2.2.0.7 false Summary of Significant Accounting Policies 0202 - Disclosure - Summary of Significant Accounting Policies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Summary of Significant Accounting Policies [Abstract] 0 ghl_SummaryOfSignificantAccountingPoliciesAbstract ghl false na duration Summary of Significant Accounting Policies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Summary of Significant Accounting Policies. false 3 Summary of Significant Accounting Policies 1 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div align="left" style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 2 — Summary of Significant Accounting Policies</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Basis of Financial Information</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     These condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted (“GAAP”) in the United States, which require management to make estimates and assumptions regarding future events that affect the amounts reported in our financial statements and these footnotes, including investment valuations, compensation accruals and other matters. Management believes that the estimates used in preparing its condensed consolidated financial statements are reasonable and prudent. Actual results could differ materially from those estimates. Certain reclassifications have been made to prior period information to conform to current period presentation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The condensed consolidated financial statements of the Company include all consolidated accounts of Greenhill & Co., Inc. and all other entities in which the Company has a controlling interest, including GCI, GCEI, GCPE, and GCPII LLC, after elimination of all significant inter-company accounts and transactions. In accordance with the accounting pronouncements on the consolidation of variable interest entities, the Company consolidates the general partners of its merchant banking funds in which it has a majority of the economic interest. The general partners account for their investments in their merchant banking funds under the equity method of accounting. As such, the general partners record their proportionate shares of income (loss) from the underlying merchant banking funds. As the merchant banking funds follow investment company accounting, and generally record all their assets and liabilities at fair value, the general partners’ investment in merchant banking funds represents an estimation of fair value. The Company does not consolidate the merchant banking funds since the Company, through its general partner and limited partner interests, does not have a majority of the economic interest in such funds and the limited partners have certain rights to remove the general partner by a simple majority vote of unaffiliated third-party investors. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2009 filed with the Securities and Exchange Commission. The condensed consolidated financial information as of December 31, 2009 has been derived from audited consolidated financial statements not included herein. The results of operations for interim periods are not necessarily indicative of results for the entire year. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Noncontrolling Interests</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company records the noncontrolling interests of other consolidated entities as equity in the condensed consolidated statements of financial condition. Additionally, the condensed consolidated statements of income separately present income allocated to both noncontrolling interests and common stockholders. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The portion of the consolidated interests in the general partners of the Company’s merchant banking funds, which are held directly by employees of the Company, are presented as noncontrolling interests in equity. Additionally, the portion of the consolidated interests in GCP II LLC, which accrues to the benefit of GCP Capital Partners Holdings LLC (“GCP Capital”), an entity not controlled by the Company, is presented as noncontrolling interest in equity. See “Note 4 – Investments – Affiliated Merchant Banking Investments”. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Revenue Recognition</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Financial Advisory Fees</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company recognizes financial advisory fee revenue for mergers and acquisitions or financing advisory and restructuring engagements when the services related to the underlying transactions are completed in accordance with the terms of the engagement letter. The Company recognizes fund placement advisory fees at the time of the client’s acceptance of capital or capital commitments in accordance with the terms of the engagement letter. Retainer fees are recognized as financial advisory fee revenue over the period in which the related service is rendered. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company’s clients reimburse certain expenses incurred by the Company in the conduct of financial advisory engagements. Expenses are reported net of such client reimbursements. Client reimbursements totaled $1.6 million and $1.2 million for the three months ended September 30, 2010 and 2009 and $3.6 million and $2.7 million for the nine months ended September 30, 2010 and 2009, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Merchant Banking and Other Investment Revenues</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Merchant banking revenues consist of (i) management fees on the Company’s merchant banking activities, (ii) gains (or losses) on the Company’s investments in merchant banking funds and other principal investment activities, and, if any, (iii) merchant banking profit overrides. See “Note 4 – Investments – Affiliated Merchant Banking Investments”. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Management fees earned from the Company’s merchant banking activities are recognized over the period of related service. