In this Management's Discussion and Analysis of Financial Condition and Results of Operations, ''we'', ''our'', ''firm'' and ''us'' refer to Greenhill & Co., Inc.

Cautionary Statement Concerning Forward-Looking Statements

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this report. We have made statements in this discussion 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. These factors include, but are not limited to, those discussed in our Report on Form 10-K under the caption ''Risk Factors''.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. 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 hereof.

Overview

Greenhill is an independent investment banking firm that (i) provides financial advice on significant mergers, acquisitions, restructurings and similar corporate finance matters and (ii) manages merchant banking funds and similar vehicles and commits capital to those funds and vehicles. We act for clients located throughout the world from offices in New York, London, Frankfurt, Toronto, Dallas and San Francisco. Our activities constitute a single business segment with two principal sources of revenue:

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                  •                 Financial advisory, which includes advice on
                                    mergers, acquisitions, restructurings and
                                    similar corporate finance matters; and

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                  •                 Merchant banking fund management, which
                                    currently consists primarily of management of
                                    Greenhill's private equity funds, Greenhill
                                    Capital Partners or GCP; Greenhill's venture
                                    capital fund, GSAVP; Greenhill Capital
                                    Partners Europe or GCP Europe; and principal
                                    investments by Greenhill in those funds.

Historically, our financial advisory business has accounted for the majority of our revenues, and we expect that to remain so for the near to medium term, although there may be periods, such as the first quarter of 2006, in which merchant banking results outweigh our financial advisory earnings. The main driver of the Financial Advisory business is overall mergers and acquisitions, or M&A, and restructuring volume, particularly in the industry sectors and geographic markets in which we focus. In addition, new managing director hires add incrementally to our revenue and income growth potential. The principal drivers of our merchant banking fund management revenues are realized and unrealized gains on investments and profit overrides, the size and timing of which are tied to a number of different factors including the performance of the particular companies in which we invest, general economic conditions in the debt and equity markets and other factors which affect the industries in which we invest, such as commodity prices.

Business Environment

Economic and global financial market conditions can materially affect our financial performance. See the ''Risk Factors'' in our Report on Form 10-K filed with the Securities and Exchange

Commission. Net income and revenues in any period may not be indicative of full-year results or the results of any other period and may vary significantly from year to year and quarter to quarter.

Financial advisory revenues were $69.5 million for the three months ended March 31, 2008 compared to $36.3 million for the three months ended March 31, 2007, which represents an increase of 92%. Global volume of completed M&A transactions was $719 billion in the first three months of 2008 compared to $886 billion in the first three months of 2007, a 19% decrease2.

While the industry outlook for 2008 remains uncertain due in part to a lack of credit availability, we believe Greenhill is well positioned for this more difficult environment. Our strategy of focusing on corporations rather than private equity or hedge funds is serving us well. We are starting to see an increase in restructuring advisory opportunities. We are also finding good opportunities to recruit Managing Directors who extend our geographic or industry sector reach.

Merchant banking fund management and other revenues were $5.9 million for the three months ended March 31, 2008 compared to $7.2 million for the three months ended March 31, 2007, which represents a decrease of 18%. Merchant banking revenues principally consisted of realized and unrealized gains on investments in GCP, merchant banking profit overrides and management fees. While the amount of management fees earned from our existing merchant banking funds is principally a function of the amount of capital invested (in the case of GCP I) or committed (in the case of GCP II, GCP Europe and GSAVP), those portions of merchant banking revenues consisting of gains and profit overrides may vary considerably depending on economic conditions and market conditions.

Adverse changes in general economic conditions, commodity prices, credit and public equity markets could impact negatively the amount of financial advisory and merchant banking revenue realized by the firm.

Summary

Our first quarter 2008 revenues of $75.4 million compare with revenues of $43.5 million for the first quarter of 2007, which represents an increase of $31.9 million or 73%. The increase in revenue in the first quarter 2008 revenue as compared to the same period in the prior year was primarily attributable to a larger number of completed financial advisory assignments that were greater in scale offset by a decline in merchant banking revenue.

Our first quarter net income of $19.2 million compares with net income of $8.7 million for the first quarter of 2007, which represents an increase of $10.5 million or 121%. This increase was primarily due to increased advisory revenue, partially offset by greater compensation expense.

Our quarterly revenues can fluctuate materially depending on the number and size of completed transactions on which we advised and the levels of gain realized on our merchant banking investments, as well as other factors. Accordingly, the revenues in any particular quarter may not be indicative of future results.

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2 Source: Thomson Financial as of April 28, 2008.

