| GREENHILL & CO INC Item 1A Risk Factors Our ability to retain our managing directors is critical to the success of our business The success of our business depends upon the personal reputation, judgment, business generation capabilities and project execution skills of our 30 managing directors and senior advisors at December 31, 2005, particularly the members of our Management Committee (which consists of Robert F Greenhill, Scott L Bok, Simon A Borrows, Robert H Niehaus, Timothy M George, James R C Lupton and Colin T Roy) |
| Founded in 1996, our business has a limited operating history and, as a result, our managing directors’ personal reputations and relationships with our clients are a critical element in obtaining and maintaining client engagements, and forming and investing merchant banking funds |
| Accordingly, the retention of our managing directors is particularly crucial to our future success |
| The departure or other loss of Mr |
| Greenhill, our founder, Chairman and Chief Executive Officer, or the departure or other loss of any other member of our Management Committee or any other managing director, each of whom manages substantial client relationships and possesses substantial experience and expertise, could materially adversely affect our ability to secure and successfully complete engagements and conduct our merchant banking business, which would materially adversely affect our results of operations |
| In addition, if any of our managing directors were to join an existing competitor or form a competing company, some of our clients could choose to use the services of that competitor instead of our services |
| There is no guarantee that the compensation arrangements, non-competition agreements and lock-up agreements we have entered into with our managing directors are sufficiently broad or effective to prevent our managing directors from resigning to join our competitors or that the non-competition agreements would be upheld if we were to seek to enforce our rights under these agreements |
| A significant portion of our revenues are derived from advisory fees We have historically earned a significant portion of our revenues from advisory fees paid to us by our clients, in large part upon the successful completion of the client’s transaction or restructuring |
| Financial advisory revenues represented 64prca and 86prca of our total revenues in 2005 and 2004, respectively |
| Unlike diversified investment banks, we only have one other significant alternative source of revenue, but lack such other sources of revenue as securities trading or underwriting |
| We expect that our reliance on advisory fees will continue for the foreseeable future and a decline in our advisory engagements or the market for advisory services generally would have a material adverse effect on our business and results of operations |
| Our merger and acquisition and restructuring advisory engagements are singular in nature and do not provide for subsequent engagements Our clients generally retain us on a non-exclusive, short-term, engagement-by-engagement basis in connection with specific merger or acquisition transactions or restructuring projects, rather than 5 _________________________________________________________________ under exclusive long-term contracts |
| As these transactions are singular in nature and our engagements are not likely to recur, we must seek out new engagements when our current engagements are successfully completed or are terminated |
| As a result, high activity levels in any period are not necessarily indicative of continued high levels of activity in the next-succeeding or any other period |
| In addition, when an engagement is terminated, whether due to the cancellation of a transaction due to market reasons or otherwise, we may earn limited or no fees and may not be able to recoup the costs that we incurred prior to that termination |
| A high percentage of our financial advisory revenues are derived from a few clients and the termination of any one advisory engagement could reduce our revenues and harm our operating results Each year, we advise a limited number of clients |
| Our top ten clients accounted for 39prca and 53prca of our total revenues in 2005 and 2004, respectively |
| Our single largest clients accounted for 9prca and 10prca of our total revenues in 2005 and 2004, respectively |
| While the composition of the group comprising our largest clients varies significantly from year to year, we expect that our advisory engagements will continue to be limited to a relatively small number of clients and that an even smaller number of those clients will account for a high percentage of revenues in any particular year |
| As a result, the adverse impact on our results of operation of one lost mandate or the failure of one transaction or restructuring on which we are advising to be completed can be significant |
| A high percentage of our merchant banking revenues is derived from the gains on a small number of investments; these gains may not recur and may not be replaced by other gains; our investments may lose money We have a limited number of investments in our merchant banking portfolio |
| The fair market value of these investments may appreciate (or depreciate) at different rates based on a variety of factors |
| The gain from one investment accounted for more than 10prca of total revenues recognized by the firm in 2005 |
| This gain was significantly impacted by market factors, specific industry conditions and other factors beyond our control, and we cannot assure you that we will benefit from a similar gain from this or any other investment in any other period |
| The lack of such gains (and any losses which may be attributable to the investments in our merchant banking portfolio) may adversely affect our stock price |
| There will not be a consistent pattern in our financial results from quarter to quarter, which may result in increased volatility of our stock price We can experience significant variations in revenues and profits during the year |
