MC Moelis Initiating

North America Equity Research
12 May 2014
Initiation
Overweight
Moelis
MC, MC US
Price: $27.55
Initiating Coverage with an Overweight Rating
Price Target: $31.00
We are recommending Moelis with an Overweight rating and 12/2014 price target
of $31. As a leading investment banking boutique, we believe Moelis is
positioned to take advantage of an improving M&A environment, one in which
boutiques are gaining market share as companies seek multiple advisors. Moelis
has a unique compensation structure that we feel better promotes internal growth
and reduces the potential that Moelis will stagnate and peak, as have many other
boutiques historically. We see earnings growth near term being driven by the
seasoning of its MDs and its expansion into new sectors and geographies.
M&A environment recovering. The M&A environment has been slowly
recovering since its recent trough in 2009. Total global deal value recovered to
$2.5tn in 2013 compared with 2009s level of $2.3tn, but it still remains well
below the peak of $4.6tn reached in 2007. Activity levels so far in 2014 are
amongst the strongest since 1995, which we view as a particular benefit to the
boutiques, which have been gaining deal market share, and to Moelis
particularly given its M&A focus with no trading or fixed income businesses.
Brokers, Asset Managers &

Exchanges
Kenneth B. Worthington, CFA
AC
(1-212) 622-6613
kenneth.b.worthington@jpmorgan.com
Bloomberg JPMA WORTHINGTON <GO>
J.P. Morgan Securities LLC
Price Performance
32
30
$ 28
26
24
May-13
Aug-13
Nov-13
Feb-14
May-14
MC share price ($)

RTY (rebased)
Boutiques gaining market share. Boutiques are gaining meaningful market

share of M&A fees. These share gains are being driven by both increased use of
multiple advisors on deals and by a greater absolute use of boutiques given the
recent negative press associated with larger banks. Boutiques now account for
~22% of advisory deal value, up from ~18% in 2009 and ~ 9% in 2000.
Moelis developing a culture of sustainable growth. Moelis has an innovative
compensation structure of restricted compensation as well as clawbacks on cash
awards. Bankers have access to unvested cash, but the potential to have to repay
that award encourages retention and MD focus on junior banker development.
The banking team is cross-trained and collaborative across disciplines, sectors
and geography, enabling greater efficiency and productivity.
Relative valuation attractive; well positioned to earn a premium. We value
Moelis at 17.5x our 2015 EPS estimate, a discount to its boutique peers due to
its more limited operations as a public company and lower-than-peer projected
growth. However, we believe earnings forecasts for Moelis are more
conservative than peers and that as the differences are reconciled, projections
for Moelis will rise and valuation will expand. Our 12/2014 price target is $31.
Moelis & Company (MC;MC US)

FYE Dec
EPS ($)
Q1 (Mar)
Q2 (Jun)
Q3 (Sep)
Q4 (Dec)
FY
2013A
2014E
2015E
2016E
0.01
0.24
0.17
0.39
0.80
0.37A
0.26
0.37
0.56
1.56
0.38
0.30
0.40
0.68
1.77
0.40
0.30
0.43
0.74
1.88
Source: Company data, Bloomberg, J.P. Morgan estimates.
Company Data
Price ($)
Date Of Price
52-week Range ($)
Market Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
Price Target End Date
27.55
09 May 14
28.14-25.75
1,497.80
Dec
54
31.00
31-Dec-14
See page 24 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com

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12 May 2014
Table of Contents
Investment Thesis ....................................................................3
Risks to Rating and Price Target ............................................4
Company Description ..............................................................5
Moelis Business Overview ......................................................5
Financial Outlook ...................................................................20
Valuation .................................................................................20
Model .......................................................................................21

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12 May 2014
Investment Thesis
Moelis & Co. (MC)
Overweight
Moelis 2013 Revenue Mix
RE, Gmbl.,
Lodg.,&
Leisure,
12%
Healthcare,
6%
Cnsmr,
Retail &
Rest., 11%
Fin. Inst &
Gov't, 18%
Energy &
Power, 4%
Tech,
Media,
Telecom,
28%
Industrials,
21%
Source: Company reports.
Industry (Avg) Mix(5yr avg based on rank

value
RE, Gmbl.,
Lodg.,& Leisure,
9%
Healthcare, 9%
Cnsmr, Retail &

Rest., 12%
Fin. Inst &

Gov't, 15%
Energy &
Power, 19%
Tech, Media,
Tele com, 18%
Source: Company reports.
Industrials,
19%
Moelis Participates in the Growing M&A Marketplace

We view the M&A business as attractive, as it generates high returns on equity and
has stable margins. The business generates high revenues with a minimum amount of
capital and number of employees. Barriers to success are high given that its a highly
relationship-driven business. We expect it will be an increasingly valuable business
as bigger banks seek less capital-intensive sources of revenue given the increased
regulatory costs impacting the trading and fixed income businesses.
Data shows that global M&A activity levels are still down meaningfully compared to
pre credit crisis levels, offering potentially meaningful revenue upside. Activity
levels as measured by deal value completed were $2.4tn in 2013, well below peak
levels achieved in 2007. As a percent of GDP, M&A deal value is 17.4% today
versus over 30% in past peaks and the 23% average over the past two decades. Deal
activity has been improving, with activity levels growing steadily since their recent
trough in 2009. In fact, 2014 has been one of the strongest starts to a year since 1995,
which we believe bodes well for the near- and long-term M&A outlook.
Unlike other banks and most boutiques, Moelis is a pure-play on M&A. Given the
asset management outlook is more uncertain with choppy markets, the exchange
outlook is poor with falling volumes, and the banking outlook is challenged by
higher capital requirements, we believe an investment based on the growing M&A
market would be well placed.
Boutiques Are Taking Market Share
There has been a bigger shift of activity levels to the boutiques over the past 13 years
(2000-2013). Corporate boards of directors are increasingly seeking the independent
advice presented by the boutiques. We see this in the uptick of deals utilizing more
than one advisor, a number that is up 50% over the last 10 years. Boutiques were
involved in ~39% of M&A transactions in 2013, up from ~27% a decade before.
Given the continued demand for multiple advisors and the migration of bankers from
the bulge bracket to boutiques, we see boutiques continuing to gain share.
Moelis Has Developed a Culture for Success, Driving Up Production per Banker
We believe Moelis has developed a culture that distinguishes it from its larger and
smaller peers, one that permits it to grow earnings quicker than peers over time. The
focus point of the differentiation is compensation and Moeliss ability and
willingness to use compensation to influence banker and MD behavior.
Moelis offers restricted stock and options like many other investment banks. What is
different, however, is that Moelis also has a clawback provision for its cash
compensation, which is calculated off a single global bonus pool that doesnt
segment based on region, product or sector.
The nature of the bonus pool and clawback provision increases the level of influence
that Moeliss management has on banker/MD behavior it goes beyond tying pay to
production. Compensation arrangements increase the incentives for senior bankers to
train junior personnel, developing talent for the longer-term success of Moelis. Its

