UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark one)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20202021
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)

______________________________________________________________________________________
Delaware51-0500737
(State or Other Jurisdiction
of Incorporation or Organization)		(I.R.S. Employer
Identification No.)
1271 Avenue of Americas
New York, New York
10020
(ZIP Code)
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: (212) 389-1500


Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, par value $0.01 per shareGHLThe New York Stock Exchange
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 and posted 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  ☑    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 filerþNon-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No   ☑ As of OctoberJuly 30, 2020,2021, there were 18,972,15819,136,172 shares of the registrant’s common stock outstanding.




TABLE OF CONTENTS
  Page
PART I.
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3.
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4.
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1.
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1A.
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2.
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3.
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5.
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6.
E-1
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Exhibits
  Page
PART I.
1.
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5
6
7
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2.
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3.
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4.
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1A.
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2.
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3.
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4.
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6.
E-1
1
Exhibits

2


AVAILABLE 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 United States Securities and Exchange Commission (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. 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.
3



Part I. Financial Information
Item 1. Financial Statements
Greenhill & Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Condition
(in thousands except share and per share data)
As of
September 30,December 31,
20202019
(unaudited)
Assets
Cash and cash equivalents ($9.7 million and $9.8 million restricted from use at September 30, 2020 and December 31, 2019, respectively)$90,738 $113,975 
Fees receivable, net of allowance for doubtful accounts of $0.3 million and $1.1 million at September 30, 2020 and December 31, 2019, respectively25,817 77,766 
Other receivables17,630 2,519 
Property and equipment, net of accumulated depreciation of $48.9 million and $47.7 million at September 30, 2020 and December 31, 2019, respectively10,467 6,281 
Operating lease right-of-use asset78,688 28,346 
Goodwill207,833 205,992 
Deferred tax asset, net61,348 51,278 
Other assets10,194 8,218 
Total assets$502,715 $494,375 
Liabilities and Equity
Compensation payable$16,015 $26,878 
Accounts payable and accrued expenses16,637 12,412 
Current income taxes payable4,856 9,653 
Operating lease obligations84,213 30,750 
Secured term loan payable340,598 358,003 
Deferred tax liability26,976 12,004 
Total liabilities489,295 449,700 
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 48,642,520 and 46,801,812 shares issued as of September 30, 2020 and December 31, 2019, respectively; 18,963,567 and 18,355,907 shares outstanding as of September 30, 2020 and December 31, 2019, respectively486 468 
Restricted stock units56,571 77,657 
Additional paid-in capital935,900 887,095 
Retained earnings33,195 69,093 
Accumulated other comprehensive income (loss)(34,165)(34,115)
Treasury stock, at cost, par value $0.01 per share; 29,678,953 and 28,445,905 shares as of September 30, 2020 and December 31, 2019, respectively(978,567)(955,523)
Stockholders’ equity13,420 44,675 
Total liabilities and equity$502,715 $494,375 
As of
June 30,December 31,
20212020
(unaudited)
Assets
Cash and cash equivalents ($7.1 million and $7.2 million restricted from use at June 30, 2021 and December 31, 2020, respectively)$92,518 $112,703 
Fees receivable, net of allowance for doubtful accounts of $0.2 million and $0.5 million at June 30, 2021 and December 31, 2020, respectively27,066 80,919 
Other receivables8,451 5,285 
Property and equipment, net of accumulated depreciation of $19.0 million and $17.5 million at June 30, 2021 and December 31, 2020, respectively23,743 21,242 
Operating lease right-of-use asset77,439 76,440 
Goodwill213,621 215,936 
Deferred tax asset, net64,533 65,033 
Other assets21,398 8,241 
Total assets$528,769 $585,799 
Liabilities and Equity
Compensation payable$16,962 $34,061 
Accounts payable and accrued expenses14,165 15,424 
Current income taxes payable4,396 6,031 
Operating lease obligations95,609 95,097 
Secured term loan payable301,943 321,046 
Deferred tax liability27,738 26,073 
Total liabilities460,813 497,732 
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 50,471,753 and 48,701,743 shares issued as of June 30, 2021 and December 31, 2020, respectively; 19,231,494 and 19,001,605 shares outstanding as of June 30, 2021 and December 31, 2020, respectively505 487 
Restricted stock units44,131 59,412 
Additional paid-in capital966,483 937,025 
Retained earnings86,114 95,424 
Accumulated other comprehensive income (loss)(26,654)(25,501)
Treasury stock, at cost, par value $0.01 per share; 31,240,259 and 29,700,138 shares as of June 30, 2021 and December 31, 2020, respectively(1,002,623)(978,780)
Stockholders’ equity67,956 88,067 
Total liabilities and equity$528,769 $585,799 

See accompanying notes to condensed consolidated financial statements (unaudited).
4


Greenhill & Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share data)

For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,		For the Three Months Ended
June 30,		For the Six Months Ended
June 30,
20202019202020192021202020212020
RevenuesRevenues$56,045 $87,036 $170,930 $194,315 Revenues$43,237 $47,786 $112,161 $114,885 
Operating ExpensesOperating ExpensesOperating Expenses
Employee compensation and benefitsEmployee compensation and benefits46,754 43,376 147,590 134,503 Employee compensation and benefits39,791 46,476 87,083 100,836 
Occupancy and equipment rentalOccupancy and equipment rental7,539 5,608 20,296 16,660 Occupancy and equipment rental4,600 7,411 8,997 12,757 
Depreciation and amortizationDepreciation and amortization551 632 1,719 1,944 Depreciation and amortization793 569 1,580 1,168 
Information servicesInformation services2,650 2,501 7,706 7,509 Information services2,327 2,651 4,685 5,056 
Professional feesProfessional fees3,149 2,594 7,370 7,146 Professional fees1,704 1,899 3,900 4,221 
Travel related expensesTravel related expenses19 3,242 2,525 10,101 Travel related expenses516 118 708 2,506 
Other operating expensesOther operating expenses2,464 3,878 8,586 11,876 Other operating expenses2,695 3,772 7,172 6,122 
Total operating expensesTotal operating expenses63,126 61,831 195,792 189,739 Total operating expenses52,426 62,896 114,125 132,666 
Total operating income (loss)Total operating income (loss)(7,081)25,205 (24,862)4,576 Total operating income (loss)(9,189)(15,110)(1,964)(17,781)
Interest expenseInterest expense3,519 5,731 12,030 22,203 Interest expense3,078 3,728 6,286 8,511 
Income (loss) before taxesIncome (loss) before taxes(10,600)19,474 (36,892)(17,627)Income (loss) before taxes(12,267)(18,838)(8,250)(26,292)
Provision (benefit) for taxesProvision (benefit) for taxes(1,225)4,545 (4,976)(4,473)Provision (benefit) for taxes(3,442)(3,870)(1,509)(3,751)
Net income (loss)Net income (loss)$(9,375)$14,929 $(31,916)$(13,154)Net income (loss)$(8,825)$(14,968)$(6,741)$(22,541)
Average shares outstanding:Average shares outstanding:Average shares outstanding:
BasicBasic18,962,834 23,546,249 18,918,291 24,202,310 Basic19,447,717 18,886,856 19,560,997 18,895,775 
DilutedDiluted18,962,834 23,548,495 18,918,291 24,202,310 Diluted19,447,717 18,886,856 19,560,997 18,895,775 
Earnings (loss) per share:Earnings (loss) per share:Earnings (loss) per share:
BasicBasic$(0.49)$0.63 $(1.69)$(0.54)Basic$(0.45)$(0.79)$(0.34)$(1.19)
DilutedDiluted$(0.49)$0.63 $(1.69)$(0.54)Diluted$(0.45)$(0.79)$(0.34)$(1.19)

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

5


Greenhill & Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(in thousands)

For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,		For the Three Months Ended
June 30,		For the Six Months Ended
June 30,
20202019202020192021202020212020
Net income (loss)Net income (loss)$(9,375)$14,929 $(31,916)$(13,154)Net income (loss)$(8,825)$(14,968)$(6,741)$(22,541)
Currency translation adjustment, net of taxCurrency translation adjustment, net of tax4,160 (4,047)(50)(4,319)Currency translation adjustment, net of tax(602)9,822 (1,153)(4,210)
Comprehensive income (loss)Comprehensive income (loss)$(5,215)$10,882 $(31,966)$(17,473)Comprehensive income (loss)$(9,427)$(5,146)$(7,894)$(26,751)

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

6


Greenhill & Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
(in thousands, except per share data)