| These variations can generally be attributed to the fact that our revenues are usually earned in large amounts throughout the year upon the successful completion of a transaction or restructuring, the timing of which is uncertain and is not subject to our control |
| Moreover, our ability to realize gains from our merchant banking portfolio may vary significantly from period to period and depends on a number of factors beyond our control, including most notably market and general economic conditions |
| Compared to our larger, more diversified competitors in the financial services industry, we generally experience even greater variations in our revenues and profits |
| This is due to our dependence on a relatively small number of transactions for most of our revenues, with the result that our earnings can be significantly affected if any particular transaction is not completed successfully, and to the fact that we lack other, more stable sources of revenue in material amounts, such as brokerage and asset management fees, which could moderate some of the volatility in advisory revenues |
| In addition, our merchant banking investments are adjusted for accounting purposes to fair value at the end of each quarter |
| The value of our investment may increase or decrease significantly depending upon market factors that are beyond our control |
| As a result, it may be difficult for us to achieve steady earnings growth on a quarterly basis, which could adversely affect our stock price |
| In addition, in many cases we are not paid for advisory engagements that do not result in the successful consummation of a transaction or restructuring |
| As a result, our business is highly 6 _________________________________________________________________ dependent on market conditions and the decisions and actions of our clients and interested third parties |
| For example, a client could delay or terminate an acquisition transaction because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or shareholder approvals, failure to secure necessary financing, adverse market conditions or because the target’s business is experiencing unexpected financial problems |
| Anticipated bidders for assets of a client during a restructuring transaction may not materialize or our client may not be able to restructure its operations or indebtedness due to a failure to reach agreement with its principal creditors |
| In these circumstances, in many cases we do not receive any advisory fees, other than the reimbursement of certain out-of-pocket expenses |
| The failure of the parties to complete a transaction on which we are advising, and the consequent loss of revenue to us, could lead to large adverse movements in our stock price |
| Difficult market conditions could adversely affect our business in many ways Adverse market or economic conditions would likely affect the number and size of transactions on which we provide mergers and acquisitions advice and therefore adversely affect our financial advisory fees |
| As our operations in the United States and the United Kingdom have historically provided most of our revenues and earnings, our revenues and profitability are particularly affected by economic conditions in these countries |
| Adverse market or economic conditions as well as a slowdown of activity in the sectors in which the portfolio companies of our merchant banking funds operate could have an adverse effect on the earnings of those portfolio companies, and therefore, our earnings |
| In addition, in the event of a market downturn, our merchant banking funds may find fewer opportunities to exit and realize value from their investments |
| If the number of debt defaults, bankruptcies or other factors affecting demand for our restructuring advisory services continues to decline, our revenues and profitability could suffer During the period when mergers and acquisitions activity decline and debt defaults increase, we increasingly rely on the provision of restructuring and bankruptcy advisory services as a source of new business |
| We provide various restructuring and restructuring-related advice to companies in financial distress or their creditors or other stakeholders |
| A number of factors affect demand for these advisory services, including general economic conditions and the availability and cost of debt and equity financing |
| The requirement of Section 327 of the US Bankruptcy Code requiring that one be a ‘‘disinterested person’’ to be employed in a restructuring has recently been modified |
| The ‘‘disinterested person’’ definition of the US Bankruptcy Code, as previously in effect, disqualified certain of our competitors |
| The change to the ‘‘disinterested person’’ definition causing a person not to be disqualified by means of its status as an underwriter of securities could allow for more financial services firms to compete for restructuring engagements as well as with respect to the recruitment and retention of professionals |
| If our competitors succeed in being retained in new restructuring engagements, our financial restructuring practice, and thereby our results of operations, could be materially adversely affected |
| If demand for our restructuring services decreases, we could suffer a decline in revenues, which could lower our overall profitability |
| We are continuing to expand our merchant banking fund management business, which will entail increased levels of investments in high-risk, illiquid assets We continue to expand our merchant banking fund management business by establishing a new merchant banking fund in 2005 and may expand our merchant banking business further |
| Our revenues from this business are primarily derived from management fees calculated as a percentage of committed capital and/or assets under management, investment gains and profit overrides, which are earned if investments are profitable over a specified threshold |
| Our ability to form new merchant banking funds is subject to a number of uncertainties, including adverse market or economic conditions, competition from other fund managers, and the ability to negotiate terms with major investors |