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12 May 2014
the sharing of relationships and contacts as well as sector and banking knowledge
that helps drive better production out of the junior bankers over time.
Earnings Upside Comes from Expansion into New Geographies and Sectors
Earnings upside should result from the seasoning of the new MDs. Productivity
typically increases over time for MDs, which for Moelis has gone from an average of
$4mn in year 1 to $8mn by year 5. Having hired 200 junior bankers over the last
three years, and having brought on and promoted over 20 MDs over the last two
years, we see opportunity for upside. We model that productivity per banker/year
will rise from $5mn in 2013 to $6.4mn in 2016. This leads to projected revenue
increases over that time of $135mn on productivity alone.
Valuation Moelis Comes at a Discount, Offering Potential Upside vs Peers
As a new publicly traded company, we believe investors are valuing Moelis at a
discount to peers while they determine the aggressiveness/conservativeness of
revenue/expense guidance. If the companys compensation structure can drive higher
and more effective growth than expected over the interim, allowing the firm to grow
through the levels at which other boutiques over time have gotten capped. Then we
expect Moelis to go from trading at a discount to trading at a premium to peers.
Moelis currently trades at ~15.5x our 2015 EPS estimate of $1.77, a 3.4x discount to
the peer average. While growth projections are lower for Moelis than its peers, we
think conservative guidance (and therefore estimates) is the root cause. If the M&A
environment continues to improve, then Moelis could exceed estimates and
experience multiple expansion. We value Moelis at 17.5x our 2015 EPS estimate, a
small discount to where the peer group is trading. This brings us to a December
2014 price target of $31, representing upside of ~13% from its current stock price.
Risks to Rating and Price Target

Reputational Risk
We see brand as particularly important to Moeliss business, especially given
Moeliss smaller size and more limited operational history. Were the brand to get
damaged, it could impair the perception of Moelis being able to offer unconflicted
advice, potentially meaningfully driving down its activity, earnings and valuation.
Product Conflicts
Boutiques have been winning market share based on their ability to offer less
conflicted advice, which we think reflects its smaller size and focus on the M&A
advisory. Should the need for other products such as financing play a greater role in
adviser selection, boutiques could suffer losses in market share.
Market Risk
Given Moeliss exposure to market conditions, an adverse M&A environment could
have a negative impact on earnings, as it doesnt have the diversification of many of
its peers. As such, it could be subject to more downside risk.

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12 May 2014
Key Man Risk

A departure by Ken Moelis, the founder and CEO of Moelis & Co., from Moelis
could impair the firms reputation, its ability to attract bankers and clients, and thus
hinder the companys ability to grow and prosper.
Company Description
Moelis & Company is a leading global independent investment bank that provides
innovative strategic and financial advice to a diverse client base, including
corporations, governments and financial sponsors. Moelis advises clients across all
major industry sectors and offers strategic solutions that include but are not limited to
mergers and acquisitions, restructuring and recapitalization, as well as corporate
finance. Moelis employs over 300 advisory professionals, which includes 80+
Managing Directors in 15 offices around the globe who have advised on over
$1 trillion of transactions since the companys inceptions in 2007. The company
became publicly traded in April 2014, and J.P. Morgan acted as a passive advisor.
Moelis Business Overview

Moelis & Co. is one of the leading independent investment banks, offering advisory
services across all major industry sectors to global corporations, governments, and
financial sponsors. As part of its advisory practice, Moelis has one of the top
restructuring businesses. The firm was ranked No.1 global restructuring advisor in
2009 and has placed 12th overall in the US M&A business.
Moeliss Operations Are Broad in Sector and Geography
Moelis participates in all major industries, where it offers traditional M&A advisory
services in the Consumer, Retail & Restaurants, Financial Institutions, Financial
Sponsors, General Industrials, Healthcare, Natural Resources, Real Estate, Gaming,
Lodging & Leisure and Technology, Media & Telecommunications sectors. The
company fully integrates these sectors within its M&A, Recapitalization &
Restructuring, Capital Markets, and Financial Institutions advisory franchises.
Moelis seems to be best known for its work within the General Industries, Media,
FIG and Gaming & Lodging sectors, where its senior bankers have a long history of
expertise and established client relationships. Moelis offers a full suite of advisory
services (as do its peers), but the holistic approach to providing advisory solutions
with integrated capabilities seems differentiated to us and has helped the company
win mandates in some of the biggest advisory deals over the last few years, including
the 30bn+ sale of Natixiss derivative portfolio. Other notable transactions include
the $29.6bn American Airline Chapter 11 bankruptcy and the following $17bn
merger with US Airways, where Moelis demonstrated its integrated advisory
capabilities by working on both the restructuring /bankruptcy as well as the merger.
On the following page, in Table 1, we highlight some of Moelis biggest deals.

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12 May 2014
Table 1: Moelis's Top Cross-Border Deals Demonstrate its Global Footprint and Diverse Industry
Expertise
Client
Deal Size
Transaction
Anheuser Busch
$61.2bn
$61.2 billion sale to InBev SA
Yahoo
$44.6bn
$44.6 billion unsolicited proposal from Microsoft Corporation
Natixis
30bn
Geographies
30 billion sale of most of its complex credit derivative portfolio
Omnicom Group
$35.1bn
American Airlines
$46.6bn
$35.1 billion merger with Publicis Groupe SA*

$29.6 billion Chapter 11 Reorganization;
$17.0 billion merger with US Airways Group, Inc.
Heinz
$28bn
$28 billion sale to Berkshire Hathaway Inc. and 3G Capital, Inc.
Hilton
$26.5bn
$26.5 billion sale to The Blackstone Group L.P.
Gov't of Dubai
$24.9bn
$24.9 billion restructuring of Dubai World Corporation
Source: Company data.
Part of Moeliss success has been driven by its resources outside the US and its
ability to participate in cross-border transactions, which, as seen above, include many
of the larger transactions by deal size. Moelis has made significant investments in
expanding its global advisory footprint and currently advises clients in six regions
(North America, South America, Europe, Middle East, APAC, and China) where it
operates out of 15 offices.
Not surprisingly, Moelis has its biggest presence in North America, where it has six
offices, but sees greater advisory opportunities and attractive industry sectors in
Europe and Asia Pacific, where the company is looking to expand its presence. South
America/LATAM is another strategically important location for Moelis. With a lot of
advisory potential, especially within the commodities, utilities and energy sectors,
Moelis sees budding opportunities for its business there and has already initiated
efforts to establish a presence in the region.
Figure 1: Moeliss Global Footprint (No. of Offices)
%
Mainland China (1)

7%
Asia &
Australia (3)
20%
Middle East (1)
7%
Europe (3)
20%
North America
(6)
40%
South America (1)

6%

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12 May 2014
Despite a Competitive Landscape, Moelis Continues to Take Share and Grow

Given Moeliss position as one of the fastest growing independent banks, both
regionally and internationally, the firms competitors include large bulge-bracket
investment banks as well as boutique peers like Greenhill, Evercore, and Lazard.
Moeliss principal businesses are strategic advisory (M&A) and restructuring/
recapitalizations. By its nature, restructuring is inherently a cyclical business and was
a meaningful source of revenue for Moelis during and immediately after the financial
crisis, with the company being ranked as the No.1 global restructuring advisor in
2009. Moeliss biggest revenue driver, however, continues to be its M&A services
segment, which has grown meaningfully in recent years, with the company ranking
as the no.12 US M&A advisor since 2007, growing to generate ~4% M&A market
share most recently in 2013.
M&A Environment Is Attractive and Growing/Recovering

