No Slide Title€¦ · Franchise in 2015 Client Role Region Sector Deal Size Acquisition of...
Transcript of No Slide Title€¦ · Franchise in 2015 Client Role Region Sector Deal Size Acquisition of...
Greenhill Scott L. Bok – Chief Executive Officer
The JMP Securities Financial Services & Real Estate Conference
September 21, 2015
Greenhill
Forward-Looking Statements
Statements contained in this Presentation that are not based on
current or historical fact are forward-looking in nature. Such forward-
looking statements are based on current plans, estimates and
expectations and are made pursuant to the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on known
and unknown risks, assumptions, uncertainties and other factors. For a
further discussion of such factors, you should read the Company’s
Forms 10-K, Forms 10-Q, subsequent Forms 8-K and other periodic
reports filed with the Securities and Exchange Commission. The
Company’s actual results, performance, or achievements may differ
materially from any future results, performance, or achievements
expressed or implied by such forward-looking statements. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements
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Greenhill
Introduction to Greenhill
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Independent advisory firm
– Almost 20 years old
– First to IPO
Truly global business
– Typically half of revenue ex-US
– All global operations wholly owned
Strong capabilities across industry sectors
Advise on wide variety of assignments
– M&A, restructuring, financing, capital raising
– Newly expanded capability in capital advisory
Greenhill
Table of Contents
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Investment Case for Greenhill
State of the M&A Market
Market Environment for Other Advisory Activities
Greenhill in 2015 and Beyond
Greenhill
Greenhill's Long History Demonstrates a Differentiated Strategy and Track Record
1. Pure advisory business – M&A, restructuring, capital raising
2. Most globally diverse client base
3. Most diverse client base by sector
4. Most focused on larger transactions
5. Highest profit margin relative to peers
6. Simple, transparent accounting (no non-GAAP adjustments)
7. Strongest dividend
8. No share count dilution for 10+ years
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Greenhill
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Announcement Data Confirms Greenhill’s Broader Geographic Diversity
47%
74%
38%
70%
86%
25%
18%
48%
14%
10%
17%
2% 6%
11%7%
12% 10%4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Greenhill Evercore Lazard Moelis Houlihan Lokey
Perc
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pan
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Rest of World
Australia
Europe
United States/Canada
Note: Based on number of 2013 to YTD 2015 announcements. Deal count and geographic allocations based on client’s nationality, both per Thomson One data as of 9/18/2015
Greenhill
Greenhill Client Base Also Most Diverse by Sector (6 Sectors @ 9%+)
6 Note: Based on number of 2013 to YTD 2015 announcements. Deal count and industry allocations based on target industry, both per Thomson One data as of 9/18/2015
16%
5%
15% 12%
21%
7% 5%3%
4%
10%
31%9%
5%
7%
11%
13%
12%
11%
9%
12%6%
8%
9%
14%
9%16%
8%
9%
10%
7%
4%
7%18%
6%2%
5%
5% 5%1%
1%1%
4%
5% 5% 3%
24%
14%
24% 23% 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Greenhill Evercore Lazard Moelis Houlihan Lokey
Perc
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t o
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eal C
ou
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Industrials and Materials
Real Estate
Government and Agencies
Telecommunications
Media and Entertainment
High Technology
Healthcare
Financials
Energy and Power
Retail
Consumer Products and Services
Greenhill
61%
70% 73%81%
92%
13%
13% 8%
8%
4%
6%
7%6%
4%
2%
13%
5%7%
3%2%
7% 4% 6% 4% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Greenhill Evercore Lazard Moelis Houlihan Lokey
Perc
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t o
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Over 5bn
2bn - 5bn
1bn - 2bn
500mm - 1bn
<500mm or NA
Greenhill Most Focused on Larger Transactions
