Greenhill Profit Plunges 90% as Advisory Fees Fall by Half

Greenhill & Co., the advisory firm founded by Robert Greenhill, reported a 90 percent plunge in second-quarter profit that missed analysts’ estimates as advisory revenue fell by almost half.

Net income dropped to $2.2 million, or 7 cents a share, from $21.5 million, or 69 cents, a year earlier, the New York-based company said today in a statement. The average estimate of seven analysts surveyed by Bloomberg was for profit of 25 cents.

Deals announced worldwide fell 22 percent in the first six months to $983.8 billion from $1.26 trillion in the same period last year, according to data compiled by Bloomberg. Chief Executive Officer Scott Bok has said market volatility and uncertainty made it difficult for management to focus on long-term opportunities, delaying deal announcements.

“The second quarter was obviously a slow one, both for the entire transaction market and for us,” Bok, 53, said today on a conference call. “We had very few significant transactions close in the period and also had fewer non-public assignments come to fruition.”

Advisory revenue in the second quarter declined 47 percent to $45.1 million from the year-earlier period. Total revenue fell 48 percent to $47.3 million.

There has been “significant improvement” in revenue from European clients, Bok said on the call without offering details. For the full year, advisory revenue could be similar to or better than last year, he said.

The firm set aside $28.4 million, or 60 percent of revenue, for compensation expense in the second quarter, compared with $41.8 million, or 46 percent, a year earlier.

Greenhill currently has 68 managing directors who work directly with clients, Bok said. By year-end, headcount is expected to increase by 5 percent, Chief Financial Officer Christopher Grubb said today on the call.

Greenhill declined 0.5 percent to close at $37.69 in New York. The firm’s shares have climbed 3.6 percent this year.


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