We view M&A as an attractive business with high ROEs as high as 46% for some
peers such as Lazard. Given the increasing capital intensity for fixed income and
derivative businesses, we think the advisory business, with its more consistent but
still attractive margins in the 30% range, will become increasingly valuable to the
more regulated bulge bracket brokers, and thus the standalone companies should earn
a higher valuation over time.
M&A Business Slowly Recovers from the Financial Crisis, with Meaningful
Upside Back to the Prior Volume Peak in 2007
M&A activity has been slowly recovering since the end of the financial crisis in early
2009. The number of M&A transactions has increased over the last five years, and
we have witnessed an upward trend in deal volumes since the more recent trough in
2009. We also point out that M&A activity is having one of the best starts to the year
in the US, with ~$650bn announced through April 30. Over the last two decades,
only 2000 and 2007 started more strongly.
Below, in Figure 2, we show M&A global deal value over the last nearly two
decades. In Figure 3, we show the recovery in the number of transactions each year,
both within and outside the US. We note that while deal value and transaction
activity levels are off trough levels, we see meaningful opportunity to get back to the
peak levels experienced in 2000 and 1997.
Figure 2: M&A ($ Deal Value in mm) Has Shown Modest
Increase over the Last 5 years
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Figure 3: Total M&A Activity Globally (# of

Transactions); M&A Transactions Have Peaked since
2009
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Total- ALL M&A Activity Globally (Deal Value $)
Source: J.P. Morgan estimates, Dealogic.
Total M&A Activity Globally (# of Transactions)
Figures 2 and 3 support our view that activity levels and therefore Moeliss earnings
remain well below their potential based on industry activity levels seen both at peak
and at more normal levels. Figure 4 on the following page highlights M&A deal
7

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12 May 2014
value as a percent of 1-year trailing GDP, which is still well below the highs of 19992000 and 2006- 2007. All of this points to the assessment that deal value is still in the
earlier stages of a cyclical recovery, with meaningfully more room for greater
activity levels.
Figure 4: M&A Deal Value as a % of the 1-yr Trailing GDP, Shows that There Is Still a Lot of Room
for an M&A Recovery Back to Previous Highs
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
M&A as % of 1yr Trailing GDP
Source, J.P. Morgan estimates, Dealogic Bloomberg.
Figure 5: Total M&A Deal Value ($) as a % of ECM Deal

Value ($). M&A Activity in Remains Depressed vs. ECM
Activity
Figure 6: Total M&A Deal Value ($) as % of DCM

(Corp Bond) Deal Value ($). M&A Activity Remains
Depressed vs. DCM (Cop. Bond) Activity
450%
400%
350%
300%
250%
200%
150%
100%
50%
0%
700%
600%
500%
400%
300%
200%
100%
0%
M&A Total as a % of ECM Deal Value ($)
Source, J.P. Morgan estimates, Dealogic.
Total M&A as % of DCM (Corp Bond) Deal Value
Based on current revenue at Moelis, were activity levels to return to peak levels and
remain there for a year, we estimate Moeliss revenue could grow 70%-80%, which
could lead to an incremental $1.10 of EPS in 2015.
Continued Activity in Recapitalization and Restructuring Market
We believe the restructuring business could also experience growth from current
levels as more frothy credit dynamics season. The amount of leverage, including
floating rate instruments, that companies have taken on in recent years could become
the catalyst for a more consistent recapitalization and restructuring market in the
coming years. As interest rates rise, credit markets could become more difficult to
access, even with an improving macroeconomic environment, increasing the need for
restructuring and recapitalization services. While restructuring has often been
countercyclical to traditional M&A, we see the potential for both Advisory and
Restructuring to potentially be strong at the same time.
Both 2012 and 2013 represented record years of leveraged finance issuance in the
U.S., as companies took advantage of historically low borrowing costs to leverage
their capital structures. We believe Moelis is well positioned to assist companies
8

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12 May 2014
through its holistic approach to providing solutions to clients in both robust and
challenging economic environments.
The Restructuring Business Provides a Strong Ballast to the Traditional
Advisory Business
The M&A business is particularly rewarding in periods of high deal activity, but is
typically cushioned in cycle downturns from strength in the restructuring business. In
times of economic uncertainty and weaker M&A activity, bankers often offer other
investment banking services like recapitalization and restructuring to companies
undergoing bankruptcy or which are in financial distress.
Moelis has done a good job in building out its restructuring business, in our view.
While the restructuring franchise has just a handful of truly dedicated bankers with
particularly focused technical expertise, Moelis has cross trained advisory bankers in
restructuring. According to data provided by Moelis, 2012 and 2013 represented two
of the biggest years of leverage finance issuance as companies took advantage of
lower borrowing costs to finance their capital expenditures. The fact that many
companies have taken on additional leverage in recent years due to historically low
interests rates provides some indication that activity will continue (as interest rates
rise or credit become tighter) in restructuring for Moelis over the next few years.
Boutiques Are Well Positioned within M&A Market

Continue to Gain Share
Independent investment banks/boutiques have taken advantage of the dislocated
financial markets over the recent years to gain M&A advisory market share, which
we believe is a result of continued turmoil and structural struggles at the lager (bulge
bracket) banks, which have faced regulatory scrutiny and a shrinking cost structure.
This is particularly true of European banks, which have continued to disclose layoffs
in the wake of the financial crisis in 2008.
Below, in Figure 7, we show that the boutiques are participating in an everincreasing percentage of M&A deal value, according to Dealogic.
Figure 7: Boutiques Taking M&A Market Share Shown Below as Boutique (Deal $) as % of Total
M&A (Deal $); Boutique Activity Has Increased, Driving Investment Banking Revenues Higher
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Boutique % Share of M&A activity

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12 May 2014
Corporate Management Teams and Boards of Directors Increasingly Seeking

Boutique Advisors
The dynamics and the nature of advisory services sought by clients have been
increasingly shifting to what can be perceived as more independent advice. In this
search for flexibility, clients corporate boards have been hiring boutiques with
specialized expertise to work alongside the larger banks, and are increasingly hiring
the boutiques instead of and in addition to the bulge bracket firms. No longer do we
typically see one advisor on transactions, but rather two, three, four or five advisors
participating and ultimately sharing the advisory fees. Clients are increasingly
interested in obtaining broad-based advice that enables them to build relationships
with different advisors and utilize these partnerships for future business needs.
Having this flexibility not only helps clients corporate boards hire boutiques with
specialized expertise to work alongside the larger banks, and are increasingly hiring
the boutiques instead of the bulge bracket firms.
Hiring multiple advisors and allocating work to different advisors working on a
single transaction has given boutiques a greater foothold within higher-end deals
(high profile/larger $ size) that in the past were serviced by a few top bulge bracket
firms. Running leaner teams with extensive M&A advisory expertise has given
boutiques an arguably slight edge/competitive advantage in pure M&A advisory over
the larger banks, some of which have struggled to retain top talent and support
continuity of relationships and services. Generally speaking, the ability of boutique
firms to hire and then deploy well-rounded seasoned bankers has enabled them to
operate leaner and more efficient teams that still deliver high caliber services to
clients.
Figure 8: The Number of Deals with More than One Target Advisor Has Doubled Since 2000
14%
12%
10%
8%
6%
4%
2%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
% of M&A Deals with >1 Target Advisor(s) out of Total # of M&A Deals
Larger Banks Suffer Operational, Regulatory and Financial Challenges,