Three Months Ended
September 30,		Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
20202019202020192021202020212020
Common stock, par value $0.01 per shareCommon stock, par value $0.01 per shareCommon stock, par value $0.01 per share
Common stock, beginning of the periodCommon stock, beginning of the period$485 $467 $468 $450 Common stock, beginning of the period$502 $483 $487 $468 
Common stock issuedCommon stock issued1 1 18 18 Common stock issued3 2 18 17 
Common stock, end of the periodCommon stock, end of the period486 468 486 468 Common stock, end of the period505 485 505 485 
Restricted stock unitsRestricted stock unitsRestricted stock units
Restricted stock units, beginning of the periodRestricted stock units, beginning of the period52,257 56,911 77,657 71,596 Restricted stock units, beginning of the period41,325 47,430 59,412 77,657 
Restricted stock units recognized, net of forfeituresRestricted stock units recognized, net of forfeitures7,180 12,636 28,013 34,311 Restricted stock units recognized, net of forfeitures6,693 10,526 15,039 20,833 
Restricted stock units deliveredRestricted stock units delivered(2,866)(2,751)(49,099)(39,111)Restricted stock units delivered(3,887)(5,699)(30,320)(46,233)
Restricted stock units, end of the periodRestricted stock units, end of the period56,571 66,796 56,571 66,796 Restricted stock units, end of the period44,131 52,257 44,131 52,257 
Additional paid-in capitalAdditional paid-in capitalAdditional paid-in capital
Additional paid-in capital, beginning of the periodAdditional paid-in capital, beginning of the period933,315 884,646 887,095 846,721 Additional paid-in capital, beginning of the period962,651 927,686 937,025 887,095 
Common stock issuedCommon stock issued2,585 2,579 48,805 40,504 Common stock issued3,832 5,629 29,458 46,220 
Additional paid-in capital, end of the periodAdditional paid-in capital, end of the period935,900 887,225 935,900 887,225 Additional paid-in capital, end of the period966,483 933,315 966,483 933,315 
Exchangeable shares of subsidiary
Exchangeable shares of subsidiary, beginning of the period0 0 0 1,958 
Exchangeable shares of subsidiary delivered0 0 0 (1,958)
Exchangeable shares of subsidiary, end of the period0 0 0 0 
Retained earningsRetained earningsRetained earnings
Retained earnings, beginning of the period, as previously reportedRetained earnings, beginning of the period, as previously reported43,881 32,645 69,093 63,427 Retained earnings, beginning of the period, as previously reported96,192 60,202 95,424 69,093 
Cumulative effect of the change in accounting principle related to credit lossesCumulative effect of the change in accounting principle related to credit losses0 0 (123)0 Cumulative effect of the change in accounting principle related to credit losses— — — (123)
Retained earnings, beginning of the period, as adjustedRetained earnings, beginning of the period, as adjusted43,881 32,645 68,970 63,427 Retained earnings, beginning of the period, as adjusted96,192 60,202 95,424 68,970 
DividendsDividends(1,311)(1,343)(3,859)(4,042)Dividends(1,253)(1,353)(2,569)(2,548)
Net income (loss)Net income (loss)(9,375)14,929 (31,916)(13,154)Net income (loss)(8,825)(14,968)(6,741)(22,541)
Retained earnings, end of the periodRetained earnings, end of the period33,195 46,231 33,195 46,231 Retained earnings, end of the period86,114 43,881 86,114 43,881 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss), beginning of the periodAccumulated other comprehensive income (loss), beginning of the period(38,325)(35,977)(34,115)(35,705)Accumulated other comprehensive income (loss), beginning of the period(26,052)(48,147)(25,501)(34,115)
Currency translation adjustment, net of taxCurrency translation adjustment, net of tax4,160 (4,047)(50)(4,319)Currency translation adjustment, net of tax(602)9,822 (1,153)(4,210)
Accumulated other comprehensive income (loss), end of the periodAccumulated other comprehensive income (loss), end of the period(34,165)(40,024)(34,165)(40,024)Accumulated other comprehensive income (loss), end of the period(26,654)(38,325)(26,654)(38,325)
Treasury stock, at cost, par value $0.01 per shareTreasury stock, at cost, par value $0.01 per shareTreasury stock, at cost, par value $0.01 per share
Treasury stock, beginning of the periodTreasury stock, beginning of the period(978,145)(915,864)(955,523)(886,084)Treasury stock, beginning of the period(993,324)(977,579)(978,780)(955,523)
RepurchasedRepurchased(422)(16,482)(23,044)(46,262)Repurchased(9,299)(566)(23,843)(22,622)
Treasury stock, end of the periodTreasury stock, end of the period(978,567)(932,346)(978,567)(932,346)Treasury stock, end of the period(1,002,623)(978,145)(1,002,623)(978,145)
Total stockholders’ equityTotal stockholders’ equity$13,420 $28,350 $13,420 $28,350 Total stockholders’ equity$67,956 $13,468 $67,956 $13,468 

See accompanying notes to condensed consolidated financial statements (unaudited).
7


Greenhill & Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

For the Nine Months Ended
September 30,		For the Six Months Ended
June 30,
2020201920212020
Operating activities:Operating activities:Operating activities:
Net income (loss)Net income (loss)$(31,916)$(13,154)Net income (loss)$(6,741)$(22,541)
Adjustments to reconcile net income (loss) to net cash used for operating activities:Adjustments to reconcile net income (loss) to net cash used for operating activities:Adjustments to reconcile net income (loss) to net cash used for operating activities:
Non-cash items included in net income (loss):Non-cash items included in net income (loss):Non-cash items included in net income (loss):
Depreciation and amortizationDepreciation and amortization3,054 3,417 Depreciation and amortization2,476 2,056 
Net investment (gains) lossesNet investment (gains) losses239 (114)Net investment (gains) losses(372)502 
Restricted stock units recognized, netRestricted stock units recognized, net28,013 34,311 Restricted stock units recognized, net15,039 20,833 
Deferred taxes, netDeferred taxes, net5,938 (268)Deferred taxes, net3,019 8,026 
Non-cash portion of loss on refinancing0 1,759 
Loss on fair value of contingent obligation0 575 
Allowance for doubtful accountsAllowance for doubtful accounts(77)0 Allowance for doubtful accounts43 (32)
Loss (gain) on sales of property and equipment127 0 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Fees receivableFees receivable51,865 22,068 Fees receivable53,810 32,361 
Other receivables and assetsOther receivables and assets(16,150)(8,425)Other receivables and assets(17,163)(18,958)
Payment of contingent obligation due selling unitholders of Cogent0 (5,724)
Compensation payableCompensation payable(11,577)(35,268)Compensation payable(17,099)(5,198)
Accounts payable and accrued expensesAccounts payable and accrued expenses6,434 4,029 Accounts payable and accrued expenses(2,591)2,444 
Current income taxes payableCurrent income taxes payable(4,798)(5,824)Current income taxes payable(1,635)(1,398)
Net cash provided by (used for) operating activitiesNet cash provided by (used for) operating activities31,152 (2,618)Net cash provided by (used for) operating activities28,786 18,095 
Investing activities:Investing activities:Investing activities:
Purchases of investmentsPurchases of investments(2,050)0 Purchases of investments0 (2,050)
Proceeds from sales of investmentsProceeds from sales of investments847 0 Proceeds from sales of investments1,190 847 
Distributions from investmentsDistributions from investments27 239 Distributions from investments22 27 
Purchases of property and equipmentPurchases of property and equipment(5,418)(1,202)Purchases of property and equipment(4,119)(2,240)
Net cash used in investing activitiesNet cash used in investing activities(6,594)(963)Net cash used in investing activities(2,907)(3,416)
Financing activities:Financing activities:Financing activities:
Proceeds from refinancing of secured term loan, net0 48,248 
Repayment of secured term loanRepayment of secured term loan(18,750)(18,125)Repayment of secured term loan(20,000)(15,625)
Payment of contingent obligation due selling unitholders of Cogent0 (13,144)
Dividends paidDividends paid(3,145)(4,682)Dividends paid(2,570)(2,162)
Purchase of treasury stockPurchase of treasury stock(23,044)(46,262)Purchase of treasury stock(23,843)(22,622)
Net cash used in financing activitiesNet cash used in financing activities(44,939)(33,965)Net cash used in financing activities(46,413)(40,409)
Effect of exchange rate changesEffect of exchange rate changes(2,856)(1,354)Effect of exchange rate changes349 (3,695)
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents(23,237)(38,900)Net decrease in cash and cash equivalents(20,185)(29,425)
Cash and cash equivalents, beginning of the periodCash and cash equivalents, beginning of the period113,975 156,374 Cash and cash equivalents, beginning of the period112,703 113,975 
Cash and cash equivalents, end of the periodCash and cash equivalents, end of the period$90,738 $117,474 Cash and cash equivalents, end of the period$92,518 $84,550 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:
Cash paid for interestCash paid for interest$11,241 $16,751 Cash paid for interest$5,453 $8,102 
Cash paid for taxes, net of refundsCash paid for taxes, net of refunds$9,316 $5,134 Cash paid for taxes, net of refunds$128 $4,843 

See accompanying notes to condensed consolidated financial statements (unaudited).
8


Greenhill & Co., Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)

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. During the third quarter of 2020, we exited Brazil by selling our business there to the local team.
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 LLPGmbH & Co. KG (“GCE”Greenhill Europe”) and Greenhill & Co. Australia Pty Limited (“Greenhill Australia”). Effective October 1, 2020, GCE’s operations were transferred to Greenhill Europe GmbH & Co. KG (“Greenhill Europe”) and will include, as branches, our French and Spanish operations.
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 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 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 compensation accruals and other matters. Management believes that it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that the estimates used in preparing the 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.
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 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, 20192020 included in the Company’s Annual Report on Form 10-K filed with the SEC. The condensed consolidated financial information as of December 31, 20192020 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.
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
9