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company recognizes revenue on its investments in merchant banking funds based on its allocable share of realized and unrealized gains (or losses) reported by such funds. Investments held by merchant banking funds and certain other investments are recorded at estimated fair value. The value of merchant banking fund investments in privately held companies is determined by the general partner of the fund after giving consideration to the cost of the security, the pricing of other sales of securities by the portfolio company, the price of securities of other companies comparable to the portfolio company, purchase multiples paid in other comparable third-party transactions, the original purchase price multiple, market conditions, liquidity, operating results and other qualitative and quantitative factors. Discounts may be applied to the funds’ privately held investments to reflect the lack of liquidity and other transfer restrictions. Investments in publicly traded securities are valued using quoted market prices discounted for any legal or contractual restrictions on sale. Because of the inherent uncertainty of valuations as well as the discounts applied, the estimated fair values of investments in privately held companies may differ significantly from the values that would have been used had a ready market for the securities existed. The values at which the Company’s investments are carried on its condensed consolidated statements of financial condition are adjusted to estimated fair value at the end of each quarter and the volatility in general economic conditions, stock markets and commodity prices may result in significant changes in the estimated fair value of the investments from period to period. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     When certain financial returns are achieved over the life of the fund, the Company recognizes merchant banking profit overrides. Profit overrides are generally calculated as a percentage of the profits over a specified threshold earned by each fund on investments managed on behalf of unaffiliated investors except the Company. When applicable, the profit overrides earned by the Company are recognized on an accrual basis throughout the year. In accordance with the relevant guidance, the Company records as revenue the amount that would be due pursuant to the fund agreements at each period end as if the fund agreements were terminated at that date. Overrides are generally calculated on a deal-by-deal basis but are subject to investment performance over the life of each merchant banking fund. We may be required to repay a portion of the overrides paid to the limited partners of the funds in the event a minimum performance level is not achieved by the fund as a whole (we refer to these potential repayments as “clawbacks”). The Company would be required to establish a reserve for potential clawbacks if it were to determine that the likelihood of a clawback is probable and the amount of the clawback can be reasonably estimated. As of September 30, 2010, the Company believes it is more likely than not that the amount of profit overrides recognized as revenue will be realized and accordingly, the Company has not reserved for any clawback obligations under applicable fund agreements. See “Note 4 — Investments – Affiliated Merchant Banking Investments” for further discussion of the merchant banking revenues recognized. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Investments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company’s investments in its merchant banking funds are recorded under the equity method of accounting based upon the Company’s proportionate share of the fair value of the underlying merchant banking fund’s net assets. The Company’s other investments, which consider the Company’s influence or control of the investee, are recorded at estimated fair value or under the equity method of accounting based, in part, upon the Company’s proportionate share of the investee’s net assets. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Financial Advisory Fees Receivables</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Receivables are stated net of an allowance for doubtful accounts. The estimate for the allowance for doubtful accounts is derived by the Company by utilizing past client transaction history and an assessment of the client’s creditworthiness. The Company recorded bad debt expense of approximately $0.2 million for the nine months ended September 30, 2010 and released previously recorded bad debt expense of $0.3 million during the nine months ended September 30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Restricted Stock Units</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company accounts for its share-based compensation payments under which the fair value of restricted stock units granted to employees with future service requirements is recorded as compensation expense and generally amortized over a five-year service period following the date of grant. Compensation expense is determined at the date of grant. As the Company expenses the awards, the restricted stock units recognized are recorded within equity. The restricted stock units are reclassed into common stock and additional paid-in capital upon vesting. The Company records dividend equivalent payments, net of estimated forfeitures, on outstanding restricted stock units as a dividend payment and a charge to equity. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Earnings per Share</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company calculates earnings per share (‘‘EPS’’) by dividing net income allocated to common stockholders by the weighted average number of shares outstanding for the period. Diluted EPS includes the determinants of basic EPS plus the dilutive effect of the common stock deliverable pursuant to restricted stock units for which future service is required as a condition to the delivery of the underlying common stock. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Under the treasury method, the number of shares issuable upon the vesting of restricted stock units included in the calculation of diluted earnings per share is the excess, if any, of the number of shares expected to be issued, less the number of shares that could be purchased by the Company with the proceeds to be received upon settlement at the average market closing price during the reporting period. The denominator for basic EPS includes the number of shares deemed issuable due to the vesting of restricted stock units for accounting purposes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective on January 1, 2009, the Company adopted the accounting guidance for determining whether instruments granted in share-based payment transactions are participating securities. Under that guidance, the Company evaluated whether instruments granted in share-based payment transactions are participating securities prior to vesting and therefore need to be included in the earnings allocation in calculating EPS. Additionally, the two-class method requires unvested share-based payment awards that have non- forfeitable rights to dividend or dividend equivalents to be treated as a separate class of securities in calculating earnings per share. The adoption of this pronouncement did not have a material effect in calculating earnings per share. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Foreign Currency Translation</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Foreign currency assets and liabilities have been translated at rates of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Income and expenses transacted in foreign currency have been translated at average monthly exchange rates during the period. Translation gains and losses are included in the foreign currency translation adjustment included as a component of other comprehensive income (loss) in the condensed consolidated statements of changes in equity. Foreign currency transaction gains and losses are included in the condensed consolidated statements of income. