Greenhill & Co. (GHL:US) and Evercore Partners Inc. (EVR:US), the New York-based takeover advisers, reported profits that missed analysts’ estimates as transactions weren’t finished in time to yield fees. Conditions for dealmaking are improving, they said.
Greenhill’s first-quarter net income plunged 98 percent from a year earlier to $238,000, or 1 cent a share, falling short of the 26-cent estimate of 10 analysts surveyed by Bloomberg. Revenue dropped 45 percent amid a “reduced number of large transaction completions,” the firm said yesterday in a statement.
Evercore, founded by former U.S. Treasury Secretary Roger C. Altman, said net income from continuing operations rose 44 percent to $13.4 million. Adjusted earnings per share were 31 cents, missing the 51-cent average estimate (EVR:US) of nine analysts. Net revenue slipped 2.3 percent as some transactions were delayed, it said.
“Ours is a lumpy business where we don’t have any control over the timing of closings and the related payment of fees,” Altman told analysts on a conference call. “I do think the environment is improving and that it’ll continue to be somewhat better.”
High stock valuations, availability of financing and U.S. economic growth are giving business leaders more confidence to make big takeovers, Altman said. Announced mergers and acquisitions involving U.S. companies jumped by more than a third to $361 billion during the quarter as the Standard & Poor’s 500 Index climbed toward a record high on April 2, according to data compiled by Bloomberg.
“The good news is that the shortfall versus our expectation appears primarily a function of the timing of deal closings as opposed to an indication of franchise deterioration,” Jeff Harte, an analyst at Sandler O’Neill & Partners LP, wrote of Evercore in a note to clients yesterday.
Evercore fell 1.3 percent to $52.38 at 10:08 a.m. today in New York. Greenhill tumbled 5.8 percent to $49.24, the biggest intraday decline since Jan. 29.
“Notwithstanding the slow start to revenue for the year, both market data and our own level of client activity suggest that the long-awaited rebound in transaction activity, both in the U.S. and Europe, may finally be beginning,” Greenhill Chairman Robert Greenhill said in the statement. “We expect a strong rebound in revenue.”
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