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.
9


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 $4.8$8.2 million and $3.9$7.1 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively. Deferred revenue is included in accounts payable and accrued expenses in the condensed consolidated statements of financial condition. During the ninesix months ended SeptemberJune 30, 20202021 and SeptemberJune 30, 2019,2020, the Company recognized $2.2$3.6 million and $4.4$1.9 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 $0.5$0.6 million and $1.5$0.7 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively and $2.4$1.1 million and $4.0$1.9 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, 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 0net reversals of bad debt expense of $0.1 million and $0.8 million in either of the three months ended SeptemberJune 30, 2021 and 2020, and September 30, 2019.respectively. The Company recorded bad debt expense of $0.1 million in the six months ended June 30, 2021 and a net reversal of bad debt expense of $0.1 million in the ninesix months ended SeptemberJune 30, 2020 and $0.4 million in bad debt expense in the nine months ended September 30, 2019.2020.
Included in the fees receivable balances at SeptemberJune 30, 20202021 and December 31, 20192020 were $5.2$0.8 million and $10.5$3.4 million, respectively, of long term receivables related to primary private capital advisory engagements which are generally paid in installments over a period of three years.
Credit risk related to 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.
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
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(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 at least annually.annually or more frequently where certain events or changes in circumstances indicate that goodwill may more likely than not be impaired. 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’ equity.
We test for impairment, at a minimum, on an annual basis or earlier where certain events or changes in circumstances indicate that goodwill may more likely than not be impaired. As of September 30, 2020, we do not believe it is more likely than not that our goodwill was impaired. If there are decreases in our stock price for a sustained period (including as a result of the impact of the COVID-19 pandemic on equity securities), a decline in our revenues or other unfavorable factors, we may be required to recognize an impairment, which could be material to our condensed consolidated financial statements.
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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 (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 87 — 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
11


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. As of September 30, 2020, we believe that no additional valuation allowance is required with respect to our deferred tax assets. However, if there are material declines in the assumptions underlying such assessment (including as a result of the impact of the COVID-19 pandemic on the U.S. and global economies), we may be required to record a valuation allowance, which could have a material impact on our condensed consolidated financial statements.
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’ equity. Foreign currency transaction gains and losses are included in the condensed consolidated statements of operations in other operating expenses.
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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 4 — 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
12


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 condensed consolidated balance sheets. 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 condensed consolidated statement of financial condition. Temporary differences are recognized for tax purposes and reflected separately in the condensed 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 1015 years or the remaining lease term
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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 February 2016,On January 1, 2020, the FASB issuedCompany adopted 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 condensed 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 condensed consolidated statement of operations.
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 athe modified retrospective approach. TheASU 2016-13 replaces the incurred loss impairment methodology for financial instruments with the current expected credit loss (CECL) model with requires an estimate of future credit losses. Upon adoption, a cumulative effect of adopting this ASUadjustment was a net decrease torecorded which decreased retained earnings ofby $0.1 million.
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 is currently evaluating theadopted this standard on January 1, 2021 under a prospective approach. The impact of the future adoption of ASU 2019-12 on the Company's consolidated financial statements. Adoption could be material to the CompanyCompany’s consolidated financial statements in future periods of enactment of new tax laws or rates. The standard is effective for the Company on January 1, 2021 under a prospective approach and can be early adopted prior to that date.

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Note 3 — Cash and Cash Equivalents
The carrying values of the Company’s cash and cash equivalents are as follows:
As of
September 30,
As of December 31,
20202019
(in thousands)
(unaudited)
Cash$46,445 $59,455 
Cash equivalents34,622 44,751 
Restricted cash - letters of credit9,671 9,769 
Total cash and cash equivalents$90,738 $113,975 
As of
June 30,
As of December 31,
20212020
(in thousands)
(unaudited)
Cash$47,095 $52,335 
Cash equivalents38,368 53,198 
Restricted cash - letters of credit7,055 7,170 
Total cash and cash equivalents$92,518 $112,703 
The carrying value of the Company’s cash equivalents approximates fair value. See “Note 4 — Fair Value of Financial 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, 20202021 and December 31, 2019,2020, 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 SeptemberJune 30, 20202021
Quoted Prices in
Active  Markets for
Identical Assets
(Level 1)		Significant Other
Observable  Inputs
(Level 2)		Significant
Unobservable  Inputs
(Level 3)
Balance as of
June 30, 2021
(in thousands, unaudited)
Assets
Cash equivalents$38,368 $0 $0 $38,368 
Total$38,368 $0 $0 $38,368 
Quoted Prices in
Active  Markets for
Identical Assets
(Level 1)		Significant Other
Observable  Inputs
(Level 2)		Significant
Unobservable  Inputs
(Level 3)
Balance as of
September 30, 2020
(in thousands, unaudited)
Assets
Cash equivalents$34,622 $0 $0 $34,622 
Total$34,622 $0 $0 $34,622 
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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$44,751 $0 $0 $44,751 
Total$44,751 $0 $0 $44,751 
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$53,198 $0 $0 $53,198 
Total$53,198 $0 $0 $53,198 

Note 5 — Related Parties
At September 30, 2020 and December 31, 2019, the Company had 0 amounts receivable from or payable to related parties.

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Note 6 — 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”) and provided a three-year secured revolving credit facility (“Revolving Loan Facility”) for $20.0 million, which was undrawn at closing.
On April 12, 2019, the Company refinanced borrowings made under its 2017 Term Loan Facilityrecapitalization plan 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. Under the terms of the 2017 Term Loan Facility, the Company was eligible to repay, refinance or reprice the outstanding principal amount of the loan facility as of April 12, 2019 without any incremental premium or other charge.
Effective with the refinancing in April 2019, borrowingsBorrowings under the Term Loan Facility bear interest at either U.S. Prime 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 ninesix months ended SeptemberJune 30, 2021 and June 30, 2020 of 3.4% and September 30, 2019 of 4.0% and 5.9%4.2%, 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. The Company is also required to repay certain amounts in connection with the non-ordinary course sale of assets, receipt of insurance proceeds, and the issuance of debt obligations, subject to certain exceptions. For the year ended December 31, 2019, based upon the Company’s financial results for 2019 an excess cash flow payment was not required.
The RevolvingTerm Loan Facility maturedpermits voluntary principal payments to be made in advance without penalty and such payments are applied to the next successive quarterly installments. In April 2021, the Company made a voluntary principal payment on October 12, 2020. During the three year period that the RevolvingTerm Loan Facility was outstanding, there were no drawings on it. Based onof $20.0 million. In addition, the Company’s current liquidity positionCompany made a voluntary principal payment of $15.0 million in July 2021 and expected operating needs, manangement did not forecast any future needs foras a result the facility and elected not to renew or extend it.next mandatory principal amortization payment is due in December 2023.
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 and 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 and the Revolving Loan Facility was subject to a springing total net leverage ratio financial covenant, subject to certain step downs, if the Company’s borrowings under the Revolving Loan Facility exceed $12.5 million. The Companybut is also subject to certain other non-financial covenants. At SeptemberJune 30, 2020,2021, the Company was compliant with all loan covenants.
In conjunction withAs of June 30, 2021, the refinancing of the 2017 Term Loan Facility in April 2019, the Company incurred feeshad a principal balance of $5.7$306.9 million of which $2.7 millionand its carrying value was recorded as deferred$301.9 million. 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 condensed 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 condensed consolidated statement of financial condition. The Company incurred incremental interest expense of $0.4 million related to the amortization of deferred financing costs for each of the three months ended SeptemberJune 30, 20202021 and 20192020, and incremental interest expense of $1.3 million and $1.5$0.9 million related to the amortization of such costs for each of the ninesix months ended SeptemberJune 30, 20202021 and 2019, respectively.
As of September2020. At June 30, 2020, the Term Loan Facility had a principal balance of $346.9 million and its carrying value was $340.6 million and 0 amounts were outstanding under the Revolving Loan Facility. At September 30, 2020,2021, the fair value of the Term Loan Facility approximated its outstanding principal balance. AsSince the borrowing is not accounted for at fair value, the fair value is not included in the Company’s fair value hierarchy in “Note 4 —- Fair Value of Financial Instruments,” however, had the borrowing been included, it would have been classified in Level 2.
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During the nine months ended September 30, 2020, the Company made aggregate principal payments on the Term Loan Facility of $18.8 million. Such payments were applied to and made in advance of the quarterly installments due in March, June, September and December 2020. 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.

Note 76 — Equity
On SeptemberJune 16, 2020,2021, a dividend of $0.05 per share was paid to stockholders of record on SeptemberJune 2, 2020.2021. For both the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, total dividend payments of $0.15$0.10 per share were paid to stockholders. Dividend equivalent payments of $1.0$0.6 million and $0.7 million were paid to or accrued for holders of restricted stock units for each of the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively.
During the ninesix months ended SeptemberJune 30, 2021, the Company repurchased 787,537 common shares through open market transactions at an average price of $15.87, for a total cost of $12.5 million. Additionally, during the six months ended June 30,
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2021, 1,754,799 restricted stock units vested and were settled in shares of common stock of which the Company is deemed to have repurchased 752,584 shares at an average price of $15.07 per share for a total cost of $11.3 million in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units.
During the six months ended June 30, 2020, the Company repurchased 489,704 common shares through open market transactions at an average price of $17.18, for a total cost of $8.4 million. Additionally, during the ninesix months ended SeptemberJune 30, 2020, 1,813,2531,706,917 restricted stock units vested and were settled in shares of common stock, of which the Company is deemed to have repurchased 743,344703,464 shares at an average price of $19.69$20.20 per share for a total cost of $14.6 million in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units.
During the nine months ended September 30, 2019, the Company repurchased 1,841,396 common shares through open market transactions at an average price of $17.70, for a total cost of $32.6 million. Additionally, during the nine months ended September 30, 2019, 1,368,985 restricted stock units vested and were settled in shares of common stock, of which the Company is deemed to have repurchased 557,255 shares at an average price of $24.53 per share for a total cost of $13.7$14.2 million in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units.