Resulting in Banker Turnover
Sweeping changes in the regulatory landscape in the aftermath of the financial crisis
have made it easier for boutiques like Moelis to hire bankers from larger banking
competitors. Bulge bracket firms face heightened operational and regulatory
challenges that have resulted in lower compensation. Larger capital requirements and
resulting profitability challenges in non-banking businesses have made larger banks
more reliant on growing profits in their advisory revenues to offset rising capital
costs elsewhere, and lower compensation has become an industry-wide phenomenon.
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With banker compensation impacted by the successes and failures of other

departments within larger, diversified financial organizations, and with pressure to
cross-sell financial products, Moelis has had an easier time recruiting and retaining
MDs.
Moelis Growing Fast Within the Boutique Segment

Moelis has experienced robust revenue growth over the last six years, driven by a
very strong restructuring franchise and a growing M&A business. Moelis has
generated a revenue CAGR of 45%, bringing on a healthy mix of new M&A and
restructuring mandates by increasing headcount and expanding its advisory practice
internationally.
When comparing Moeliss activity levels to those of other boutiques, we see the
company has been winning market share, having grown to ~5% of the advisory
market at the end of 2013. Below, in Figure 9, we show Moeliss mix of Advisory
and Restructuring revenue. It is apparent here that Moelis has a meaningful franchise
in both disciplines.
Figure 9: Strategic Advisory Has Shown Higher Revenue Distribution Over the Last Three Years,
Whereas Restructuring (more cyclical businesses) Was Greater in 2009 -2010
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
2008
2009
2010
Strategic Advisory
2011
Restructuring
2012
2013
In Figure 10, we show Moeliss growth as a function of the increase in its MD

headcount.
Figure 10: US and International MD Headcount Has Increased Every Year Since 2008; Larger
Growth Has Occurred in R.O.W. Over the Last 3 Years, Where MD Headcount Grew to 23 in 2013
100
90
80
70
60
50
40
30
20
10
0
22
22
54
58
23
13
6
1
18
34
2008
2009
45
2010
US Advisory MDs
2011
2012
ROW Advisory MDs
63
2013

11

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12 May 2014
In Figure 11, which follows, we see that Moelis is adding MDs (now largely through
internal promotions) at a more rapid pace than at its leading boutique competitors.
We believe Moelis is well positioned to grow more quickly than other boutique peers
given its smaller size and its more rapidly expanding base of producing MDs. Here,
we note that Moelis has been growing MDs at a 35% CAGR compared with peer
growth between 0% and 15% annually
Figure 11: Moelis Is Showing Robust MD/SMD Headcount Growth Compared to Peers over 5 Yrs
160
151 151
140
120
100
86
80
66
60
40
20
0
70
52
34
19
Moelis MD
Headcount 5 Yr CGAR: 35%
Evercore SMD
Headcount 5-Yr
CAGR: 14%
2008
Greenhill MD
Headcount (5Yr CAGR: 6%)
Lazard MD
Headcount (5Yr CAGR: 0%)
2013
Geographic Expansion Helps Drive Earnings Growth

Moelis has shown particular strength in multiple sectors (particularly in TMT and
FIG), and that has enabled the company to compete for some of the most prestigious
advisory mandates. Although the company provides banking services in the major
industrial sectors, it has significant room to further build out its banking base by
expanding into new areas.
One of the leading sectors for Moelis is Tech, Media and Telecom, where it
generated 28% of its deal value vs. the industry average of 18%. Other big sectors for
Moelis include Healthcare, FIG and Industrials, in which it has an above-industryaverage presence.
Moelis believes the greatest opportunities lie in the energy sector, where it has a
smaller presence at just 4% of deal value vs. the industry average of 18%. To drive
an increased presence in Energy, Moelis has expanded into Brazil, has a number of
initiatives in Asia and has an Australian JV that should all help drive a bigger
presence for Moelis. Other areas of growth potential include the Canadian
energy/materials markets as well as the industrials market in Germany.
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Figure 12: Moeliss Sector Diversification
Figure 13: Industry Diversification by Sector

Consumer, Retail &
Restaurants
Consumer, Retail &

Restaurants
6%
4%
Financial Insitutions and

Gov't
12% 11%
9%
9%
Industrials
18%
28%
21%
Industrials
15%
Tech, Media and Telecom
Tech, Media and Telecom
19%
Energy & Power
19%
18%
Healthcare
RE, Gaming, Lodging &
Leisure
Financial Insitutions and

Gov't
12%
Energy & Power

Healthcare
RE, Gaming, Lodging &
Leisure
Interestingly, Moelis has indicated that other banks have pulled back resources
overseas, leaving more opportunities for Moelis to win market share abroad. There
have been press reports about some of the larger banks like Barclays and RBS taking
steps over the last 18 months to further cut and/or scale back their global banking
operations. The sovereign debt crisis in Europe, along with political tensions in
EMEA, have forced the European banking sector to downsize operations in order to
rein in costs and increase capital buffers. The impacts of the latter provides smaller
firms like Moelis an opportunity to further penetrate and acquire greater share of the
European advisory market.
Moelis Business Model Designed for Sustainable Growth

We believe Moeliss operating positioning and strategy can allow for sustainable
growth. Many other boutiques are challenged to grow beyond a certain size, with the
limiting factor usually revolving around the capacity of the founder/producer.
However, we see Moelis having built an advisory business that is developing its
growth internally and is aggressively using compensation to drive the right incentives
and structure to sustain such growth. Furthermore, as the companys more newly
promoted and hired bankers season, we expect to see more meaningful revenue
growth. Longer term, we see the potential for Moelis to grow a business that has
elements of meaningful breadth by both region and by sector.
Moeliss Flat Hierarchy Creates the Building Blocks for Sustainable Growth
Moelis operates on the premise of a flat corporate structure that integrates the full
suite of advisory capabilities across its 15 office locations around the world. From
senior MDs down to junior bankers, Moeilss employees success is a product of low
information barriers, knowledge sharing, and implementation of best practices. These
instances promote partnership, passion, and hard work that enable Moelis to deliver
innovative solutions that help the company differentiate itself from its competitors.
A Strategy to Develop Bankers Rather than Hire from the Outside
Moelis has created a culture that develops its personnel, with the intention of
growing more from within over time rather hiring existing prominent senior bankers.
Successful development of banking talent is a function of senior bankers willing to
spend time and resources to share ideas and contacts to help develop the more junior
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12 May 2014
bankers. An example is Moeliss mentorship program, designed to give junior