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Goodwill</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Goodwill is the cost in excess of the fair value of identifiable net assets at acquisition date. The Company tests its goodwill for impairment at least annually. An impairment loss is triggered if the estimated fair value of an operating unit is less than estimated net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Goodwill is translated at the rate of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Any translation gain or loss is included in the foreign currency translation adjustment included as a component of other comprehensive income in the condensed consolidated statement of changes in equity. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Property and Equipment</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the life of the assets. Amortization of leasehold improvements is computed using the straight-line method over the lesser of the life of the asset or the term of the lease. Estimated useful lives of the Company’s fixed assets are generally as follows: </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Aircraft – 7 years </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Equipment – 4 years </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Furniture and fixtures – 7 years </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Leasehold improvements – the lesser of 10 years or the remaining lease term </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Provision for Taxes</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company accounts for taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), “Income Taxes (Topic 740),” which requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company follows the guidelines, pursuant to FASB ASC Topic 740-10, in recognizing, measuring, presenting and disclosing in its financial statements uncertain tax positions taken or expected to be taken on its income tax returns. Income tax expense is based on pre-tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions. The recognition or derecognition of income tax expense related to uncertain tax positions is determined under the guidance as prescribed by FASB ASC Topic 740-10. Deferred tax assets and liabilities are recognized for the future tax attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period of change. Management applies the ‘‘more-likely-than-not criteria’’ included in FASB ASC Topic 740-10 when determining tax benefits. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Cash and Cash Equivalents</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company held cash on deposit with financial institutions of $36.6 million and $31.8 million as of September 30, 2010 and December 31, 2009, respectively. The Company considers all highly liquid investments with a maturity date of three months or less, when purchased, to be cash equivalents. At September 30, 2010 and December 31, 2009, the carrying value of the Company’s cash equivalents amounted to $20.2 million and $42.7 million, respectively, which approximated fair value. Cash equivalents primarily consist of money market funds and overnight deposits. At September 30, 2010 and December 31, 2009, cash on deposit of $4.1 million and $0.6 million, respectively, were held by certain financial institutions as compensating balances for outstanding letters of credit. No amounts had been drawn under any of the letters of credit at September 30, 2010 and December 31, 2009, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company maintains its cash and cash equivalents with financial institutions with high credit ratings. The Company maintains deposits in federally insured financial institutions in excess of federally insured (FDIC) limits and in institutions in which deposits are not insured. However, management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Financial Instruments and Fair Value</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company accounts for financial instruments measured at fair value in accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”. FASB ASC Topic 820 provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the pronouncement are described below: </div> <div align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%"><i>Basis of Fair Value Measurement</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to FASB ASC Topic 820. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Derivative Instruments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company accounts for warrants under the guidance for accounting for derivative instruments and hedging activities. In accordance with that guidance, the Company records warrants at estimated fair value in the condensed consolidated statements of financial condition with changes in estimated fair value during the period recorded in merchant banking and other investment revenues in the condensed consolidated statements of income. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Subsequent Events</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company evaluates subsequent events through the date on which financial statements are issued, in accordance with ASU No. 2010-09, “Topic 855 – Amendments to Certain Recognition and Disclosure Requirements”. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Accounting Developments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities. The guidance affects the overall consolidation analysis and requires enhanced disclosures on involvement with variable interest entities. The guidance was effective for fiscal years beginning after November 15, 2009; however, in January 2010, the FASB confirmed its decision to defer the effective date of this guidance for certain reporting enterprises in the asset management industry, including mutual funds, hedge funds, mortgage real estate investment funds, private equity funds and venture capital funds. The deferral is applicable to the Company and will apply until the completion of a joint project between the FASB and the International Accounting Standards Board (“IASB”) on consolidation accounting, which is expected to be completed in 2010. Accordingly, the deferral resulted in no changes to the Company’s financial reporting. The Company will assess the impact of the joint project when completed. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock This element may be used to describe all significant accounting policies of the reporting entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 false 1 2 false UnKnown UnKnown UnKnown false true