Note 87 — Earnings per Share
The computations of basic and diluted EPS are set forth below:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2020201920202019
(in thousands, except per share amounts, unaudited)
Numerator for basic and diluted EPS — net income (loss)$(9,375)$14,929 $(31,916)$(13,154)
Denominator for basic EPS — weighted average number of shares18,963 23,546 18,918 24,202 
Add — dilutive effect of:
Restricted stock units0 (1)2 0 (1)0 (1)
Denominator for diluted EPS — weighted average number of shares and dilutive securities18,963 (1)23,548 18,918 (1)24,202 (1)
Earnings (loss) per share:
Basic EPS$(0.49)$0.63 $(1.69)$(0.54)
Diluted EPS$(0.49)$0.63 $(1.69)$(0.54)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2021202020212020
(in thousands, except per share amounts, unaudited)
Numerator for basic and diluted EPS — net income (loss)$(8,825)$(14,968)$(6,741)$(22,541)
Denominator for basic EPS — weighted average number of shares19,448 18,887 19,561 18,896 
Add — dilutive effect of:
Restricted stock units0 (1)0 (1)0 (1)0 (1)
Denominator for diluted EPS — weighted average number of shares and dilutive securities19,448 (1)18,887 (1)19,561 (1)18,896 (1)
Earnings (loss) per share:
Basic EPS$(0.45)$(0.79)$(0.34)$(1.19)
Diluted EPS$(0.45)$(0.79)$(0.34)$(1.19)
____________________
(1) In periods of income, the fully diluted denominator for diluted EPS would have been 22,284,299Excludes 4,593,000 and 2,086,000 unamortized restricted stock units that were antidilutive for the three months ended SeptemberJune 30, 2021 and 2020, respectively, and 22,507,3104,396,000 and 24,519,5742,971,000 for the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively, and 2019, respectively.thus were not included in the above calculation. The calculation ofincremental shares that could be included in the diluted EPS denominatorcalculation in future periods of income is based on the weighted average number of incremental shares issuable from unvested restricted stock units as calculated using the treasury stock method and will vary based on a variety of factors, including the future share price and the amount of unrecognized compensation cost.
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The incremental shares included, if any, would be less than the number of outstanding restricted stock units.
The activity related to the restricted stock units is set forth below:

Restricted Stock Units OutstandingRestricted Stock Units Outstanding
2020201920212020
Units
Grant Date
Weighted
Average Fair
Value
Units
Grant Date
Weighted
Average Fair
Value
Units
Grant Date
Weighted
Average Fair
Value
Units
Grant Date
Weighted
Average Fair
Value
Outstanding, January 1,Outstanding, January 1,6,781,475 $21.60 6,210,282 $22.73 Outstanding, January 1,7,587,078 $14.68 6,781,475 $21.60 
GrantedGranted3,915,997 8.79 2,213,529 22.90 Granted2,356,183 12.96 3,915,997 8.78 
DeliveredDelivered(1,844,617)26.61 (1,392,406)27.79 Delivered(1,830,792)16.61 (1,738,281)26.80 
ForfeitedForfeited(240,334)15.42 (218,219)23.31 Forfeited(298,885)14.54 (3,657)25.68 
Outstanding, September 30,8,612,521 $14.83 6,813,186 $21.34 
Outstanding, June 30,Outstanding, June 30,7,813,584 $13.80 8,955,534 $14.91 


Note 98 — Income Taxes
The Company is subject to U.S. federal, state and local, as well as foreign, corporate income taxes and its effective tax rate varies depending on the jurisdiction in which the income is earned.
The Company is required to record a charge or benefit in its income tax provision for the tax effect of the difference between the grant date value of restricted stock units and the market value of such awards at the time of vesting. The provisions for income taxes for the ninesix months ended SeptemberJune 30, 20202021 and 20192020 include net charges of $3.0$0.6 million and $1.0$2.6 million, respectively, related to the tax effect of the vesting of restricted stock units at a market value below their grant price.
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Based on the Company’s historical taxable income and its expectation for taxable income in the future, management expects that its largest deferred tax asset, which relates principally to compensation expense deducted for book purposes but not yet deducted for tax purposes, will be realized as offsets to future taxable income.
Any gain or loss resulting from the translation of deferred taxes for foreign affiliates is included in the foreign currency translation adjustment incorporated as a component of other comprehensive income (loss), net of tax, in the condensed consolidated statements of changes in stockholders’ equity and the condensed consolidated statements of comprehensive income.
The income tax laws in the jurisdictions in which the Company operates 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 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 SeptemberJune 30, 2020,2021, the Company does not expect any material changes in its tax provision related to any current or future audits.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) was enacted in response to the COVID-19 pandemic which included temporary changes to income and non-income based tax laws including: (i) the elimination of the 80% of taxable income limitation by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 and 2020; (ii) allowing NOLs originating in 2018, 2019 and 2020 to be carried back five years; (iii) increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning January 1, 2019 and 2020; and (iv) other related provisions including the deferral of certain tax payments. The CARES Act is not expected to have a material impact on the Company’s condensed consolidated financial statements based on current financial projections.

Note 109 — 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.
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The undiscounted aggregate minimum future rental payments are as follows:
As of
September 30,December 31,
20202019
(in thousands)
(unaudited)
2020 (remainder)$2,379 $15,789 
202111,251 13,374 
202211,284 11,795 
202310,029 10,523 
20249,219 9,602 
Thereafter85,504 88,757 
     Total lease payments$129,666 $149,840 
Less: minimum future rental payments for which the lease has not commenced (1)
0 (115,870)
     Total lease payments for which the Company has a right-of use-asset and corresponding liability129,666 33,970 
Less: Interest(45,453)(3,220)
Present value of operating lease liabilities$84,213 $30,750 
____________________
(1) On May 16, 2019, the Company entered into a new office lease (the “Lease”) for its new principal executive office in New York, N.Y. Rental payments are scheduled to commence on January 1, 2021 and shall continue for a term of 15 years and 3 months. As of April 1, 2020, the Company obtained the right-to-use the premises for build out purposes and as such, recorded the operating lease right-of-use asset and operating lease obligation on the condensed consolidated statement of financial condition. The Company also began recording straight-line operating lease costs in occupancy and equipment rental in the condensed consolidated statement of operations as of April 1, 2020.
As of
June 30,December 31,
20212020
(in thousands)
(unaudited)
2021 (remainder)$5,937 $11,671 
202213,737 11,190 
202311,882 10,171 
202410,207 9,329 
20259,038 8,756 
Thereafter76,877 76,875 
     Total lease payments$127,678 $127,992 
Less: minimum future rental payments for which the lease has not commenced(1,109)0 
Total lease payments for which the Company has a right-of-use-asset and corresponding liability126,569 127,992 
Plus: tenant incentive allowance utilized to finance leasehold improvements10,930 11,302 
Less: Interest(41,890)(44,197)
Present value of operating lease liabilities$95,609 $95,097 

The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:
As of
September 30,December 31,
20202019
(unaudited)
Weighted average remaining lease term in years, including the lease for which the right to use had not commenced at December 31, 201912.712.1
Weighted average discount rate6.8 %5.8 %
As of
June 30,December 31,
20212020
(unaudited)
Weighted average remaining lease term in years11.912.7
Weighted average discount rate6.8 %6.8 %

Note 1110 — Regulatory Requirements
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.
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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 SeptemberJune 30, 2020,2021, G&Co’s net capital was $31.0$37.8 million, which exceeded its requirement by $30.5$37.3 million. G&Co’s aggregate indebtedness to net capital ratio was 0.2 to 1 at SeptemberJune 30, 2020.2021. Certain distributions and other capital withdrawals of G&Co are subject to certain notifications and restrictive provisions of the Rule.
At SeptemberJune 30, 20202021, GCI and GCE areis 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 SeptemberJune 30, 2020,2021, GCI, GCE, Greenhill Europe, Greenhill Australia, and our other regulated operations were in compliance with local capital adequacy requirements.


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Note 1211 — Subsequent Events
The Company evaluates subsequent events through the date on which the financial statements are issued. On July 30, 2021, the Company repaid in advance $15.0 million of its Term Loan Facility.
On November 2, 2020,August 3, 2021, the Board of Directors of the Company declared a quarterly dividend of $0.05 per share. The dividend will be payable on December 16, 2020September 15, 2021 to the common stockholders of record on December 2, 2020.September 1, 2021.
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Greenhill”, “we”, “our”, “Firm” and “us” refer to Greenhill & Co., Inc.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, the risk factors in item 1A of this Quarterly Report on Form 10-Q and subsequent Current Reports on Form 8-K.
Cautionary Statement Concerning Forward-Looking Statements
The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this report. We have made statements in this discussion 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”, “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. These factors include, among other things, uncertainties associated with the coronavirus (“COVID-19”) pandemic. 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. These factors include, among other things, uncertainties associated with the coronavirus (“COVID-19”) pandemic, including the negative effect that the COVID-19 pandemic has had and the significant and adverse effect it may continue to have on our business. You should consider the various risks outlined under “Risk Factors” in our 20192020 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot give assurances that these 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.