bankers an opportunity to receive coaching (formal and informal) from their senior
counterparts. This type of an investment in intellectual capital is an invaluable
measuring stick for the young talent employed at Moelis. The company firmly
believes this practice will harvest new talent and help the firm grow organically.
Bankers with a Variety of Skills Improves the Chances to Win Deals, but also
Improves Efficiency
The flat corporate structure also complements the fluid nature of Moeliss
business. Moeliss flat structure enables it to bring together different parts of the
organization to deliver different services to its advisory customers. Its bankers are
cross-trained in mergers and restructuring and are thus able to better interpret and
offer more complete advice. While other firms have dedicated restructuring efforts
that can bring their expertise to advisory client both on demand and proactively,
Moeliss bankers can provide advice in an integrated manner with advisory services,
offering the potential for additional business wins.
The most relevant recent example of success here is the December 2013 Chapter 11
reorganization of American Airlines and its subsequent merger with US Airways.
Here, the bankers were able both to effectively navigate the bankruptcy and
reorganization process, which flowed into a merger with US Air. While this
transaction could have been advised by any number of firms with both strong
advisory and restructuring capabilities, Moelis was able to effectively advise
American in part because of the restructuring experience of its advisory bankers.
The cross-expertise of Moeliss bankers in both advisory and restructuring leads, we
believe, to a more efficient and resilient business model across the cycle. Directly,
having more expertise in restructuring leads to greater counter-cyclicality of
earnings, with more resources involved in advisory during stronger economic cycles
and restructuring during the weaker parts of the cycle. Indirectly, there is a greater
chance Moelis can retain its people through the banking boom and bust cycles with
greater banker productivity. Such efficiency has been seen for years amongst the
junior banking ranks with flexibility across sectors, but the ability for senior bankers
to provide advisory work across mergers and restructuring in a broad base is
differentiated.
Growth by Expanding its Producing Base of Banking Managing Directors
Moelis has been driving revenue growth and growth potential by building its base of
Managing Directors. While we see more of the growth over time coming from its
development of banking talent internally, as the firm has grown, it has both hired
from the outside and developed from within. As these MDs further season, there is
meaningful upside for productivity improvements, potentially driving solid earnings
growth.
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12 May 2014
Figure 14: Moeliss MD Headcount Has a 6-yr CAGR of 28%

100
90
80
70
60
50
40
30
20
10
0
76
80
86
58
40
19
2008
2009
2010
2011
Total MDs
2012
2013
Moelis Embraces Growth by Heavily Investing in Intellectual Capital

Moelis has aggressively expanded its base of Managing Directors over the last five
years, as it has broadened its business both within and outside the US. The expansion
has come in the form of external hires as well in internal promotions.
Through 2013, Moelis has generated 22 MD-level internal promotions, which
represents about 25% of its current MD base and growing. While there are benefits
of using a binary approach in growing the MD base promoting from within and
hiring externally management recognizes that developing internally is far less
costly over time than hiring top-notch talent, which often absorbs disproportional
deal economics. The push to promote from within is supported by the companys
innovative compensation structure that incentivizes the development and retention of
bankers. It also is pushing compensation that tops what many of its peers are paying
for the top performers. The company has made serious on-campus investments by
targeting undergraduate and graduate students. Moeliss recruiting pitch is focused
around a generalist approach, where new joiners are given the opportunity to
obtain a high level of experience with a degree of flexibility in terms of sector
coverage. Since 2007, Moelis has hired over 200 junior bankers/analysts from
campuses, demonstrating that its brand has quickly gained recognition and that
young talent is being drawn in.
Hiring Experienced Bankers Represents the Majority of MD Pool Getting the Best
Fit for Future Moelis Growth
Moelis has built its base of bankers by hiring those with the desire to work in a
smaller firm with fewer conflicts of interest and less variability than has become
inherent within a bigger organization. Compensation helps, with higher
compensation levels for the biggest producers that are ultimately more directly tied to
the performance of the banker than with other areas of a larger financial institution
such as the trading or sales arms of large banks.
Moelis had been particularly active hiring from UBS (particularly in its earlier days),
where most of its senior management team had once worked. The advantage of
hiring seasoned bankers is their ability to leverage relationships to become
meaningful producers relatively quickly. Using the latter in conjunction with
growing talent internally has maximized Moeliss current opportunities and also
planted essential seeds for future growth.
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12 May 2014
Revenue Growth Opportunities Grow as Younger Producers Season

We believe there is earnings upside as banker productivity improves. Moeliss MDs
generated on average $5.0mn of revenue in 2013, up from $4mn in 2011. This is a
meaningful improvement but is still well short of peers such as Evercore and Lazard,
whose MDs are generating $8mn-$12mn per MD.
As Moeliss bankers season, their productivity should improve. We estimate that
revenue per managing director has nearly doubled from their first year after joining
Moelis to their third year. As more bankers season and productivity rises, revenue
should also experience solid growth. In Figure 15 below, we see the increase in MD
productivity since 2011, rising from $4mn per MD to what we expect will be $5.5mn
in 2014.
Figure 15: Moelis Revenue per MD, Increasing Since 2011; Productivity per MD Is on the Rise with
4-Year CAGR of 12%
$
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$2011
2012
2013
Moelis Revenue per MD
2014E
Source: J.P. Morgan estimates, Company data.
In Figures 17 and 18, below, we show productivity per MD at other boutique

investment banks. We believe it is challenging to compare MD production at
different firms given the differing views on what characterizes a Managing Director,
but it does show that the productivity is high at both Lazard and Evercore. It also
shows that there is the potential for meaningful upside at Moelis as its senior
producers season. Were Moeliss existing bankers able to generate the same
productivity as Evercore bankers, we estimate Moelis would generate incremental
EPS of $1.10 and nearly $3.00 in 2015.
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(1-212) 622-6613
Figure 17: Lazard Revenue per MD
Figure 18: Evercore Revenue per SMD
000s
000s
$14,000
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
2005
2006
2007
2008
2009
2010
Lazard Revenue per MD

2011
2012
2013
2005
2006
2007
2008
2009
2010
2011
2012
2013
Evercore Revenue per SMD
International Expansion Moelis Has Been Successful, but Opportunities

Remain Robust for Further Expansion
Management recognizes that a strong international presence offers important
advantages for the company and its global M&A brand. Having a presence within a
particular international market enables the firm to generate new business and quickly
respond to the changes in advisory demand in the nearby or surrounding markets.
Fewer banks have effective cross-border capabilities, allowing Moelis to better
differentiate itself.
Moeliss international expansion began in 2008 with the opening of its London
office, which was followed by an office opening in Sydney in 2009, Dubai in 2010,
Hong Kong and Beijing in 2011, Frankfurt, Paris and Mumbai in 2012 and Brazil in
2014. In this relatively short time, Moelis was able to lay the ground work and
establish hubs for its advisory operations in many of the major cities around the
world. In light of the geographic expansion, Moelis has targeted highly productive
and accretive MDs to head its international offices, with the goal of building out
sector teams then going after new business.
Selective expansion into new markets is an ongoing process that is continuously
evaluated and assessed by management. Some of the regions where Moelis has
expressed near-term expansion interest include Canada, where theres a large mining
and energy sector an area in which Moelis has expertise and desire to further
expand. Expansion into South America, and into Brazil in particular (just
announced), provides a strategic footprint in the Latam markets, where Moelis hopes
to further its infrastructure and energy sector expertise. Lastly, the company sees
Germany as an attractive area for industrials a growing sector in Europe that would
help the company expand its M&A offering across the greater European Union and
EMEA markets.
Moeliss Compensation Structure Key to Affecting Banker Behavior and
Longer-Term Growth
Moelis employs a unique discretionary compensation model that we believe is one of
the differentiating factors leading to the past successes of the firm and what will
ultimately drive the company to outperform peers. Moeliss compensation structure
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12 May 2014
utilizes a global rather than regional revenue pool for compensation distribution,
which enables Moelis to pay not only on banker production, but also on other criteria
to which management attributes high value. These attributes include collaboration,
global partnerships and training, which we feel translates into higher retention rates,
broader-based employee productivity and greater earnings growth over time.
Moelis Compensation System The Structure
Moelis employs a discretionary payout model driven by various performance/
evaluation criteria. The compensation process entails frequent sit-downs (typically
every six months) with management. These reviews drive transparency, which
management feels is an effective way to manage banker expectations and banker
behavior.
The compensation structure is formulated off equity and cash payouts no different
than most investment banks. However, what is different is that there is a material
clawback for cash compensation. Here, any cash bonus paid to an MD who ends up
leaving within a 12-month period is required to be paid back in full to Moelis, with
clawback step-downs occurring as the vesting process continues over the subsequent
12 months. The clawback is based on non-compete clauses in MD contracts that are
triggered when Moelis employees leave for competitors. Other compensation awards
are largely RSUs that are designed to reward and retain talented employees, which
Moelis believes are essential to the companys long-term growth and overall success.
Moelis has built in some flexibility in its comp structure by providing a mix of equity
and cash bonuses. The proportion varies from banker to banker depending on
milestones, goals as well as the circumstances of each individual employee. Equity
payouts are one of the compensation features that enable Moelis to incentivize its
employees and align banker interests with the equity holders.
Table 2: Moeliss Cash Bonus Vesting Schedule
%
Departure Timeline (from % of Annual Cash Bonus