Revenues By Source

The following provides a breakdown of our aggregate revenues by source for the three month periods ended March 31, 2008 and 2007, respectively:

                     Revenue by Principal Source of Revenue

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                  [[Image Removed]] [[Image Removed]]                                                                                                                                                                                         For the Three Months Ended
                  [[Image Removed]] [[Image Removed]]                                                                                   March 31, 2008                                                                                    [[Image Removed]] [[Image Removed]]                                                                                   March 31, 2007
                  [[Image Removed]] [[Image Removed]]                                 Amount                                  [[Image Removed]] [[Image Removed]]                               % of Total                                [[Image Removed]] [[Image Removed]]                                 Amount                                  [[Image Removed]] [[Image Removed]]                               % of Total
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Financial         [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
advisory                                                                                $              69.5 [[Image Removed]]                                                       [[Image Removed]]                92 %                                                                                       $              36.3 [[Image Removed]]                                                       [[Image Removed]]                83 %
Merchant banking
fund management & [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
other                                                                   [[Image Removed]]               5.9 [[Image Removed]]                                                       [[Image Removed]]                 8 %                                                                       [[Image Removed]]               7.2 [[Image Removed]]                                                       [[Image Removed]]                17 %

Financial Advisory Revenues

Financial advisory revenues primarily consist of advisory and transaction related fees earned in connection with advising companies in mergers, acquisitions, restructurings or similar transactions. We earned $69.5 million in financial advisory revenues in the first quarter of 2008 compared to $36.3 million in the first quarter of 2007, which represents an increase of 92%. The increase in our financial advisory fees in the first quarter of 2008 compared to the same period in 2007 generally reflected a larger number of completed assignments that were larger in scale.

Completed assignments in the first quarter of 2008 included:

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                  •                 the sale by E. Brost & J. Funke GmbH & Co. KG
                                    of their holding in German retailing and
                                    services group Otto to the Otto family;

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• the sale of Foseco plc to Cookson Group plc;

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• the sale of Kelda Group plc to a consortium of international infrastructure investors;

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• the sale of Nikko Cordial Corp. to Citigroup Inc.; and

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• the acquisition by Roche Holding Ltd. of Ventana Medical Systems, Inc.

Merchant Banking Fund Management & Other Revenues

Our merchant banking fund management activities currently consist primarily of the management of and our investment in Greenhill's merchant banking funds, GCP I, GCP II, GSAVP and GCP Europe. We generate merchant banking revenue from (i) management fees paid by the funds, (ii) gains (or losses) on our investments in the merchant banking funds, and (iii) profit overrides. The following table sets forth additional information relating to our merchant banking and interest income:

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                  [[Image Removed]] [[Image Removed]]                                                                                For the Three Months
                                                                                                                                        Ended March 31,
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Management fees   [[Image Removed]] [[Image Removed]] [[Image Removed]]                 $               5.0 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                 $               3.9 [[Image Removed]]
Net realized and
unrealized gains  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
on investments in
merchant banking                                                        [[Image Removed]]               1.2 [[Image Removed]]                                                       [[Image Removed]]               0.9 [[Image Removed]]
Merchant banking  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
profit overrides                                                        [[Image Removed]]              (1.1 )                                                                       [[Image Removed]]               0.6 [[Image Removed]]
Other unrealized  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
investment income                                                       [[Image Removed]]              (0.6 )                                                                       [[Image Removed]]               1.0 [[Image Removed]]
Interest income   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]               1.4 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]               0.8 [[Image Removed]]
Merchant banking
fund management & [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
other revenue                                                                           $               5.9 [[Image Removed]]                                                                       $               7.2 [[Image Removed]]


The firm earned $5.9 million in merchant banking fund management & other revenue
in the first quarter of 2008 compared to $7.2 million in the first quarter of
2007, representing a decrease of 18%. This decrease is primarily due to a
decrease in the fair market value of the merchant banking portfolio and a
reversal of previously accrued profit overrides, offset partially by higher
asset management fees and greater interest income.

The values at which our investments are carried on our books are adjusted to fair value at the end of each quarter based upon a number of factors including the length of time the investments have 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 general economic conditions, stock markets and commodity prices, as well as capital events at the portfolio companies such as initial public offerings or private sales of securities, may result in significant movements in the fair value of such investments. Accordingly, any such changes or capital events may have a material effect, positive or negative, on our revenues and results of operations. The frequency and timing of such changes or capital events and their impact on our results are by nature unpredictable and will vary from period to period.

During the first quarter of 2008, our merchant banking funds (and the firm) earned revenue in respect of nine of our portfolio companies and recognized losses in respect of six of our portfolio companies. During the first quarter of 2007, our merchant banking funds (and the firm) earned revenue in respect of six of our portfolio companies and recognized losses in respect of two of our portfolio companies.

In terms of new investment activity during the first quarter of 2008, our funds invested $14 million, 10% of which was firm capital. In the same period in 2007, our funds invested $80 million, 10% of which was firm capital. During the first quarter of 2008, GCP made an in-kind distribution of its remaining shareholdings of Crown Castle International Corp. (NYCE: CCI).