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 1615 offices across four continents.
Over our 2425 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 as well as through the recent recruitment ofmarket. 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. In early 2020, we paused our recruiting efforts 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. As a result we recruited fewer managing directors in 2020 than in prior years. In 2020,

During 2021, we have recruited 210 additional client facing managing directors to expanddirectors. With these recruits we have expanded our reachglobal M&A regional experience in the U.K.Latin America and enhancesector efforts in telecom and communications infrastructure, media and software. Additionally, we have made good progress rebuilding our private capital advisory team and, as part of that we have
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restructuring efforts as well as 2 senior advisors focused on Francetaken steps to build a primary fund raising business. We remain in dialogue with numerous additional candidates and Japan. expect to finalize additional recruits throughout the year.As of OctoberJuly 31, 2020,2021, we had 71 client facing managing directors. Wedirectors, including those whose recruitment we have a robust pipeline of managing director recruits for early 2021, and our objective isannounced to achieve increased Firm productivity by increasing managing director headcount in high fee areas like M&A in the largest markets and reducing managing director headcount in lower fee areas.date.

Business Environment and Outlook /Factors Affecting Our Results
Recent Developments. During 2020, COVID-19 has become 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 over the past few months these directives were eased in a number of jurisdictions only to have additional directives issued as there was resurgence of the pandemic in those same jurisdictions. It is possible that additional and more restrictive proclamations and/or directives may be issued in the future. During the period March through June, the majority of our employees worked remotely. Since then, some of our employees have begun a gradual return to our office locations, in compliance with local government guidelines. 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.
As a result of the global pandemic, there has been significant disruption and volatility in the domestic and international economies and financial markets and there continues to be uncertainty about both the short and longer term economic implications. 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, including current market conditions as a consequence of COVID-19, it is expected that the volume of global M&A transactions will be volatile and the timing of transaction closings may be extended or disrupted, with some announced transactions being terminated.
Beginning in the first quarter of 2020 and continuing through the third quarter, we were impacted by the unfavorable market conditions that COVID-19 caused on our business. During the first nine months of 2020 overall M&A activity is far below its historic levels, particularly relative to total stock market capitalization, a measure investors have historically used to monitor the M&A cycle. Beginning in the third quarter we have seen an increase in new assignment activity for M&A as compared to the same period last year. If market uncertainty declines and the economies around the globe rebound, we expect an improvement in M&A going forward. However, we cannot estimate the speed at which the transaction process will proceed given the uncertainty and volatility created by the pandemic and the impact of other events such as the U.S election.
Since the early stages of the 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 retainer fees and begun to realize an increase in completion fees during the first nine months of 2020 as compared to the prior year, this increase has not been enough to offset the decline in M&A transaction revenue,. For the full year 2020, we expect that a number of restructuring transactions will move toward completion and the restructuring business will make a significant contribution to our total revenue for this year. Furthermore, given continuing financial distress in many industries, we expect restructuring to continue to be a major revenue contributor for at least 2021 and likely beyond. However, because our financial advisory and restructuring business is smaller than our mergers and acquisitions advisory business, it is unlikely that the revenues we generate from that business will fully offset weakness in the revenue generation from our merger and acquisition advisory business.
For the first nine months of 2020, our capital advisory business has been significantly impacted by the pandemic and our transaction volume is far below its level for the same period in the prior year. The capital advisory business is typically adversely impacted during periods of market volatility. Recently, we have had a number of managing directors, primarily in the U.S, depart the Firm. Our smaller European and Asian operations, where we have seen a recent increase in activity, remain primarily unaffected. Over the longer term, we cannot be certain whether we will be able to recruit additional personnel to return the secondary market capital advisory business to pre-pandemic revenue levels.
The extent to which the COVID-19 pandemic and the related global economic crisis 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 scope and duration of the pandemic and any recovery period, future actions taken by governmental authorities, central banks and other third parties in response to the pandemic; and the effect on our clients, employees and third-party providers.
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During the third quarter, 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.
For additional information, see “Risk Factors” in our 2019 Annual Report on Form 10-K and in “Item 1A — Risk Factors” in this Form 10-Q.
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. However, the economic and market reaction to the pandemic negatively affected our results forIn the first ninesix months of 2020, as many2021, market conditions were favorable for M&A and capital advisory transactions were impacted. Offsettingactivity is stronger than it has been in recent years. We see this decline,in the fact that we haveare winning a significantly larger number of assignments than we did last year (during the COVID-19 pandemic) or the year before (which benefited from a significant increasegood economy and more normal operating conditions). We also see the results of a more active market in restructuring assignments and related retainer fees.
In the first nine monthsnumber of 2020,deal announcements we experienced bothare associated with. This past quarter we announced the second highest number of transactions in any quarter in our history. And on a decrease intrailing four quarters basis, our number of transaction announcements is at the highest level ever, by a meaningful margin. While many of those transactions have been for major companies, the size of deals that have been completed has skewed toward the smaller end of the scale, which has resulted in relatively modest first half revenue. In the second half of this year we expect the size of completed deals and related fee events to increase, such that we expect that we should be able to get to a full year revenue outcome that shows improvement over 2020. In the past two years our second half revenue generation was significantly higher than our first half.
On a regional basis we expect to show a stronger year than last year in the U.S. and Canada and a much stronger year in Australia, offset by reduced revenue in Europe, where we had a particularly strong revenue year in 2020. By type of advice we are seeing the greatest opportunities in M&A transaction completions and&A. Restructuring activity is materially lower given the strength of the credit markets, but we are making progress in our strategic initiative to be more active in financing advisory assignments of various kinds. In our private capital advisory transaction activity, which were offsetbusiness, we continue to be busy with secondary transactions in partEurope and Asia, including an increasing number of complex fund restructuring transactions led by fund general partners. In addition, over the course of the year to date we have succeeded in building out a significant increaseglobal primary fund raising team, and we expect to start seeing revenue from that group in restructuring completions and retainers. the third quarter. In all our businesses, we are making progress on our strategic initiative to do more business with financial sponsors.
Globally, the number and volume of announced transactions decreasedincreased by 1%35% and 21%118%, respectively, in the first ninesix months of 20202021 versus the same period in the prior year. The number and volume of completed transactions globally remained flatincreased by 32% and decreased by 16%19%, respectively, in the same period1.
We continue to expect a particularly strong fourth quarter due to significant restructuring and M&A completions. Further, based on the increase we have experienced in new assignment activity, we expect an increase in transaction activity during 2021 subject to continued global economic recovery. However, if the duration of the pandemic worsens it is possible that, among other things, current transaction activity may pause, pending announced transactions may be terminated prior to closing, or one party may seek not to close or the timing to complete deals could be further prolonged. We receive only a portion of our fee, or in some cases no fee, if the deals we advise on are terminated or otherwise do not close and our receipt of fees may be delayed if transactions take longer to close than expected.period.
We believe our business performance is best measured over longer periods of time, as we generally experience significant variations in revenues and profits from quarter to quarter. These variations can generally be attributed to the fact that our revenues are typically earned in large amounts upon the successful completion of a transaction or restructuring, the timing of which is uncertain and is not subject to our control. Accordingly, revenues, operating income and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter.
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 there are 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.
1 Excludes transactions less than $100,000 and withdrawn/canceled deals. Source: Thomson Financial as of October 30, 2020.July 31, 2021.

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Results of Operations
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.
Revenues were $56.0$43.2 million in the thirdsecond quarter of 2021 compared to $47.8 million in the second quarter of 2020, compared to $87.0 million in the third quarter of 2019, a decrease of $31.0$4.6 million, or 36%10%. The decrease was principally attributable to the impact of the global pandemic on both mergerresulted from a reduction in restructuring retainer and acquisition activity, particularlyadvisory fees partially offset by an increase in the U.S .and Australia, and capital advisory transaction activity, offset in part by significant increases in both restructuring completion and retainer fees.
For the nine months ended September 30, 2020, revenues were $170.9 million compared to $194.3 million in 2019, a decrease of $23.4 million, or 12%. Decreases in both merger and acquisition transaction completion fees.

For the six months ended June 30, 2021, revenues were $112.2 million compared to $114.9 million in 2020, a decrease of $2.7 million, or 2%. The decrease principally resulted from a reduction in restructuring retainer fees and capital advisory fees due to the impact of the global pandemic were partially offset by increases in restructuringmerger and acquisition transaction completion fees and retainer fees. For the nine month period ended September 30, 2020, a substantial increasefinancing advisory fees, particularly in European transaction completions in 2020 offset declines in transaction completions in the U.S. and Australia.North America.
We generally experience significant variations in revenues during each quarterly period. These variations can generally be attributed to the fact that a majority of our revenues is usually earned in large amounts throughout the year upon the successful completion of transactions, the timing of which are uncertain and are not subject to our control. Accordingly, the revenues earned in any particular period may not be indicative of revenues earned in future periods.

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.
Our total operating expenses for the thirdsecond quarter of 20202021 were $63.1$52.4 million, which compared to $61.8$62.9 million of total operating expenses for the thirdsecond quarter of 2019.2020. The slight increasedecrease in total operating expenses of $1.3$10.5 million, or 2%17%, resulted from an increase in ourboth lower compensation and benefits expenses partially offset by a decrease in ourand non-compensation operating expenses, both as described in more detail below.
For the nine months ended September 30, 2020, our total operating expenses were $195.8 million, which compared to $189.7 million of total operating expenses for the same period in 2019. The increase in total operating expenses of $6.1 million, or 3%, also resulted from an increase in our compensation and benefits expenses, partially offset by a decrease in our non-compensation operating expenses, botheach as described in more detail below.

