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Letter to Our Shareholders

Letter to our Clients, Stockholders and Colleagues

2013 was another year of strong performance relative to our four primary objectives: increasing our market share of advisory fees paid globally, achieving the highest profit margin among our peer group, continuing a strong dividend policy and maintaining a flat or declining share count. Our advisory revenue for the year was down less than 2% despite the number of global completed transactions declining by over 9%. Based on advisory revenue reported by our large bank competitors, it is clear that we again increased our market share of the global fee pool in 2013. By keeping non-compensation costs flat and maintaining a disciplined compensation ratio, we achieved a pre-tax profit margin of 25%. Furthermore, we not only continued our strong dividend policy but repurchased nearly 1.1 million shares during the year, returning a total of $112 million to shareholders while maintaining a balance sheet with no net debt. Importantly, we substantially completed our exit from our historic merchant banking business in 2013, selling the vast majority of our remaining investment assets and eliminating all future investment commitments. We were rewarded for our efforts with a 15% gain for our shareholders, including both share price appreciation and dividend payments. Since our IPO in 2004 we have outperformed the index of comparable companies by a 4 times margin. 

It is not an overstatement to call us unique among investment banks. First, advising clients is our only business. We have no products to sell and no inherent conflicts of interest. For our large bank competitors, client advisory work represents a small fraction of their business and even other so-called “independent” investment banks are active in investing, research, underwriting and other businesses that can create conflicts with clients. Second, we offer advice on a very wide range of matters. Mergers and acquisitions remains our largest area of activity, but each year we earn a meaningful share of our revenue from advising on other issues, like financing, restructuring and capital raising, as well as from various projects for governments around the world. Many of our most interesting assignments of 2013 are described elsewhere in this report. Third, we have teams of senior bankers in the most important transaction markets across the globe. We expanded these capabilities in 2013 by entering the growing Brazilian market through the opening of an office in São Paulo and hiring two of the top bankers in that market to lead our effort. We believe strongly that one integrated global team is far more effective at advising clients on cross-border transactions than any set of alliances or joint ventures with other firms could ever be. Today we have 5 offices in the United States, 3 in Europe, 2 in Australia and 1 each in Brazil, Canada and Japan. Other offices in new markets will follow, as we continue to attract leading bankers around the world. Finally, we have continued to deepen our industry sector expertise, both through recruiting and through transaction experience. 

Whether from a client or shareholder perspective, the most important question in considering Greenhill is whether we can continue to attract and retain the best people in our business on a global basis. There are many reasons why we are confident that will be the case. First, our people can take pride in their work. They are trusted advisors to their clients, as opposed to salesmen trying to sell multiple products. Second, ours is a very collegial culture, with everyone united by the common goal of winning and retaining clients by providing insightful advice and successfully executing transactions. Third, ours is a stable business. We have built a business with no regulatory threats and are contemplating no fundamental restructuring of our business model or our team, unlike the case at many of the large global banks. Finally, ours has been a growing business for 18 years, and it remains so today.

In closing, we are grateful to our clients, employees and stockholders for making 2013 another year of progress in building our Firm. We look forward to 2014.


Robert F. Greenhill       
Founder and Chairman

Scott L. Bok
Chief Executive Officer

Annual Meeting
Wednesday, April 23, 2014
at 11:00 a.m. ET at the
Waldorf Astoria
301 Park Avenue
New York, NY 10022

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No conflicts
No conflicts
We've made a conscious decision not to offer research, trading or lending in order to assure our clients of getting the most unbiased expert advice possible.
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Symbol GHL
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