Also in the first quarter of 2008, the firm completed the offering of units in GHL Acquisition Corp., a blank check company sponsored by the firm. In the initial public offering, GHL Acquisition Corp. raised $400 million. The firm invested $8 million of its capital in GHL Acquisition Corp. and owns approximately 17.3% of its outstanding common stock.

The investment gains or losses in our investment portfolio may fluctuate significantly over time due to factors beyond our control, such as individual portfolio company performance, equity market valuations and merger and acquisition opportunities. Revenue recognized from gains recorded in any particular period is not necessarily indicative of revenue that may be realized in future periods.

Operating Expenses

We classify operating expenses as compensation and benefits expense and non-compensation expenses.

Our operating expenses for the first quarter of 2008 were $45.4 million, which compares to $29.4 million of operating expenses for the first quarter of 2007. This represents an increase in operating expenses of $16.0 million or 54%, reflecting principally an increase in compensation expense and is described in more detail below. The pre-tax income margin was 40% in the first quarter of 2008 compared to 32% for the first quarter of 2007.

The following table sets forth information relating to our operating expenses, which are reported net of reimbursements of certain expenses by our clients and merchant banking portfolio companies:

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                  [[Image Removed]] [[Image Removed]]                                                                                For the Three Months
                                                                                                                                        Ended March 31,
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Employee
compensation &    [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
benefits expense                                                                        $              34.7 [[Image Removed]]                                                                       $              20.2 [[Image Removed]]
% of revenues     [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                46 %                 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                46 %
Non-compensation  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
expense                                                                 [[Image Removed]]              10.7 [[Image Removed]]                                                       [[Image Removed]]               9.2 [[Image Removed]]
% of revenues     [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                14 %                 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                21 %
Total operating   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
expense                                                                 [[Image Removed]]              45.4 [[Image Removed]]                                                       [[Image Removed]]              29.4 [[Image Removed]]
% of revenues     [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                60 %                 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                68 %
Minority interest
in net income of  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
affiliates                                                              [[Image Removed]]              (0.1 )                                                                       [[Image Removed]]               0.0 [[Image Removed]]
Total income      [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
before tax                                                              [[Image Removed]]              30.0 [[Image Removed]]                                                       [[Image Removed]]              14.1 [[Image Removed]]
Pre-tax income    [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
margin                                                                  [[Image Removed]]                40 %                                                                       [[Image Removed]]                32 %

Compensation and Benefits

Our employee compensation and benefits expense in the first quarter of 2008 were $34.7 million, which reflects a 46% ratio of compensation to revenues. This amount compares to $20.2 million for the three months ended March 31, 2007, which also reflected a 46% ratio of compensation to revenues. The increase of $14.5 million or 72% is due to the higher level of revenues in the first quarter of 2008 compared to the comparable period in 2007.

Our compensation expense is generally based upon revenue and can fluctuate materially in any particular quarter depending upon the amount of revenue recognized as well as other factors. Accordingly, the amount of compensation expense recognized in any particular quarter may not be indicative of compensation expense in a future period.

Non-Compensation Expenses

Our non-compensation expense includes the costs for occupancy and rental, communications, information services, professional fees, recruiting, travel and entertainment, insurance, depreciation, interest expense and other operating expenses. Reimbursable client expenses are netted against non-compensation expenses.

Our non-compensation expenses were $10.7 million in the first quarter of 2008, which compared to $9.2 million in the first quarter of 2007, representing an increase of 16%. The increase is principally related to an increase in interest expense due to greater short term borrowings and greater information services and travel costs primarily incurred as a result of the growth in personnel and business development activities in the first quarter of 2008 as compared to the same period in 2007.

Non-compensation expense as a percentage of revenue in the three months ended March 31, 2008 was 14%, compared to 21% for the three months ended March 31, 2007. The decrease in non-compensation expenses as a percentage of revenue in the first quarter of 2008 as compared to the same period in 2007 reflects higher amount of non-compensation expenses spread over higher revenue.

The firm's non-compensation expense as a percentage of revenue can vary as a result of a variety of factors including fluctuation in quarterly revenue amounts, the amount of recruiting and business development activity, the amount of reimbursement of engagement-related expenses by clients, the amount of short term borrowings, interest rate and currency movements and other factors. Accordingly, the non-compensation expense as a percentage of revenue in any particular quarter may not be indicative of the non-compensation expense as a percentage of revenue in future periods.

Provision for Income Taxes

The provision for taxes in the first quarter of 2008 was $10.9 million, which reflects an effective tax rate of approximately 36%. This compares to a provision for taxes in the first quarter of 2007 of

. . .