For the six months ended June 30, 2021, our total operating expenses were $114.1 million, which compared to $132.7 million of total operating expenses for the first half of 2020. The decrease in total operating expenses of $18.6 million, or 14%, resulted from both lower compensation and benefits expenses and non-compensation operating expenses, each as described in more detail below.
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The following table sets forth information relating to our operating expenses.
For the Three Months Ended September 30,
For the Nine Months Ended
September 30,
2020201920202019
(in millions, unaudited)
Employee compensation and benefits expenses$46.8$43.4$147.6$134.5
% of revenues
83 %50 %86 %69 %
Non-compensation operating expenses16.418.548.255.2
% of revenues
29 %21 %28 %28 %
Total operating expenses63.161.8195.8189.7
% of revenues
113 %71 %115 %98 %
Total operating income (loss)(7.1)25.2(24.9)4.6
Operating profit marginNM29 %NM2 %
For the Three Months Ended June 30,
For the Six Months Ended
June 30,
2021202020212020
(in millions, unaudited)
Employee compensation and benefits expenses$39.8$46.5$87.1$100.8
% of revenues
92 %97 %78 %88 %
Non-compensation operating expenses12.616.427.031.8
% of revenues
29 %34 %24 %28 %
Total operating expenses52.462.9114.1132.7
% of revenues
121 %132 %102 %115 %
Total operating income (loss)(9.2)(15.1)(2.0)(17.8)
Operating profit marginNMNMNMNM
Compensation and Benefits Expenses
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 employee compensation and benefits expenses of $46.8$39.8 million in the thirdsecond quarter of 20202021 compare to $43.4$46.5 million for the thirdsecond quarter of 2019.2020. The increasedecrease in expense of $3.4$6.7 million, or 8%14%, is principally due to slightly highera reduction in incentive compensation.compensation to better align compensation with revenue generation on a quarterly basis. The ratioratios of compensation to revenues was 83% for the third quarter ofsecond quarters in both 2021 and 2020 as compared to 50% for the same period in the prior year. The rate waswere elevated in the third quarter of 2020 due to lower than typicalaverage quarterly revenues.

For the ninesix months ended SeptemberJune 30, 2020,2021, our employee compensation and benefits expenses were $147.6$87.1 million compared to $134.5$100.8 million for the same period in 2019.2020. The increasedecrease in expense of $13.1$13.7 million, or 10%14%, was principally attributable to growthlower incentive compensation as discussed above and a decrease in professional headcount and an increase in incentive compensation.the charge for amortization of restricted stock units. The ratio of compensation to revenues for the ninesix month period in 20202021 was 86%78% as compared to 69%88% for the same period in 2019. The increase in the ratio of compensation to revenues for the nine month period in 2020 as compared to the same period in 2019 resulted from the effect of spreading higher compensation and benefits expenses over lower revenues.2020.
Our compensation expense is generally based upon revenues and can fluctuate materially in any particular period depending upon changes in headcount, amount of revenues recognized, as well as other factors. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in future periods.
Non-Compensation Operating Expenses
Our non-compensation operating expenses such as occupancy, depreciation, and information services are generally relatively fixed year to year with increases generallyalthough 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 geographic expansionrevenues and our operating expenses. It is management's objective to new locations, strategic business expansion, general inflation-related increasesmaintain comparable non-compensation costs year over year for each jurisdiction in rentwhich we operate. We monitor costs based on actual costs incurred in prior periods and other costs we incuron headcount and seek to a much lesser extent, on an increase in headcount within our existing locations. Due to the COVID-19 pandemic, we had minimal travel expenditures beginning in March and through the third quarter of 2020. We expect that there will be minimal travel in the fourth quarter and it will increase thereafter, although it may take an extended time to reach pre-COVID-19 levels.gain operating efficiencies when possible.
For the three months ended SeptemberJune 30, 2020,2021, our non-compensation operating expenses of $16.4$12.6 million decreased by $2.1$3.8 million, or 11%23%, as compared to $18.5$16.4 million in the same period in 2019. During2020. The decrease principally resulted from both the third quarterelimination of a double rent charge incurred in 2020 during the benefitbuild out period for our new headquarters and the absence of minimal travel expense due toa one-time charge for the global pandemic wassale last year of our Brazilian business, partially offset by a duplicate non-cash rent charge for space we will be relocatingslight increase in travel expenses as business travel activity slowly began to in New York City during the fourth quarter.increase.

Non-compensation expenses as a percentage of revenues for the three months ended SeptemberJune 30, 20202021 were 29% compared to 21%34% for the same period in 2019.2020.

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For the first half of 2021, our non-compensation operating expenses of $27.0 million decreased $4.8 million, or 15%, as compared to $31.8 million in the comparable period in 2020. The increasedecrease principally resulted from both the elimination of the double rent charge as discussed above and the benefit of lower travel costs incurred since the beginning of the global pandemic last year, partially offset by the recognition of a foreign exchange loss in the first half of 2021 as compared to a foreign exchange gain in the same period last year.

Non-compensation expenses as a percentage of revenues for the six months ended June 30, 2021 were 24% compared to 28% for the same period in 2020. The decrease in non-compensation expenses as a percentage of revenues resulted from the effect of spreading moderatelysignificantly lower non-compensation costs over much lowerrelatively comparable revenues in the third quarterfirst half of 20202021 as compared to the same period in 2019.

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For the nine months ended September 30, 2020, our non-compensation operating expenses of $48.2 million decreased $7.0 million, or 13%, as compared to $55.2 million in the comparable period of 2019. The decrease in non-compensation expenses principally resulted from lower travel costs as a result of the global pandemic, lower recruiting costs and the benefit of foreign currency gains, partially offset by a loss on the sale of our Brazilian business and the duplicate rent charge for new space, as discussed above.

Non-compensation expenses as a percentage of revenues remained constant at 28% for the nine months ended September 30, 2020 and 2019, respectively. 2020.
Our non-compensation operating expenses can vary as a result of a variety of factors such as changes in headcount, the amount of recruiting and business development activity, the amount of office expansion, the amount of client reimbursed expenses, the impact of currency movements and other factors. Accordingly, the non-compensation operating expenses in any particular period may not be indicative of the non-compensation operating expenses in future periods.

Interest Expense
For the three months ended SeptemberJune 30, 2020,2021, we incurred interest expense of $3.5$3.1 million as compared to $5.7$3.7 million for the same period in 2019.2020. The decrease of $2.2$0.6 million related to both a lower market borrowing raterates and lower average borrowings outstanding.outstanding as a result of accelerated debt repayments.

For the ninesix months ended SeptemberJune 30, 2020,2021, we incurred interest expense of $12.0$6.3 million, a decrease of $10.2$2.2 million as compared to $22.2$8.5 million for the same period in 2019. The2020. Consistent with the quarterly period, the decrease related to the absence of a non-recurring refinancing charge of $4.8 million incurred in 2019 and decreases in theboth lower market borrowing raterates and our interest rate spread, which was reduced as part of our term loan refinancing in April 2019.lower borrowings outstanding.
The rate of interest on our borrowing is based on LIBOR and can vary from period to period. Accordingly, the amount of interest expense in any particular period may not be indicative of the amount of interest expense in future periods.

Provision for Income Taxes
For the three months ended SeptemberJune 30, 2021, we recognized an income tax benefit of $3.4 million as compared to a benefit of $3.9 million for the same period in 2020. The tax benefit realized in the second quarter of 2021 declined as compared to the same period in 2020 a result of a lower pre-tax loss in the recent three month period.

For the six months ended June 30, 2021, due to our pre-tax loss we recognized an income tax benefit of $1.2$1.5 million. This compared to an income tax expensebenefit for the same period in 20192020 of $4.5$3.8 million.
For the nine months ended September 30, 2020, due to our pre-tax loss we recognized an The income tax benefit of $5.0 million. This compared to a benefit for income taxes for the same period in 2019 of $4.5 million. The provisions for income taxes forrecognized during the first nine monthshalf of each 2021 and 2020 and 2019 includedwere net of charges of $3.0$0.6 million and $1.0$2.6 million, respectively, related to the tax effect of the difference between the grant price value and the market price value of restricted stock awards at the time of the vesting. Excluding these charges, the effective tax rate for the ninesix month period ended SeptemberJune 30, 20202021 as compared to the same period in 20192020 would have been 22%25% and 31%24%, respectively. The lowerslightly higher effective rate for the ninesix months ended SeptemberJune 30, 20202021 principally resulted from higherlower U.K. earnings from thein 2021 as compared to 2020. The U.K., which are taxed at has a lower rate than the U.S.
The effective tax rate can fluctuate as a result of variations in the amount of income earned and the tax rate imposed in the tax jurisdictions in which we operate. Accordingly, the effective tax rate in any particular period may not be indicative of the effective tax rate in future periods.

