Greenhill & Co. Inc. (GHL) said fourth quarter revenue from advisory surged 51% and the firm had the highest full-year advisory revenue since 2007.

Excluding an unusual compensation charge, fourth-quarter profit of $20.4 million, or 67 cents a share, handily beat analyst expectations, on revenue of $94.5 million.

For the full year, advisory revenue of $302.8 million rose 20% from the prior year.

The report caps a tumultuous year for Greenhill, which began 2011 with a loss after the cost of paying its investment bankers swamped revenue. The second and third quarters bounced back to better-than-expected profitability as those costs reverted to normal, but Chief Executive Scott Bok did find himself having to respond to questions about the firm's business model.

On Wednesday, Greenhill said its client base had grown 14% in 2011 and those clients generating $1 million or more in revenue had grown 30%. Less than two-thirds of advisory revenue came from the completion of mergers and acquisitions transactions, a nod to the firm's diverse sources of income despite criticism that it is too skewed toward advisory services.

Of the independent Wall Street firms providing M&A advice, Greenhill's business is nearly 100% advisory. Rivals Evercore Partners (EVR) and Lazard Ltd. (LAZ) have trading or asset-management businesses, too.

Shares of Greenhill tumbled 55% last year amid rocky markets and uncertainty over the European debt crisis that muted deal activity in the second half of the year. They are up 20% so far this year.

Analysts had expected fourth-quarter earnings of $18.8 million, or 61 cents a share, on revenue of $84 million. The quarter included a charge for accelerated vesting of stock awards for two managing directors, Jeff Buckalew and Rakesh Chawla, who died in a plane crash in December. The crash also took the lives of Buckalew's wife, Corinne, and their children, Jackson and Meriwether.

Including that unusual charge, earnings per share were 53 cents.

Like other advisory firms, Greenhill books the most in fees when deals close. Just two weeks before the end of the year, one of its biggest deals unraveled. AT&T Inc. (T) said it was canceling its $39 billion takeover of Deutsche Telekom's T-Mobile USA unit after government opposition derailed the deal.

That cost the seven banks advising the various sides, including Greenhill, as much as $150 million in fees collectively, according to Thomson Reuters.

But Greenhill continues to get assignments. The firm is advising Roche Holding Ltd. in its $5.7 billion hostile bid for Illumina Inc. (ILMN) That transaction was announced Wednesday.

In October, the firm declared its plans to buy back stock using the proceeds of the sale of its stake in satellite company Iridium Communications Inc. (IRDM) through a plan designed to let holders sell at regular intervals.

Sales of Iridium shares in the fourth quarter boosted revenue by $14 million, partially offset by a $6 million write-down in the value of the firm's remaining fund investments.

   -By Liz Moyer, Dow Jones Newswires; 212-416-2512; 
   liz.moyer@dowjones.com
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