start date)
Required to be Repaid
<12mo
100%
12mo-15mo
75%
15mo-18mo
50%
18mo-21mo
25%
Source:, Company data.
Moelis Compensation Structure Developing and Promoting Internal Talent

Moelis has instituted an approach to employee development and a complementary
compensation structure geared towards not only attracting talented bankers from
outside of Moelis, but also fostering/incentivizing promotions from within to further
employee continuity (lowering attrition rates). This model has enabled Moelis to
grow organically and expand its advisory expertise internationally.
Moeliss Employee Development program is built on a partnership premise that is
designed to build and foster talent from within through informal and formal
mentorships as well as firm-supported collaboration across industry sectors and
geographies irrespective of titles and rank.
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12 May 2014
For this development program to work, it needs buy-in from the senior bankers in the
firm to share their contacts, promote junior banker relationships and forest junior
banker growth. These are sometimes low priority for senior bankers, but given the
discretion and leverage Ken Moelis and management have in determining
compensation, they influence behavior by rewarding those who contribute to
building the culture and developing junior bankers. Given the clawback on cash
earnings, the possibility of having compensation withheld for 1-2 years while the
past bonus vests becomes a very powerful motivator.
A flatter compensation structure ties production more to pay across the pool of
bankers, allowing Moelis to retain and develop internal talent more successfully.
This is in contrast to larger firms with contracts for most of the senior bankers,
resulting in less compensation for the juniors. Moeliss compensation structure
increases the chances that not only do more junior bankers grow to become senior
bankers over time, but also that both the junior and senior bankers are retained,
allowing Moelis to get a better return on its banker investment.
Moelis Compensation Structure Promoting the Fluid Business Model
We believe Moelis is well positioned to execute on multiple fronts within its
flourishing advisory business. Were branding this as the Fluid Business Model,
which we think ultimately allows for greater efficiency from both a personnel
perspective as well as from a client-service perspective. Ultimately, it would appear
that the Fluid Business Model drives more business for Moelis.
By implementing a fluid business model, Moeliss bankers are able to more easily
cross over from different advisory projects that could range from traditional M&A to
more specialized risk solutions or restructurings. With advisory projects cyclical, the
cross-training of bankers in both advisory and restructuring, for example, allows
broader servicing of the customer. Furthermore, it allows for greater efficiency for
the investment bank, with bankers better able to toggle between various services
rather than succumbing to the boom and bust cycles of the advisory business.
Management expects that it has a more collaborative culture, given the more
distributive revenue structure across bankers, sectors and geographies. Overall,
Moelis prides itself on the fact that its senior bankers (i.e., MDs) are multifaceted
professionals who are capable of executing on technical matters as well as
strategically engaging clients and bringing in new business. Management estimates
that out of roughly 80+ global MDs, nearly all are providing both advisory and
restructuring services to their clients.
Moeliss Compensation Structure Retaining the Banker, and Getting Compensation
When They Leave
From managements point of view, one of the most appealing features of the
compensation structure is that it essentially discourages bankers from leaving before
they are fully vested. Employee contracts contain clauses that permit management to
defer large portions of awarded compensation, which makes it financially difficult
for bankers to pursue external opportunities. The fact that competitors would have to
make up the unvested portion of the bonus makes Moeliss employees more
expensive to hire than their counterparts at other banks. This structure helps Moelis
combat poaching and permits the company to make greater investments in its people
without worrying about recouping losses related to the exodus of intellectual capital.
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12 May 2014
But when they do leave, Moelis gets a big check, helping to ease the loss of high
producing bankers.
Financial Outlook
We are modeling EPS of $1.56 in 2013, $1.77 in 2014 and $1.88 in 2015. Our
revenue is generated on a production level per banking MD, which we have rising
from $5.0mn/MD in 2013 to $5.7mn in 2014, $6.1mn in 2015, and $6.4mn in 2016.
We have the base of MDs growing from 86 in 2013 to 89 in 2014, 93 in 2015 and 97
in 2016. We expect margins to remain ~28%, and model a corporate tax rate of 40%.
We model shares outstanding of 55.3mn shares.
Valuation
As a new publicly traded company, we feel Moelis we believe investors are valuing
MC at a discount to peers while they determine the aggressiveness/conservativeness
of revenue/expense guidance. If we are right that the compensation structure can
drive higher and more effective growth over the intermediate term, and allow the
firm to grow through the levels at which other boutiques over time have gotten
capped, then we think Moelis could go from trading at a discount to trading at a
premium to peers. Moelis trades at 15.6x our 2015 EPS estimate of $1.77, a ~3x
discount to peers. While growth projections are lower for Moelis than for peers, we
think conservative Moelis guidance is the root cause. If the M&A environment
continues to improve, then Moelis could exceed estimates at a time when its
valuation could rise, offering investors a much higher stock price. We value Moelis
at 17.5x our 2015 EPS estimate, a slight discount to where the peer group is trading
due to lower projected growth based on what we view as conservative expectations.
This brings us to a December 2014 price target of $31, representing upside of
~12.5% from its current stock price.
Table 3: Comparables for Evercore, Greenhill and Lazard
Price
Company Name
JPM
Ticker 5/9/14 Rating
Market
EPS Estimate
Price to EPS:
Cap.
FY2012 FY2013 FY2014E FY2015E
FY2013 FY2014E FY2015E
Moelis & Co.
MC
$26.73
OW
$1,496
$0.42
$0.80
$1.56
$1.77
34.4x
17.7x
15.6x
Everc ore Partners Inc.
EVR
$55.38
NA
$2,215
$1.78
$2.25
$2.44
$3.13
24.4x
22.5x
17.6x
Greenhill
GHL
$51.07
NA
$1,424
$1.38
$1.55
$1.60
$2.25
32.5x
31.5x
22.4x
Lazard
LAZ
$49.36
NA
$6,329
$1.44
$2.01
$2.76
$3.24
24.3x
17.7x
15.1x
27.1x
23.9x
18.4x
Average
Source: J.P. Morgan estimates for Moelis, Bloomberg for all other estimates.
20