7 Note: Based on number of 2013 to YTD 2015 announcements. Deal count and target size, both per Thomson One data as of 9/18/2015
$1bn+ Deals 26% 16% 19% 11% 5%
Greenhill
High Profit Margin Relative to Peers
Pre-Tax Margin (Including All GAAP Compensation Costs)
2006 2007 2008 2009 2010 2011 2012 2013 2014
GHL(1) 41% 44% 35% 38% 21% 26% 25% 25% 25%
LAZ(1) 22% 22% 2% (2%) 8% 13% 6% 11% 23%
EVR 33% 27% (5%) 7% 9% 7% 11% 18% 19%
MC n.a. n.a. n.a. 12% 16% (2%) 10% 18% 9%
HLI n.a. n.a. n.a. n.a. n.a. n.a. n.a. 18% 19%
(1) Excludes expense from acceleration of amortization of stock grants upon death of Lazard CEO in 2009 and two Greenhill executives in 2011
Source: Public filings 8
Greenhill
Strongest Dividend History
Aggregate Dividends Paid ($MM)
2006 2007 2008 2009 2010 2011 2012 2013 2014
GHL $21.2 $36.9 $50.0 $53.6 $56.9 $57.7 $57.1 $56.2 $56.3
LAZ 14.4 20.9 30.3 38.4 61.2 82.7 160.3 138.8 165.8
EVR n.a. 4.7 6.2 8.6 13.7 22.2 29.3 36.1 42.5
MC n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 76.2
HLI n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Note: Includes dividends and dividend equivalents (1) Calculated based on current quarterly dividend and 9/18/2015 closing share price (2) Includes special dividend of $0.20 per share (~$25mm) and an accelerated dividend of $0.20 per share (~$25mm) in
2012; includes special dividend of $0.25 per share (~$32mm) in 2013 (3) Reflects all dividends paid in 2014 (since IPO in April 2014), including special dividend of $1.00 per share (~$54mm) (4) Announced plan for $0.15 dividend per share to begin in Q3 FY2016 Source: Public filings
Current
Dividend
Yield (1)
5.7%
3.0%
2.2%
4.4%
n.a.
(2) (2)
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(3)
(4)
Greenhill
% Change in Share
Count Since Q2 2004
Advisory Focused Firms
Greenhill 1%
Lazard 33%
Evercore 76%
Diversified Large Banks
BofAML 172%
Barclays 164%
Citigroup 482%
Credit Suisse 36%
Deutsche Bank 163%
Goldman Sachs (10%)
JPMorgan 83%
Morgan Stanley 77%
UBS 241%
Large Bank Average 156%
No Share Count Dilution For Over 10 Years
Note: Share count growth based on reported average fully diluted shares outstanding in Q2 2004 to Q2 2015 (1) Share count growth based on shares outstanding since IPO Source: Company Filings and Releases
(1)
(1)
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Slight increase at
Greenhill this
year from Cogent
acquisition
Greenhill
Table of Contents
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Investment Case for Greenhill
State of the M&A Market
Market Environment for Other Advisory Activities
Greenhill in 2015 and Beyond
Greenhill
Improvement In Announced Deal Activity Largely Limited to Mega Deals
Announced M&A Data
Note: 2015 Data Annualized as of 9/18; M&A Volume and number of transactions exclude withdrawn and
cancelled deals Source: Thomson One
(M&A Volume in $ Billions)2015
Annualized2014 % Change
Transactions < $500mm 15,476 16,805 (8%)
Transactions > $500mm and < $5bn 1,004 985 2%
Transactions > $10bn 63 35 80%
Global M&A Volume $4,121 $3,400 21%
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Greenhill
Transaction Completion Improvement Likewise Skewed to $10bn+ Deals
Completed M&A Data
Note: 2015 Data Annualized as of 9/18; M&A Volume and number of transactions exclude withdrawn and
cancelled deals Source: Thomson One
(M&A Volume in $ Billions)2015
Annualized2014 % Change
Transactions < $500mm 9,947 11,277 (12%)
Transactions > $500mm and < $5bn 763 840 (9%)
Transactions > $10bn 46 19 143%
Global M&A Volume $3,156 $2,531 25%
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Greenhill US Announced Deal Volume Above 2007 Peak Levels, but Number of $500mm+ Deals Continues to Lag
US Announced M&A Data
Note: US acquiror or target; 2015 data annualized as of 9/18; M&A volume and number of transactions exclude
withdrawn and cancelled deals Source: Thomson One
547
682
340
214
408 419 440 448
558 550
$1,847
$2,054
$1,119
$902
$1,035
$1,320
$1,074
$1,238
$1,842
$2,318
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
0
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Number of Transactions >$500M Total M&A Volume in $ Billions
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Greenhill
Note: European acquiror or target; 2015 data annualized as of 9/18; M&A volume and number of transactions