| 7 _________________________________________________________________ In 2005, we committed dlra88dtta5 million to our new merchant banking fund, GCP II The kinds of investments made by these funds are generally in relatively high-risk, illiquid assets |
| Contributing capital to these funds is risky and we may lose some or all of the principal amount of our investments |
| Given the nature of the investments contemplated by Greenhill Capital Partners, there is a significant risk that Greenhill Capital Partners will be unable to realize its investment objectives by sale or other disposition at attractive prices or will otherwise be unable to complete any exit strategy |
| In particular, these risks could arise from changes in the financial condition or prospects of the portfolio company in which the investment is made, changes in national or international economic conditions or changes in laws, regulations, fiscal policies or political conditions of countries in which investments are made |
| Greenhill Capital Partners will typically invest in securities of a class that are not publicly-traded |
| In many cases Greenhill Capital Partners may be prohibited by contract or by applicable securities laws from selling such securities for a period of time or otherwise be restricted from disposing of such securities |
| Greenhill Capital Partners will generally not be able to sell these securities publicly unless their sale is registered under applicable securities laws, or unless an exemption from such registration requirements is available |
| In particular, Greenhill Capital Partners’ ability to dispose of investments is heavily dependent on the initial public offering market, which fluctuates in terms of both volume of transactions as well as the types of companies which are able to access the market |
| Furthermore, the types of investments made may require a substantial length of time to liquidate |
| In addition, the investments in these funds are adjusted for accounting purposes to fair value at the end of each quarter and our allocable share of these gains or losses will affect our revenue even though such market fluctuations may have no cash impact, which could increase the volatility of our quarterly earnings |
| It takes a substantial period of time to identify attractive merchant banking opportunities, to raise all the funds needed to make an investment and then to realize the cash value of our investment through resale |
| Even if a merchant banking investment proves to be profitable, it may be several years or longer before any profits can be realized in cash |
| We value our merchant banking portfolio each quarter using a fair value methodology, which could result in gains or losses to the firm; losses could affect our stock price adversely The firm makes principal investments in Greenhill Capital Partners |
| As of December 31, 2005, the value of the firm’s principal investment in Greenhill Capital Partners and other investments was dlra104dtta1 million |
| The value of our investment is determined on a quarterly basis by the general partner of the funds based on the fair value of such investments |
| The fair value is determined based on a number of factors including the length of time for which the investment has been held, the trading price of the shares (in the case of publicly traded securities), restrictions on transfer and other recognized valuation methodologies |
| Significant changes in the public equity markets may have a material effect on the fair value of our principal investments and therefore on our results of operations |
| The values at which the principal investments are carried on our books may increase or decrease depending on a number of factors beyond our control and may vary significantly from period to period |
| In addition, because of the inherent uncertainty of valuations, the estimated fair values of non-public securities may differ significantly from the values that would have been used had a ready market for the securities existed |
| As a result, our stock price could be adversely affected by losses in the value of these investments |
| We face strong competition from far larger firms in part due to a trend toward consolidation The investment banking industry is intensely competitive and we expect it to remain so |
| We compete on the basis of a number of factors, including the quality of our advice and service, innovation, reputation and price |
| We believe we may experience pricing pressures in our areas of operation in the future as some of our competitors seek to obtain market share by reducing prices |
| We are a relatively small investment bank, with 151 employees (including managing directors and senior advisors) on December 31, 2005 and total revenues of approximately dlra221dtta2 million in 2005 |
| Most of our competitors in the investment banking industry have a far greater range of products and 8 _________________________________________________________________ services, greater financial and marketing resources, larger customer bases, greater name recognition, more managing directors to serve their clients’ needs, greater global reach and more established relationships with their customers than we have |
| These larger and better capitalized competitors may be better able to respond to changes in the investment banking market, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally |
| The scale of our competitors has increased in recent years as a result of substantial consolidation among companies in the investment banking industry |
| In addition, a number of large commercial banks, insurance companies and other broad-based financial services firms have established or acquired financial advisory practices and broker-dealers or have merged with other financial institutions |
| These firms have the ability to offer a wide range of products, from loans, deposit-taking and insurance to brokerage, asset management and investment banking services, which may enhance their competitive position |