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(1-212) 622-6613
Models
Table 44: Moelis & Co.s Earnings Model
Adj. Diluted EPS
2012
2013
0.42 $
0.80 $
2014E
1.56 $
2015E
1.77 $
2016E
1.88 $
1Q12
(0.01) $
2Q12
0.06 $
3Q12
0.06 $
4Q12
0.31 $
1Q13
0.01 $
2Q13
0.24 $
3Q13
0.17 $
4Q13
0.39 $
1Q14
0.37 $
2Q14E
0.26 $
3Q14E
0.37 $
4Q14E
0.56 $
1Q15E
0.38 $
2Q15E
0.30 $
3Q15E
0.40 $
4Q15E
0.68 $
1Q16E
0.40 $
2Q16E
0.30 $
3Q16E
0.43 $
4Q16E
0.74
Revenues
Revenue
385,900
411,300
496,167
556,737
610,215
65,700
93,800
100,100
126,300
59,800
98,500
98,700
154,300
114,517
92,400
122,375
166,875
125,006
104,052
137,765
189,914
137,122
114,084
150,977
208,033
Total Revenue
385,900
411,300
496,167
556,737
610,215
65,700
93,800
100,100
126,300
59,800
98,500
98,700
154,300
114,517
92,400
122,375
166,875
125,006
104,052
137,765
189,914
137,122
114,084
150,977
208,033
105,663
71,622
13,225
84,847
95,531
23,691
119,222
99,085
25,972
125,057
23,562
4,158
27,720
23,863
4,895
28,758
24,197
4,172
28,369
23,751
8,750
32,501
23,932
4,682
28,614
24,109
5,511
29,619
23,739
4,748
28,487
24,682
9,599
34,281
24,528
5,134
29,662
24,911
6,039
30,950
24,964
5,201
30,165
159,281
100,888
47,692
(29,325)
119,255
138,478
72,376
(24,720)
186,133
154,140
79,328
(13,320)
220,148
14,784
15,708
(9,775)
20,717
30,986
15,297
(9,775)
36,508
55,117
16,688
(9,775)
62,030
28,751
16,251
(6,180)
38,822
22,892
13,527
(6,180)
30,238
36,508
17,909
(6,180)
48,237
50,327
24,689
(6,180)
68,836
31,538
17,826
(3,330)
46,034
25,669
14,831
(3,330)
37,170
40,764
19,627
(3,330)
57,061
56,169
27,044
(3,330)
79,883
Expenses
Compensation Expense
Salary
Benefits, Payroll Tax
Salary, Benefits, Payroll Tax
Cash Incentive Expense Accrual

Incentive Equity Expense (Excluding Acceleration)
Adjustment for 2014 Acceleration Expense
Incentive Expense (Pre- Acceleration and Pre IPO Grants)
Pre-IPO Equity Expense
11,825
8,285
8,285
7,400
2,225
2,200
2,071
2,071
2,071
2,071
2,071
2,071
2,071
2,071
GAAP Total Compensation Expense

% of Revenue
275,000
71.3%
265,000
64.4%
276,019
56%
313,641
56%
353,490
58%
49,600
75.5%
70,800
75.5%
75,600
75.5%
79,000
62.5%
43,600
72.9%
58,400
59.3%
65,000
65.9%
98,000
63.5%
60,092
52%
55,837
60%
67,491
55%
92,599
55%
73,395
59%
60,924
59%
79,928
58%
99,394
52%
82,386
60%
68,903
60%
90,082
60%
112,119
54%
Pre-IPO Backout
Adjusted Compensation Expense
% of Revenue
275,000
71.3%
265,000
64.4%
11,825
264,194
53%
8,285
305,356
55%
8,285
345,205
57%
49,600
75.5%
70,800
75.5%
75,600
75.5%
79,000
62.5%
43,600
72.9%
58,400
59.3%
65,000
65.9%
98,000
63.5%
60,092
52%
7,400
48,437
52%
2,225
65,266
53%
2,200
90,399
54%
2,071
71,323
57%
2,071
58,853
57%
2,071
77,856
57%
2,071
97,323
51%
2,071
80,314
59%
2,071
66,832
59%
2,071
88,011
58%
2,071
110,048
53%
Awarded Total Compensation Expense

% of Revenue
269,838
69.9%
257,752
62.7%
292,355
59%
334,042
60%
366,129
60%
59,549
0%
56,364
61%
74,649
61%
101,794
61%
75,003
60%
62,431
60%
82,659
60%
113,948
60%
82,273
60%
68,450
60%
90,586
60%
124,820
60%
Non- Compenation Expense
72,800
76,300
92,106
96,334
102,429
17,000
16,900
17,800
21,100
17,000
17,400
19,200
22,700
20,141
20,790
24,475
26,700
20,001
19,250
24,798
32,285
21,940
21,106
26,098
33,285
347,800
341,300
356,300
401,689
447,633
66,600
87,700
93,400
100,100
60,600
75,800
84,200
120,700
80,233
69,227
89,741
117,099
91,324
78,102
102,654
129,609
102,254
87,937
114,109
143,333
38,100
9.87%
70,000
17.02%
139,867
28.19%
155,047
27.85%
162,582
26.64%
-900
0.00%
6,100
0.00%
6,700
0.00%
26,200
0.00%
(800)
0.00%
22,700
0.00%
14,500
0.00%
33,600
0.00%
34,284
0.00%
23,173
25.08%
32,634
26.67%
49,776
29.83%
33,681
26.94%
25,950
24.94%
35,111
25.49%
60,306
31.75%
34,868
25.43%
26,147
22.92%
36,867
24.42%
64,700
31.10%
(600)
300
3,600
(800)
3,540
19
8,205
-
10,380
-
0
-100
-900
100
-1,200
100
1,500
200
1,400
100
-600
0
1,700
-1,100
1,100
200
(1,220)
19
1,150
-
1,530
-
2,080
-
1,815
-
1,540
-
2,040
-
2,810
-
2,300
-
1,950
-
2,580
-
3,550
-
Adj Income Before Income Taxes

Corporate Tax
Tax Rate %
37,800
(15,120)
40%
72,800
(29,120)
40%
143,426
(57,370)
40%
163,252
(65,301)
40%
172,962
(69,184)
40%
-1,000
400
40.0%
5,300
(2,120)
40.0%
5,600
(2,240)
40.0%
27,900
(11,160)
40.0%
700
(280)
40.0%
22,100
(8,840)
40.0%
15,100
(6,040)
40.0%
34,900
(13,960)
40.0%
33,083
(13,233)
40.0%
24,323
(9,729)
40.0%
34,164
(13,665)
40.0%
51,856
(20,743)
40.0%
35,496
(14,198)
40.0%
27,490
(10,996)
40.0%
37,151
(14,860)
40.0%
63,116
(25,246)
40.0%
37,168
(14,867)
40.0%
28,097
(11,239)
40.0%
39,447
(15,779)
40.0%
68,250
(27,300)
40.0%
Net Income Adj for Corporate Taxes
22,680
43,680
86,056
97,951
103,778
(600)
3,180
3,360
16,740
420
13,260
9,060
20,940
19,850
14,594
20,498
31,114
21,298
16,494
22,290
37,869
22,301
16,858
23,668
40,950
54,366
54,366
55,098
55,341
55,341
54,366
54,366
54,366
54,366
54,366
54,366
54,366
54,366
54,366
55,341
55,341
55,341
55,341
55,341
55,341
55,341
55,341
55,341
55,341
55,341
Total Adj. Operating Expense (adj for IPO Awards)