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 the credit agreement. It is our objective to retain a global cash balance adequate to service our forecast operating and financing needs. At SeptemberJune 30, 2020,2021, we had cash and cash equivalents of $90.7$92.5 million.
We generate substantially all of our cash from advisory fees. We use our cash primarily for recurring operating expenses, the repayment and service of our debt, the repurchase of our common shares and the funding of leasehold improvements for the build out of office space.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
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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 SeptemberJune 30, 2020,2021, we had fees receivable of $25.8 million, including long-term receivables related to primary capital advisory engagements of $5.2 million, which we expect to collect over the next twelve months.$27.1 million.
As part of our recapitalization, in OctoberIn 2017, we entered intoannounced a credit agreement withleveraged recapitalization to put in place a syndicate of lenders, who loaned us $350.0 million under a five-year securedcapital structure designed to enhance long term loan B facility (“2017 TLB”) and provided us with a three-year secured revolving credit facility of $20.0 million, which was undrawn at closing and has remained undrawn.
On April 12,shareholder value. In 2019, we refinanced the 2017 TLBcredit facility that was put in place at the time of the recapitalization and entered into a new $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 2017 TLB of $319.4 million and pay fees and expenses, with remaining net proceeds of $48.3 million. We did not incur a prepayment premium in conjunction with the refinancing.
As a result of the refinancing, we lowered our borrowing rate by 50 basis points, extended the maturity date of the new TLB by eighteen months to April 12, 2024, lowered our annual amortization payments to 5% per annum and reduced the LIBOR floor to zero. In addition, the amounts permitted for dividend payments and repurchases of our common stock under the amended credit agreement were increased. Effective with the refinancing in April 2019, borrowingsBorrowings under the TLB bear interest at either the U.S. Prime Rate plus 2.25% or LIBOR plus 3.25%. The FCA, which regulates LIBOR, has announced that it will not compel panel banks to contribute to LIBOR after 2021. ItIn 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 not possible to predictlacking. On July 29, 2021, the Alternative Reference Rates Committee announced that it is formally recommending the forward-looking Secured Overnight Financing rate term rates. Even with this update, it is unclear whether LIBOR will continuecease to exist at that time or if new methods of calculating LIBOR will be viewed as an acceptable market benchmarkestablished or what rate or rates may become accepted alternatives to LIBOR. Although ourOur credit agreement includes alternative rate fallback provisions, which provides for use of a broadly accepted market convention to replace LIBOR as the rate of interest. However, there can be no assurance the LIBOR phase out will not increase the cost of capital.
The new 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 quarterlymandatory principal amortization payments during the term) due at maturity on April 12, 2024. During the nine months ended September 30, 2020, the Company made aggregateThe TLB permits voluntary principal payments on the TLB of $18.8 million. Such payments were applied to andbe made in advance without penalty and such payments are applied to the next successive quarterly installments. Advance payments of $20.0 million were made in each of December 2020 and April 2021 and the quarterly installments due in March,outstanding principal balance at June September30, 2021 was $306.9 million. In July, an additional advance payment of $15.0 million was made, and December 2020. Asas of September 30, 2020,July 31, 2021, the TLB had an outstanding principal balance of $346.9$291.9 million. The next mandatory quarterly principal installmentamortization payment is due on March 31, 2021. in December 2023.
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, 2019, an excess cash flow payment was not required. The excess cash flow payment for 2020 is based on our annual financial performance for the year and working capital position at year-end. We are currently not able to estimate the amount of repayment, if any, that may be payable on March 31, 2021. If a payment were required, it 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 mandatory repayments of the TLB will be applied without penalty or premium. Voluntary prepayments of borrowings under the TLB are also permitted without penalty. As of April 13, 2020, we are no longer subject to a prepayment premium if we prepay, refinance or reprice the TLB. 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.
The $20.0 million revolving loan facility, which was committed as part of the Company’s recapitalization in October 2017, matured in October 2020. During the three year period that the revolving loan facility was outstanding, we did not make any drawings on it. Based on our current liquidity position and our forecast operating needs we did not expect that we would make any drawings on the facility in the future and as a result we elected not to renew or extend it.
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
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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 SeptemberJune 30, 2020,2021, 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.
In October 2017, as part ofSince we announced our recapitalization we commenced a program to repurchase our common shares. As part of that program duringin 2017, through the period from October 2017 to Decemberended July 31, 2019,2021, we have repurchased 14,550,82415,930,321 common shares through open market purchases (including pursuant to 10b5-1 plans) and tender offers at an average price of $21.16$20.74 per share, for a total cost of $307.9$330.4 million. With the completion of a significant portionThis included 787,537 shares of our repurchase plan, and recognizing that the amount of repurchases of common stock we repurchased in the
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open market during the six month period ended June 30, 2021 for $12.5 million and an additional 102,256 shares were repurchased in July 2021 for $1.6 million. 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 that may be permittedsubject to limits imposed by our credit agreement will evolve year to year, we shifted to an annual target for repurchases of common stock and common stock equivalents.
In January 2020, our Board of Directors took into accountagreement. During the amount permitted for repurchases of our common stock and common stock equivalents under our credit agreement and authorized the repurchase of our common stock and common stock equivalents of up to $60.0 million for the yearsix month period ended December 31, 2020. Under this authority, we may make repurchases of our common stock through various means, which could include open market purchases (including pursuant to 10b5-1 plans) and privately negotiated transactions. Through OctoberJune 30, 2020 under this authority we have repurchased in the open market 489,704 shares of our common stock for $8.4 million and2021, we are deemed to have repurchased 743,344752,584 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 $19.69$11.3 million.
In February 2021, our Board of Directors authorized the repurchase of our common stock and had $37.0common stock equivalents of up to $50 million for the period ended January 31, 2022. Since the Board authorization as of July 31, 2021, we have repurchased in aggregate 1,642,377 shares of common stock and common stock equivalents for $25.5 million at an average price of $15.50 and have $24.5 million remaining and authorized for repurchase during the remainder of 2020. As a result of the global pandemic and the uncertainty it has created on global market conditions,through January 2022.
Under our credit agreement, we paused our share repurchase program in late February 2020 and we did not make any open market purchasesare restricted in the second amount of cash we may use to repurchase our common stock and common stock equivalents and/or third quarters. Going forward,to make dividend distributions. As we generate cash from operations and subject to our expected operating needs, we intend to balance further debt repaymentfocus 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, amounts permitted under our credit agreement, use of cash for debt repayments, 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 2020the period ending January 31, 2022 or the amount authorized in any future year.period.
Since the recapitalization in October 2017, we have made quarterly dividend payments of $0.05 per share. Under the credit agreement as amended in April 2019, 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 had a carryover amount of $9.1 million at December 31, 2019. We intend to continue to pay quarterly dividends, 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 October 30, 2020,July 31, 2021, 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 $44.0$53.2 million (as calculated based upon the closing share price as of October 30, 2020July 31, 2021 of $12.93$16.02 per share and assuming a withholding tax rate of 41%43% consistent with our recent experience) over the next five years, of which an additional $0.1$1.5 million remains payable in 2020, $12.0 million will be payable in 2021, $14.8$18.9 million will be payable in 2022, $13.5 million will be payable in 2023, $8.8 million will be payable in 2023, $5.52024, $8.3 million will be payable in 2024,2025, and $2.8$2.2 million will be payable in 2025.2026. 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
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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 five 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 October 30, 2020,July 31, 2021, we estimate payments of $18.6$26.4 million over the next five years, of which $0.3$0.5 million remains payable in 2020, $8.5 million will be payable in 2021, $5.2$8.6 million will be payable in 2022, $3.5$7.2 million will be payable in 2023, $1.1$5.7 million will be payable in 2024, and less than $0.1$4.4 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. In late 2020, we will be relocating our principal executive office to new office space in New York City. During 2020 and early 2021, we expectcompleted our relocation to fund from our operating cash flownew headquarters and we incurred additional leasehold improvement costs, net of tenant improvement allowance, of up to approximately $12.0 million, and over the longer term expect to reduce our annual rent cost by approximately $3.5 million from the amount we currently incur.$2.0 million.
Effective beginning in 2018, as a result of the U.S.
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Under current U.S federal tax law, change in 2017, we calculate and pay the amount of incremental tax owed, if any, on our foreign earnings on a current basis and consequently, we can repatriate foreign cash with minimal or no incremental 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 and build-out costs of new office space, we may adjust our variable expenses and other disbursements, if necessary, to meet our liquidity needs. In light of the COVID-19 pandemic, we will continue to evaluate and take actions, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. However, depending on the extent and duration of the pandemic, 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. 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
In the ninesix months ended SeptemberJune 30, 2020,2021, our cash and cash equivalents decreased by $23.2$20.2 million from December 31, 2019, including a decrease2020, net of $2.9an increase of $0.3 million from the effect of the translation of foreign currency amounts into U.S. dollars at the quarter-end foreign currency conversion rates. We generated $31.2$28.8 million from operating activities, which consisted of $5.4$13.5 million from operating earnings after giving effect to non-cash items and a net decrease in working capital of $25.8$15.3 million, principally from the collection of accounts receivable.fees receivables. We used $6.6$2.9 million in investing activities to fund the build of of new leasehold space, investments,improvements and equipment purchases. We used $44.9$46.4 million in financing activities, including $18.8$20.0 million for the quarterly principalrepayment of the term loan, payments due for each of four calendar quarters in 2020, $8.4$12.5 million for open market repurchases of our common stock, $14.6$11.3 million for the repurchase of our common stock from employees in conjunction with the payment of tax liabilities in settlement of restricted stock units, and $3.1$2.6 million for the payment of dividends.
In the ninesix months ended SeptemberJune 30, 2019,2020, our cash and cash equivalents decreased by $38.9$29.4 million from December 31, 2018,2019, including a decrease of $1.4$3.7 million from the effect of the translation of foreign currency amounts into U.S. dollars at the quarter-end foreign currency conversion rates. We used $2.6generated $18.1 million from operating activities, which consisted of $26.5$8.8 million from operating earnings after giving effect to non-cash items offset byand a net increasedecrease in working capital of $29.1$9.3 million, principally from the paymentcollection of annual bonuses.fees receivable. We used $1.0$3.4 million in investing activities to fund investments, equipment purchases.purchases and leasehold improvements. We used $34.0$40.4 million in financing activities, including $32.6$15.6 million for the quarterly principal term loan payments (including the quarterly installments due in the first, second and third quarters of 2020 and a portion of the quarterly installment due in December 2020), $8.4 million for open market repurchases of our common stock, $13.7$14.2 million for the repurchase of our common stock from employees in conjunction with the payment of tax liabilities in settlement of restricted stock units, $13.1and $2.2 million for the payment of the contingent obligation due to selling unitholders of Cogent (an additional $5.7 million is classified as an operating outflow for a total payment to the selling unitholders of $18.9 million), $18.1 million for the quarterly principal term loan payments (including the advance payment of $4.7 million for the quarterly
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installment due in December 2019) and $4.7 million for the payment of dividends, offset, in part, by net proceeds of $48.3 million from the refinancing of the TLB.dividends.