| They also have the ability to support investment banking with commercial banking, insurance and other financial services revenues in an effort to gain market share, which could result in pricing pressure in our businesses |
| In particular, the ability to provide financing as well as advisory services has become an important advantage for some of our larger competitors, and because we are unable to provide such financing we may be unable to compete for advisory clients in a significant part of the advisory market |
| Strategic investments or acquisitions and joint ventures may result in additional risks and uncertainties in our business |
| We intend to grow our core business through both internal expansion and through strategic investments, acquisitions or joint ventures |
| To the extent we make strategic investments or acquisitions or enter into joint ventures, we face numerous risks and uncertainties combining or integrating the relevant businesses and systems, including the need to combine accounting and data processing systems and management controls |
| In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control |
| In addition, conflicts or disagreements between us and our joint venture partners may negatively impact our business |
| To the extent that we pursue business opportunities outside the United States, we will be subject to political, economic, legal, operational and other risks that are inherent in operating in a foreign country, including risks of possible nationalization, expropriation, price controls, capital controls, exchange controls and other restrictive governmental actions, as well as the outbreak of hostilities |
| In many countries, the laws and regulations applicable to the financial services industries are uncertain and evolving, and it may be difficult for us to determine the exact requirements of local laws in every market |
| Our inability to remain in compliance with local laws in a particular foreign market could have a significant and negative effect not only on our businesses in that market but also on our reputation generally |
| We are also subject to the enhanced risk that transactions we structure might not be legally enforceable in the relevant jurisdictions |
| Greenhill is controlled by its managing directors whose interests may differ from those of our public shareholders Our managing directors and their affiliated entities collectively own approximately 65prca of the total shares of common stock outstanding at December 31, 2005 |
| Robert F Greenhill and members of his family beneficially own approximately 21prca of our common stock and the other members of our Management Committee own approximately 33prca of our common stock outstanding at December 31, 2005 |
| As a result of these shareholdings, the members of our Management Committee currently are able to exercise significant influence over the election of our entire board of directors, the management and policies of Greenhill and the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of the assets of Greenhill |
| Our managing directors currently are able to prevent or cause a change in control of Greenhill |
| 9 _________________________________________________________________ Employee misconduct could harm Greenhill and is difficult to detect and deter There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years and we run the risk that employee misconduct could occur at our company |
| For example, misconduct by employees could involve the improper use or disclosure of confidential information, which could result in regulatory sanctions and serious reputational or financial harm |
| Our advisory business often requires that we deal with client confidences of the greatest significance to our clients, improper use of which may have a material adverse impact on our clients |
| Any breach of our clients’ confidences as a result of employee misconduct may impair our ability to attract and retain advisory clients |
| It is not always possible to deter employee misconduct and the precautions we take to detect and prevent this activity may not be effective in all cases |
| We may face damage to our professional reputation and legal liability to our clients and affected third parties if our services are not regarded as satisfactory As an investment banking firm, we depend to a large extent on our relationships with our clients and our reputation for integrity and high-caliber professional services to attract and retain clients |
| As a result, if a client is not satisfied with our services, it may be more damaging in our business than in other businesses |
| Moreover, our role as advisor to our clients on important mergers and acquisitions or restructuring transactions involves complex analysis and the exercise of professional judgment, including rendering ‘‘fairness opinions’’ in connection with mergers and other transactions |
| Our activities may subject us to the risk of significant legal liabilities to our clients and aggrieved third parties, including shareholders of our clients who could bring securities class actions against us |
| In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial intermediaries have been increasing |
| These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time |
| Our engagements typically include broad indemnities from our clients and provisions to limit our exposure to legal claims relating to our services, but these provisions may not protect us or may not be enforceable in all cases |
| As a result, we may incur significant legal expenses in defending against litigation |
| Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which could seriously harm our business prospects |
| We are subject to extensive regulation in the financial services industry We, as a participant in the financial services industry, are subject to extensive regulation in the United States and elsewhere |
| In the United States, our broker-dealer subsidiary, Greenhill & Co, LLC, is subject to the net capital requirements of the SEC Any failure to comply with these requirements could impair our ability to do business |