Income
Adjusted Operating Income (adj for IPO awards)
Adj. Operating Margin (% of Net Revenues)
Income from Australia JV (Income (loss) from equity method invest.)
Other Expenses
Number of Shares (in 000s)

Diluted
Source: Company reports and J.P. Morgan estimates.
21

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Table 5: Moelis & Co.s Balance Sheet
Balance Sheet
(Dollars in thousands)
Period
Assets
Cash And Cash Equivalents
Investments At Fair Value
Total Cash (Excluding Restricted Cash)
Restricted Cash
Total Cash (Including Restricted Cash)
Receivables:
Accounts Receivable
Interest And Dividends Receivable
Other Receivables
Total Receivables
2012
2013
$26,331 $153,943
139,138
68,141
$165,469 $222,084
160,066
149,873
$325,535 $371,957
$37,541
351
9,299
$47,191
$28,784
39
6,520
$35,343
Deferred Compensation
Investment In Equity-Method
Equipment And Leasehold Improvements
Intangible Assets
Deferred Tax Asset
Prepaid Expenses And Other Assets
Total Assets
$6,314
$3,495
10,371
12,481
5,786
5,156
211
42
1,682
1,315
3,570
13,674
$400,660 $443,463
Liabilities And Capital

Compensation Payable
Accounts Payable And Accrued Expenses
Deferred Revenue
Other Liabilities
Total Liabilities
$120,204 $103,928
8,842
14,262
2,649
6,838
6,045
8,466
$137,740 $133,494
Equity
Total Equity
Total liabilities and equity
$262,920 $309,969
$400,660 $443,463
check
22

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12 May 2014
Moelis: Summary of Financials

Income Statement - Annual
Trading revenues
Total revenue
Compensation
Non-compensation expense
Operating income
Other income / (expense)
Pretax income
Income taxes
Net income - GAAP
Net income - recurring
Diluted shares outstanding
EPS - operating
EPS - GAAP
Balance Sheet and Cash Flow Data
FY13A FY14E FY15E FY16E

(265)
70
(1)
73
(29)
44
44
54
0.80
0.80
(276)
140
0
143
(57)
86
86
55
1.56
1.56
(314)
155
0
163
(65)
98
98
55
1.77
1.77
(353)
163
0
173
(69)
104
104
55
1.88
1.88
FY13A FY14E FY15E FY16E
Cash and cash equivalents

Current assets
Total assets
154
407
443
Total debt
Total liabilities
Preferred stockholders' equity
Common stockholders' equity
133
310
Net income
D&A
Capex
Free cash flow
FCF / share
Income Statement - Quarterly

Trading revenues
Total revenue
Compensation
Non-compensation expense
Operating income
Other income / (expense)
Pretax income
Income taxes
Net income - GAAP
Net income - recurring
Diluted shares outstanding
EPS - operating
EPS - GAAP
1Q14A
2Q14E 3Q14E 4Q14E
(60)A
34A
0A
33A
(13)A
20A
20A
54A
0.37A
0.37A
(56)
23
0
24
(10)
15
15
55
0.26
0.26
(67)
33
0
34
(14)
20
20
55
0.37
0.37
(93)
50
0
52
(21)
31
31
55
0.56
0.56
Ratio Analysis
FY13A
FY14E
FY15E
FY16E
Revenue growth
EPS growth
92.6%
94.4%
13.3%
5.9%
Tax rate
Net income margin
40.0%
-
40.0%
-
40.0%
-
40.0%
-
Return on equity (ROE)

Dividends
Dividend payout ratio
15.2%
-
55.5%
-

Note: $ in millions (except per-share data).Fiscal year ends Dec
23

12 May 2014

(1-212) 622-6613
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Moelis (MC, MC US) Price Chart
42
35
28
Price($)
21
14
0
Apr
14
Apr
14
Apr
14
May
14
May
14
May
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
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the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
24

(1-212) 622-6613

12 May 2014
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
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J.P. Morgan Global Equity Research Coverage

IB clients*
JPMS Equity Research Coverage
IB clients*
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(buy)
44%
58%
45%
78%
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(hold)
44%
49%
48%
67%
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(sell)
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40%
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60%
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North America Equity Research

Initiating Coverage with an Overweight Rating

Price Target: $31.00

Brokers, Asset Managers &

MC share price ($)

Boutiques gaining market share. Boutiques are gaining meaningful market

Moelis & Company (MC;MC US)

Source: Company data, Bloomberg, J.P. Morgan estimates.

See page 24 for analyst certification and important disclosures.

Kenneth B. Worthington, CFA

North America Equity Research

Kenneth B. Worthington, CFA

North America Equity Research

Source: Company reports.

Industry (Avg) Mix(5yr avg based on rank

Cnsmr, Retail &

Fin. Inst &

Source: Company reports.

Moelis Participates in the Growing M&A Marketplace

Kenneth B. Worthington, CFA

North America Equity Research

Risks to Rating and Price Target

Kenneth B. Worthington, CFA

North America Equity Research

Key Man Risk

Moelis Business Overview

Kenneth B. Worthington, CFA

North America Equity Research

$61.2 billion sale to InBev SA

$44.6 billion unsolicited proposal from Microsoft Corporation

30 billion sale of most of its complex credit derivative portfolio

$35.1 billion merger with Publicis Groupe SA*

$28 billion sale to Berkshire Hathaway Inc. and 3G Capital, Inc.

$26.5 billion sale to The Blackstone Group L.P.

$24.9 billion restructuring of Dubai World Corporation

Source: Company data.

Mainland China (1)

Source: Company data.

South America (1)

Kenneth B. Worthington, CFA

North America Equity Research

Despite a Competitive Landscape, Moelis Continues to Take Share and Grow

M&A Environment Is Attractive and Growing/Recovering

Figure 3: Total M&A Activity Globally (# of

Total- ALL M&A Activity Globally (Deal Value $)

Source: J.P. Morgan estimates, Dealogic.

Total M&A Activity Globally (# of Transactions)

Source: J.P. Morgan estimates, Dealogic.

Kenneth B. Worthington, CFA

North America Equity Research

Figure 5: Total M&A Deal Value ($) as a % of ECM Deal

Figure 6: Total M&A Deal Value ($) as % of DCM

Source, J.P. Morgan estimates, Dealogic.

Total M&A as % of DCM (Corp Bond) Deal Value

Source: J.P. Morgan estimates, Dealogic.

Kenneth B. Worthington, CFA

North America Equity Research

Boutiques Are Well Positioned within M&A Market

Kenneth B. Worthington, CFA

North America Equity Research

Corporate Management Teams and Boards of Directors Increasingly Seeking

Larger Banks Suffer Operational, Regulatory and Financial Challenges,

Kenneth B. Worthington, CFA