasury stock method, the number of shares issuable upon the vesting of restricted stock units included in the calculation of diluted EPS is the excess, if any, of the number of shares expected to be issued, less the number of shares that could be repurchased by the Company with the proceeds to be received upon settlement at the average market closing price during the reporting period. See "Note“Note 8 — Earnings per Share"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'sCompany’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

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 condensed consolidated statements of changes in stockholders'stockholders’ equity. Foreign currency transaction gains and losses are included in the condensed consolidated statements of operations in other operating expenses.

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:

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“Note 4 — Fair Value of Financial Instruments"Instruments”.

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 10 years or the remaining lease term

The Company'sCompany’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 capital advisory services. The Company earns less than 1% of its revenues from interest income and investment gains (losses) on investments.

Recently Adopted Accounting Pronouncements

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

In May 2014, the FASB issued ASU 2014-09 "Revenue“Revenue from Contracts with Customers"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'sCompany’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 FebruaryJune 2016, the FASB issued ASU No. 2016-02, Leases ("2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (“ASU 2016-02"2016-13”). This ASU 2016-02 requires thewill change 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 lease assets and lease liabilities for operating leases, among other changes. This ASU also requires expanded disclosures about the nature and terms of leases. Managementcredit losses. The Company is currently evaluating the impact of the future adoption of ASU 2016-022016-13 on the Company’s consolidated financial statements, including the anticipated gross up for leased right-of-use assets and liabilities for the present value of future lease obligations on the consolidated statement of financial condition.

Note 3 — Cash and Cash Equivalents

The carrying values of the Company'sCompany’s cash and cash equivalents are as follows:

The carrying value of the Company'sCompany’s cash equivalents approximates fair value. See "Note“Note 4 — Fair Value of Financial Instruments"Instruments”.

Letters of credit are secured by cash held on deposit.

Note 4 — 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 SeptemberJune 30, 2019, the Company had Level 1 assets measured at fair value. As of December 31, 2018, the Company had Level 1 assets and Level 2 liabilities measured at fair value. As of December 31, 2017, the Company had Level 1 assets and Level 3 liabilities measured at fair value.

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“Note 3 — Cash and Cash Equivalents"Equivalents”.

In connection with the acquisition in April 2015 of Cogent Partners, LP and its affiliates ("Cogent") (now(“Cogent,” now known as the secondary 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"“Earnout”). The cash payment and the issuance of common shares related to the Earnout were to be made if secondary capital advisory revenues of $80.0 million or more arewere earned during either the two year period ending on the second anniversary of the closing or the two year period ending on the fourth anniversary of the closing. The revenue generated by the secondary capital advisory business for the first two year period ended March 31, 2017 was slightly less than required to achieve the Cogent earnout. In the third quarter of 2018, the earnoutThe Earnout for the second two year period endingended March 31, 2019 was achieved, and in accordance with terms of the purchase agreement, the contingent consideration will bewas paid promptly after the fourth anniversary of the Acquisition.in April 2019. The fair value of the contingent cash consideration was valued on the date of the acquisition at $13.1 million and iswas remeasured quarterly based on a probability weighted present value discount that the revenue target may be achieved. At SeptemberJune 30, 2018, based on the present value of the remaining term, the2019, no contingent cash consideration that will be paid as a resultliability remained after the payment in the second quarter of 2019. Additionally, there was no impact on operating expense subsequent to March 31, 2019 because the earnout being achievedliability was valued at $17.8 million based on a 12.6% discount rate.recognized in full. Due to the remeasurement of the Earnout, for the three and ninemonth period ended June 30, 2018, the Company recognized an increase in other operating expenses of $2.7 million. For the six month periods ended SeptemberJune 30, 2019 and June 30, 2018, the Company recognized increases in other operating expenses of $0.4$0.6 million and $4.0 million, respectively. For the three and nine month periods ended September 30, 2017, the Company recognized an increase in other operating expenses of $1.9 million and a decrease in other operating expenses of $5.6$3.6 million, respectively. See "Note“Note 7 - Equity” and “Note 8 — Earnings per Share"Share”.

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.Earnout prior to its settlement in April 2019. The liability arose as a result of the acquisition of Cogent and until September 30, 2018, was categorized as a Level 3 liability. Through March 31, 2019, the liability andwas remeasured each quarterly periodquarter based on the probability of achieving the target revenue threshold and weighted average discount rate as discussed below. In the third quarter of 2018, the liability was transferred to Level 2 as the only remaining fair value input iswas the present value discount until the earnout is paid.discount.

Changes in Level 3 liabilities measured at fair value on a recurring basis for the three and ninesix month periods ended SeptemberJune 30, 2018 are as follows:

Realized and unrealized gains (losses) are reported as a component of other operating expenses in the condensed consolidated statements of operations.

Note 5 — Related Parties

At SeptemberJune 30, 20182019 and December 31, 2017,2018, the Company had no amounts receivable from or payable to related parties.

Prior to June 2018, the Company subleasessubleased airplane and office space to a firm owned by the Chairman of the Company. The Company recognized rent reimbursements of $0.0 million for the three months ended September 30, 2018 and less than $0.1 million for each of the three months ended September 30, 2017 and ninesix month periods ended SeptemberJune 30, 2018 and 2017.2018.

Note 6 — Loan Facilities

In October 2017, as part of a recapitalization plan, the Company entered into a new credit agreement with a syndicate of lenders, who lent a principalface amount of $350.0 million under a five-year secured term loan facility ("(“2017 Term Loan Facility"Facility”) and provided a three-year secured revolving credit facility ("(“Revolving Loan Facility"Facility”) for $20.0 million, which was undrawn at closing. The 2017 Term Loan Facility required quarterly principal amortization payments of $4.375 million beginning March 31, 2018 through September 30, 2018 and the Revolving Loan Facility together are referred to as the "Secured Loan Facilities". In conjunction with the borrowings under the Secured Loan Facilities,thereafter required quarterly principal amortization payments of $8.75 million.

On April 12, 2019, the Company incurred expenses of $11.5 million, consisting of original issue discount of $1.75 million and deferred financing costs of $9.8 million, which were recorded as a reduction in the initial carrying value of therefinanced its 2017 Term Loan Facility. These costs are being amortized into interest expense overThe new principal amount of $375.0 million from a new five-year secured term loan facility (“Term Loan Facility”) was used to repay in full the lives$319.4 million outstanding principal balance of the obligations. In conjunction with2017 Term Loan Facility, pay fees and expenses and resulted in net cash proceeds of $48.3 million, which increased the borrowingCompany’s cash balance. Under the terms of the 2017 Term Loan Facility, the Company used a portionwas eligible to repay, refinance or reprice the outstanding principal amount of the proceeds to repay in full outstanding borrowingsloan facility as of April 12, 2019 without any incremental premium or other charge.

Borrowings under the previously existing revolving bank loan facility.

The Term Loan Facility requires quarterly principal amortization payments of $4.375$4.7 million which began on(or $18.8 million annually), beginning September 30, 2019 through March 31, 2018 and continued through September 30, 2018, and $8.75 million (or $35.0 million annually) beginning December 31, 2018 through September 30, 2022,2024, with the remaining outstanding balance of the Term Loan Facility due at maturity on OctoberApril 12, 2022.2024. In addition, beginning for the year ended December 31, 2018,2019, the Company ismay be required to make annual repayments of principal on the Term Loan Facility within ninety days of year endyear-end of up to 50% (determined based on the net leverage ratio) of its annual excess cash flow as defined in the credit agreement.agreement based on a calculation of net leverage. 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.

Note 7 — Equity