| We also face the risk of significant intervention by regulatory authorities in all jurisdictions in which we conduct our business |
| Among other things, we could be fined, prohibited from engaging in some of our business activities or subject to limitations or conditions on our business activities |
| In addition, as a result of recent highly publicized financial scandals, the regulatory environment in which we operate may be subject to further regulation |
| New laws or regulations or changes in the enforcement of existing laws or regulations applicable to our clients may also adversely affect our business |
| Legal restrictions on our clients may reduce the demand for our services New laws or regulations or changes in enforcement of existing laws or regulations applicable to our clients may also adversely affect our businesses |
| For example, changes in antitrust enforcement could affect the level of mergers and acquisitions activity and changes in regulation could restrict the activities of our clients and their need for the types of advisory services that we provide to them |
| Fees earned in connection with advisory assignments in the bankruptcy context may be subject to challenge and reduction In our advisory business we from time to time advise debtors or creditors of companies which are involved in bankruptcy proceedings in the United States Bankruptcy Courts |
| Fees earned and reflected in our revenues may from time to time be subject to successful challenges, which could result in a reduction of revenues and affect our stock price adversely |
| Our share price may decline due to the large number of shares eligible for future sale Sales of substantial amounts of common stock by our managing directors and other employees, or the possibility of such sales, may adversely affect the price of the common stock and impede our ability to raise capital through the issuance of equity securities |
| As of December 31, 2005, there were 29cmam229cmam528 shares of common stock outstanding, which is net of 1cmam650cmam496 shares of common stock held in treasury |
| As of December 31, 2005, 10cmam061cmam359 shares of common stock are freely transferable without restriction or further registration under the Securities Act of 1933 |
| Subject to certain exceptions, the remaining 19cmam168cmam169 shares of common stock may not be sold until May 11, 2009, except in one or more underwritten public offerings approved by our underwritten offering committee which consists of Robert F Greenhill (who chairs the committee), Scott L Bok and Simon A Borrows |
| Approval of an underwritten offering by the committee will require approval of either the chair of the committee or the joint approval of the other two members of the committee |
| Accordingly, Robert Greenhill alone, or Scott Bok and Simon Borrows together, may permit a sale of shares of our common stock that could adversely affect the market price of our common stock |
| After May 11, 2009, there will be no remaining contractual restrictions on resale on the shares issued to our managing directors at the time of the initial public offering |
| In addition, 7cmam110cmam535 of such shares of common stock held by Robert F Greenhill through his affiliated entities, Lord James Blyth and Harvey R Miller will be eligible for resale pursuant to Rule 144 after May 11, 2006 and will not be subject to such contractual restrictions after that date |
| A significant portion of the compensation of our managing directors is paid in restricted stock units and the shares we expect to issue on the vesting of those restricted stock units could result in a significant increase in the number of shares of common stock outstanding At the time of and since our initial public offering we have awarded our directors, managing directors and other employees restricted stock units |
| A significant portion of the compensation of our managing directors has been paid in restricted stock units |
| Each restricted stock unit represents the holder’s right to receive one share of our common stock or a cash payment equal to the fair value thereof, at our election, following the applicable vesting date |
| Awards of restricted stock units to our managing directors and other employees generally vest either ratably over a five year period beginning on the first anniversary of the grant date or do not vest until the fifth anniversary of their grant date, when they vest in full |
| Shares will be issued in respect of restricted stock units only under the circumstances specified in the applicable award agreements and the equity incentive plan, and may be forfeited in certain cases |
| As of December 31, 2005, 130cmam024 shares of common stock have been issued from the vesting of restricted stock units |
| Assuming all of the conditions to vesting are fulfilled, shares in respect of the 1cmam023cmam709 restricted stock units that are outstanding as of December 31, 2005 would be issued as follows: 151cmam367 shares in 2006, 144cmam748 shares in 2007, 140cmam659 shares in 2008, 151cmam775 shares in 2009 and 435cmam160 shares in 2010 |
| While we have historically been able to repurchase in the open market and through privately negotiated transactions a significant number of our shares of common stock, if we were to cease to or were unable to repurchase shares of common stock, the number of shares outstanding would increase over time, diluting the ownership of our existing stockholders |
| The market price of our common stock may decline The price of the common stock may fluctuate widely, depending upon many factors, including the perceived prospects of Greenhill and the financial services industry in general, differences between our actual financial and operating results and those expected by investors, the performance of our merchant banking portfolio, changes in general economic or market conditions and broad market fluctuations |
| Declines in the price of our stock may adversely affect our ability to recruit and retain key employees, including our managing directors |