exclude withdrawn and cancelled deals Source: Thomson One
European M&A Activity Far Below Peak, Flat For Several Years
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European Announced M&A Data
Number of Transactions >$500M Total M&A Volume in $ Billions
535
726
439
260
381 391 389
316
414 375
$1,610
$2,268
$1,346
$709
$987 $924
$1,130
$901
$1,193 $1,248
$0
$500
$1,000
$1,500
$2,000
$2,500
0
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Greenhill
Table of Contents
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Investment Case for Greenhill
State of the M&A Market
Market Environment for Other Advisory Activities
Greenhill in 2015 and Beyond
Greenhill
Market Environment for Other Advisory Activities
Restructuring
– Activity levels low for years due to accommodating credit markets
– But starting with energy that should start to change
Capital Raising
– Private equity and real estate funds performing well, returning significant capital
– Real estate funds performing particularly well
– For real estate, faster fund raises and more rapid deployment for funds raised
Secondary Alternative Asset Activity
– Strong valuation levels for fund interests
– Good opportunities for CIOs to adjust portfolio allocations through secondary sales
– Significant capital focused on secondary market
– Increasing liquidity and transaction activity levels
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Greenhill
Table of Contents
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Investment Case for Greenhill
State of the M&A Market
Market Environment for Other Advisory Activities
Greenhill in 2015 and Beyond
Greenhill
Highlights of 2015
Good M&A announcement activity in the US and UK markets
Continued strong performance by real estate-focused capital raising
business
Acquired Cogent, market leader in secondary capital advisory (early
signs post-acquisition all positive)
Recruited 5 M&A Managing Directors
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Greenhill
Landmark Transactions Have Enhanced Franchise in 2015
Client Role Region Sector Deal Size
Acquisition of Allergan’s Generics business Healthcare $40.5bn
Merger with Rock-Tenn Industrials $11.0bn
Acquisition of Verizon wireline assets Communications $10.5bn
Acquisition of Rexam plc Industrials $8.4bn
Merger with certain businesses of Gala Coral Gaming $5.6bn
Sale to Equinix Communications $4.1bn
Sale to Kinder Morgan Energy $3.0bn
Acquisition of Nordstrom’s credit card assets Financial Services $2.2bn
Acquisition of RTI International Metals Metals & Mining $1.5bn
20 Yellow shading denotes cross border transaction
Greenhill
Challenges of 2015
Improvement in deal activity limited to the US and UK
– Few transaction announcements in Continental Europe, Australia,
Brazil
Deal activity heavily focused on large strategic transactions
– Can result in lengthy regulatory reviews, though history suggests
few deals get blocked
Restructuring activity low, though we are advising on some of the
largest deals in the market
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Greenhill
Outlook for 2016
Longer regulatory reviews result in an already much improved revenue
backlog for 2016
– Europe looks to show major improvement off weak 2015
M&A activity improvement should broaden over time to smaller and
mid-sized deals
M&A activity improvement should also broaden to geographies beyond
the US and UK
Restructuring activity should pick up, starting in energy sector
Primary and secondary capital advisory activity should remain robust
barring a significant decline in asset values
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Greenhill
Longer-Term Opportunity for Greenhill
Brand stronger than ever in corporate boardrooms
Unified global team of highly motivated bankers
Poised to benefit from an increase in global deal activity
– Much upside remains in deals sub $10bn, European / Australian /
Brazilian M&A and restructuring
Only independent advisor with long track record of high GAAP
profitability, strong dividends and flat share count
– Focus on large transactions is key to achieving all three
Growing by attracting, integrating and developing senior talent
– Good recruiting opportunities continue to come our way
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