Off-Balance Sheet Arrangements
We do not invest in 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 condensed consolidated financial statements.
Contractual Obligations
There have been no material changes in our contractual obligations from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.2020.

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 condensed consolidated financial statements.
Risks Related to Cash and Short-Term Investments
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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 condensed 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 ninesix months ended SeptemberJune 30, 2020,2021, as compared to the same period in 2019,2020, the average value of the U.S. dollar was nearly flatweakened relative to the pound sterling, and euro and strengthened slightly relative to the Australian dollar. In aggregate, there was minimal impact on our revenues in the ninesix months ended SeptemberJune 30, 20202021 as compared to the same period in 20192020 as a result of the timing of recognition of foreign revenues. Even if the currency rates had changed more materially, the impact would not have had 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.
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Interest Rate Risk
Our TLB bears interest at the U.S. Prime Rate plus 2.25% or LIBOR plus 3.25% (prior to the April 2019 refinancing the borrowing rate was the U.S. Prime Rate plus 2.75% or LIBOR plus 3.75%). 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 SeptemberJune 30, 2020,2021, we had $346.9$306.9 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 SeptemberJune 30, 2020,2021, a 100 basis point increase in LIBOR would have increased our annual borrowing expense by $3.5$3.1 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. On July 29, 2021, the Alternative Reference Rates Committee announced that it is formally recommending the forward-looking Secured Overnight Financing rate term rates. Even with this update, it is unclear whether LIBOR will cease to exist at that time or if new methods of calculating LIBOR will be established or what rate or rates may become accepted alternatives to LIBOR. Our credit agreement includes alternative rate fallback provisions, which provides for use of a broadly accepted market convention to replace LIBOR as the rate of interest. However, there can be no assurance the LIBOR phase out will not increase the cost of capital.


Critical Accounting Policies and Estimates
Descriptions of our critical accounting policies and estimates, which 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,
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are set forth above in “Item 1 — Notes to Condensed Consolidated Financial Statements (unaudited), Note 2 — Summary of Significant Accounting Policies” and are incorporated by reference herein.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are set forth above in “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk”.


Item 4.  Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- Other Information

Item 1.  Legal Proceedings
The CompanyFirm is from time to time involved in legal proceedings incidental to the ordinary course of its business. We do not believe any such proceedings will have a material adverse effect on our results of operations.

Item 1A.  Risk Factors
This Item 1A. should be read in conjunction with "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. Other than with respect to the discussion below, thereThere have been no material changes in our risk factors from those disclosed in our 20192020 Annual Report on Form 10-K.
In addition to the risk factors disclosed below, the COVID-19 pandemic may exacerbate many of the other risks described in our 2019 Annual Report on Form 10-K.
The risks described in this Quarterly Report on Form 10-Q, in our 2019 Annual Report on Form 10-K and in our subsequently filed Quarterly Reports on Form 10-Q are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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Continued adverse economic conditions as a result of the COVID-19 pandemic could potentially have a material adverse impact on our business, financial condition, liquidity and results of operations, the extent of which is not known, predictable or under our control.
As result of the rapid worldwide spread of the COVID-19 global pandemic and the difficulties containing it, there has been significant disruption and uncertainty in the domestic and international economies and financial markets. As a financial services firm, adverse conditions in the global financial markets and economic conditions throughout the world could materially adversely affect our operating results and financial condition.
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 have been impacted and for the near term may be further adversely affected by such reduction in the volume or value of such advisory transactions and the extension of timing to close. In addition, in unfavorable market conditions 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. We 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.
Over the longer term, the impact of COVID-19 on our operations is unpredictable and will be significantly driven by other factors that are beyond our control, including, for example: government restrictions on business operations, in-person meetings and travel, the timing, scope and effectiveness of additional governmental responses to the pandemic; international relations and travel restrictions, and medical advancements in providing treatments for COVID-19; the timing and speed of economic recovery; and proposed or potential legislation designed to restrain M&A and other financial transactions during the pandemic. While government restrictions imposed in connection with COVID-19 were relaxed or suspended in certain jurisdictions as the COVID-19 pandemic began to abate, many jurisdictions have elected to reinstate restrictions as there has been a resurgence of cases related to the pandemic. Due to the difficulty in containing the COVID-19 pandemic it is difficult to predict the scope and timing of a successful restart and prolonged recovery of economic activity.
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.
A sustained economic downturn may also result in the carrying value of our goodwill and long-lived assets exceeding their fair value, which may require us to recognize an impairment to those assets. This could have a material impact on our consolidated financial statements and impair our ability to pay dividends or repurchase shares of our common stock.
The COVID-19 pandemic may exacerbate many of the other risks previously described in our 2019 Annual Report on Form 10-K, including cybersecurity, financial reporting and other operational functions.
The Company may encounter increased operational risks arising from changes in the way it has begun to conduct its business during the COVID-19 pandemic. In most jurisdictions in which we operate local governments 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. Furthermore, the Company’s increased reliance during the pandemic on technology for conducting certain corporate functions, such as financial reporting and administration of internal controls, may not be as effective as our historical practice of reliance on a combination of technology and in-person resources. If the Company experiences cybersecurity issues, is unable to protect confidential information, or is unable to adequately provide services or perform corporate functions, all or portions of the Company’s ability to conduct business and operate may be impaired. In such event, the Company’s financial condition and results of operations could be materially adversely affected.
The COVID-19 pandemic could adversely impact the health and welfare of our client-facing professionals, as well as our executive officers and other employees of our Company, which could have a material adverse effect on our ability to win and execute client engagements and our results of operations.
31


Our client-facing professionals provide unique and highly specialized skills and knowledge to our clients. We rely heavily on our client-facing professionals to win and execute client engagements. If the health and welfare of client-facing professionals or executive officers providing critical corporate functions deteriorates, or the number of employees so afflicted becomes significant, our ability to win business, provide client services and manage operations could be materially adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities in the thirdsecond quarter 2020:
Period
Total Number of Shares Repurchased

(1)
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

(1)
Approximate Dollar
Value of Shares
that May Yet Be
Purchased under the
Plans or Programs
  
(2)
July 1 - 31— $0.00— $36,956,193 
August 1 - 31— $0.00— 36,956,193 
September 1 - 30— $0.00— 36,956,193 
Total— — $36,956,193 
2021:
Period
Total Number of Shares Repurchased

(1)
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

(1)
Approximate Dollar
Value of Shares
that May Yet Be
Purchased under the
Plans or Programs
  
 (2)
April 1 - 30— $0.00— $35,455,106 
May 1 - 31433,095 $16.64433,095 26,451,946 
June 1 - 3016,703 $17.6916,703 26,156,493 
Total449,798 449,798 $26,156,493 

(1)Excludes 39,880117,557 common stock equivalents (e.g., vesting restricted stock units) we are deemed to have repurchased in the thirdsecond quarter of 20202021 at an average price of $10.56$15.30 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 first ninesix months of 2020,2021, the table excludes 743,344 common stock equivalents752,584 shares we are deemed to have repurchased at an average price of $19.69$15.07 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 unitsunits.
(2)On January 30, 2020,February 3, 2021, our Board of Directors authorized repurchases of our common stock and common stock equivalents (e.g., vesting restricted stock units) of up to $60.0$50 million for the yearperiod ending DecemberJanuary 31, 2020.2022. The dollar value of shares that may yet be repurchased is calculated based on the repurchases of equity securities disclosed in the table as well as the deemed repurchases of common stock equivalents discussed in note (1) above.

Item 3.  Defaults Upon Senior Securities
27


None.

Item 4.  Mine Safety Disclosures
Not applicable.

Item 5.  Other Information
None.

3228


Item 6. Exhibits
EXHIBIT INDEX
Exhibit
Number		Description
31.1
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.
31.2
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.
32.1*
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.
32.2*
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.
101.INSThe following materials from Greenhill's Form 10-Q Report for the quarterly period ended SeptemberJune 30, 2020,2021, formatted in Inline XBRL: (i) the Condensed Consolidated Statements of Financial Condition; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to the Condensed Consolidated Financial Statements.
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase
104The cover page of Greenhill's Form 10-Q Report for the quarter ended SeptemberJune 30, 2020,2021, formatted in Inline XBRL (included within the Exhibit 101 attachments).

*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 Securities Exchange Act of 1934.

E-1

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: NovemberAugust 9, 20202021
GREENHILL & CO., INC.
By:/s/ SCOTT L. BOK
Scott L. Bok
Chairman and Chief Executive Officer
By:/s/ HAROLD J. RODRIGUEZ, JR.
Harold J. Rodriguez, Jr.
Chief Financial Officer



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