| 11 _________________________________________________________________ The historical and unaudited pro forma consolidated financial information in this Form 10-K may not permit you to predict our costs of operations The historical consolidated financial information in this Form 10-K relating to periods before May 11, 2004 does not reflect the added costs that we have incurred since that date as a public company or the changes that have occurred in our capital structure and operations as a result of our initial public offering |
| Because we operated through partnerships and limited liability companies prior to our transition to corporate form, at the time of our initial public offering in May 2004, we paid little or no taxes on profits and paid limited salaries to our managing directors |
| In preparing our unaudited pro forma consolidated financial information for 2004 and years prior, we deducted and charged to earnings estimated income taxes based on an estimated tax rate, which may be different from our actual tax rate in the future, and estimated salaries, payroll taxes and benefits for our managing directors |
| The estimates we used in our unaudited pro forma consolidated financial information may not be similar to our actual experience as a public corporation |
| For more information on our historical financial statements and unaudited pro forma consolidated financial information, see ‘‘Unaudited Pro Forma Consolidated Financial Information’’ and our historical consolidated financial statements and their notes included elsewhere in this Form 10-K We may be required to make substantial payments under certain indemnification agreements In connection with our initial public offering and conversion to corporate form in May 2004, we entered into agreements that provide for the indemnification of our managing directors, directors, officers and certain other persons authorized to act on our behalf against certain liabilities of our managing directors relating to the time they were members or partners of Greenhill & Co |
| Holdings, LLC or its affiliates, and certain tax liabilities of our members that may arise in respect of periods prior to the offering when we were a limited liability company |
| We may be required to make substantial payments under these indemnification agreements, which could adversely affect our financial condition |
| Cautionary Statement Concerning Forward-Looking Statements We have made statements under the captions ‘‘Business’’, ‘‘Risk Factors’’, and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and in other sections of this Form 10-K that are forward-looking statements |
| In some cases, you can identify these statements by forward-looking words such as ‘‘may’’, ‘‘might’’, ‘‘will’’, ‘‘should’’, ‘‘expect’’, ‘‘plan’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘estimate’’, ‘‘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 projections of our future financial performance, based on our growth strategies and anticipated trends in our business |
| These statements are only predictions based on our current expectations and projections about future events |
| 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 |
| In particular, you should consider the numerous risks outlined under ‘‘Risk Factors’’ |
| These risks are not exhaustive |
| Other sections of this Form 10-K may include additional factors which could adversely impact our business and financial performance |
| Moreover, we operate in a very competitive and rapidly changing environment |
| New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements |
| Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot 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 any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations |
| 12 _________________________________________________________________ Forward-looking statements include, but are not limited to, the following: [spacer |
| gif] • the statements about (i) our expectation that our total compensation and benefits, including that payable to our managing directors, will not exceed 50prca of total revenues in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Compensation and Benefits’’ and ‘‘Notes to Consolidated Financial Statements — Pro Forma Financial Information’’ and (ii) our expectation to make certain principal investments and our expectation of revenues from a profit override and from gains on investments of our capital beginning in 2004 in ‘‘Business — Principal Sources of Revenue — Merchant Banking Fund Management’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources’’; [spacer |
| gif] • the statement about our expectation of benefits from a sustained increase in M&A volume in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Environment’’; [spacer |
| gif] • the statement about our expectation of a decline in financial distressed-driven business in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Advisory Revenues’’; [spacer |
| gif] • the statement about our expectations that we will expand our merchant banking management business in ‘‘Overview — Merchant Banking Fund Management’’; [spacer |
| gif] • the statement about new managing directors add incrementally to our revenue and income growth potential in ‘‘Management’s Discussion Analysis of Financial Condition and Results of Operations — Overview’’; [spacer |
| gif] • the statements about our expectations that the management fees and profit overrides we earn in our merchant banking management business will or could increase in ‘‘Management’s Discussion Analysis of Financial Condition and Results of Operations — Merchant Banking Fund Management’’; [spacer |
| gif] • the statement about our expectation that operating costs will increase as we grow our business in ‘‘Management’s Discussion Analysis of Financial Condition and Results of Operations — Non-Compensation Costs’’: and [spacer |
| gif] • the discussion of our ability to meet liquidity needs without maintaining significant cash balances in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources’’ |