UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended JuneSeptember 30, 2006

OR

For the transition period from                      ______________ to                     ______________

001-32975

(Commission File Number)

EVERCORE PARTNERS INC.

(Exact name of registrant as specified in its charter)

55 East 52^nd Street

43^rd floor

New York, New York 10055

(Address of principal executive offices)

Registrant’s telephone number: (212) 857-3100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨     No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ¨                Accelerated Filer  ¨                Non-Accelerated Filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the Registrant’sregistrant’s Class A common stock, par value $0.01 per share, outstanding as of September 21,November 10, 2006 was 4,587,738. The number of shares of the Registrant’sregistrant’s Class B common stock, par value $0.01 per share, outstanding as of September 21,November 10, 2006 was 51 (excluding 49 shares of Class B common stock held by a subsidiary of the Registrant)registrant).

TABLE OF CONTENTS

In this report, references to “Evercore Partners,” “Evercore,” “the Company,” “we,” “our,” or “us,” refer to Evercore Partners Inc. a Delaware company, and its subsidiaries.

References to “Evercore Holdings” or “the Company,” refer to Evercore Holdings, which, prior to the August 2006 Reorganization described herein, was comprised of certain condensed combined entities under the common ownership of the Evercore Senior Managing Directors (the “Members”) and common control of two of the founding Members (the “Founding Members”).

i

PART I. FINANCIAL INFORMATION

Condensed CombinedCombined/Consolidated Financial Statements of Evercore HoldingsPartners Inc. (Unaudited)*

EVERCORE HOLDINGSPARTNERS INC.

CONDENSED COMBINEDCOMBINED/CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)thousands, except share data)

See notesNotes to unaudited condensed combined financial statements.Unaudited Condensed Combined/Consolidated Financial Statements.

EVERCORE HOLDINGSPARTNERS INC.

CONDENSED COMBINEDCOMBINED/CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(dollars in thousands)thousands, except share data)

See notesNotes to unaudited condensed combined financial statements.Unaudited Condensed Combined/Consolidated Financial Statements.

EVERCORE HOLDINGSPARTNERS INC.

CONDENSED COMBINEDCOMBINED/CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ AND STOCKHOLDERS’ EQUITY

(UNAUDITED)

SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2006

(dollars in thousands)

See notesNotes to unaudited condensed combined financial statements.Unaudited Condensed Combined/Consolidated Financial Statements.

EVERCORE HOLDINGSPARTNERS INC.

CONDENSED COMBINEDCOMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)

		Combined For the Nine Months Ended September 30, 2005			Combined January 1, 2006 through August 9, 2006				Consolidated August 10, 2006 through September 30, 2006
		PREDECESSOR			PREDECESSOR				SUCCESSOR
SUPPLEMENTAL CASH FLOW DISCLOSURE
Payments for Interest		$	91		$	917			$	203
Payments for Income Taxes		$	3,097		$	3,808			$	—
Fixed Assets Acquired Under Capital Leases		$	113		$	—			$	—
Non-Cash Distribution of Available-For-Sale Securities		$	—		$	416			$	—
Purchase of Protego
Non-Interest-Bearing Evercore LP Notes		$	—		$	7,000			$	—
Evercore LP Partnership Units			—			27,510				—
Acquisition costs			—			3,420				—
Total Purchase Price			—			37,930				—
Accounts Receivable			—			(6,582	)			—
Financial Instruments Owned and Pledged, Fair Value			—			(198,511	)			—
Securities Purchased Under Agreements to Resell			—			(207,596	)			—
Investments			—			(1,670	)			—
Fixed Assets			—			(990	)			—
Intangible Assets			—			(3,480	)			—
Goodwill			—			(30,986	)			—
Other Assets			—			(483	)			—
Current Liabilities			—			2,756				—
Securities Sold Under Agreements to Repurchase			—			406,150				—
Dividend Payable			—			6,375				—
Minority Interest			—			1,059				—
Cash Acquired from Purchase		$	—		$	3,972			$	—
Elimination of Non-Contributed Entities
Members’ Equity of Non-Contributed Entities			—			16,452				—
Due To/From Members and Employees			—			1,255				—
Due To/From Uncombined Affiliates			—			(1,257	)			—
Investments			—			(16,757	)			—
Accounts Payable and Accrued Liabilities			—			88				—
Minority Interest			—			273				—
Cash Withdrawal from General Partner Entity		$	—		$	54			$	—
Issuance of Common Stock to Repay Note Payable		$	—		$	—			$	950
Non-Cash deferred IPO Costs		$	—		$	—			$	7,193
Transfer of Members Equity to Minority Interest		$	—		$	19,868			$	—

See notesNotes to unaudited condensed combined financial statements.Unaudited Condensed Combined/Consolidated Financial Statements.

EVERCORE HOLDINGSPARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINEDCOMBINED/CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

Note 1 – 1—Organization

Evercore HoldingsPartners Inc. and subsidiaries (the “Company”“Successor Company”) is an investment banking firm, incorporated in Delaware on July 21, 2005 and headquartered in New York, New York, which,York. The Successor Company is a holding company and its sole material asset is a controlling equity interest in Evercore LP. The Successor Company is the sole general partner of Evercore LP and, through Evercore LP and its operating entity subsidiaries, the Successor Company has continued to conduct the same business as prior to the reorganization referred to below was comprised ofby certain condensed combined and consolidated entities under the common ownership of the Evercore Senior Managing Directors (the “Members”) and common control of two of the founding Members (the “Founding Members”).

On August 10, 2006, pursuant to a contribution and sale agreement dated May 12, 2006, (1) the Members contributed to Evercore LP each of the various entities included in the Company’s historical combined financial statements of Evercore Holdings (the “Predecessor Company”), with the exception of the general partners of Evercore Capital Partners L.P. and its affiliated entities (collectively “ECP I”), Evercore Capital Partners II L.P. and its affiliated entities (collectively, “ECP II”) and Evercore Venture Partners L.P. and its affiliated entities (collectively, “EVP”), which are Company sponsored private equity funds, and of Evercore Founders L.L.C. and Evercore Founders Cayman Ltd., which are the entities through which the Founding Members fund their additional commitments to ECP I (collectively, the “Founders”) and acquired an interest in the general partner of ECP II, and EVM andwhich will permit Evercore LP to receive 8% to 9% (depending on the particular fund investment) of any carried interest from that fund following the Founders (as such terms are defined below)contribution (the “Formation Transaction”), and(2) Evercore LP acquired Protego Asesores S. de R.L. and its subsidiaries and Protego SI from its directors and other stockholders. On August 16, 2006, Evercore Partners Inc., the sole general partner of Evercore LP,Company completed the initial public offeringInitial Public Offering (“IPO”) of its Class A common stock. This reorganization is described in greater detail inThe Formation Transaction and IPO are collectively referred to as the Registration Statement on Form S-1 (File No. 333-134087) (the “Registration Statement”) filed with“Reorganization.”

The Successor Company’s Condensed Combined/Consolidated Financial Statements include the Securities and Exchange Commission in connection withaccounts of the initial public offering.Company’s subsidiaries. The financial statementssole direct subsidiary of the Company presented in this report represent the resultsis Evercore LP. The subsidiaries of operations and financial condition of the Company prior to the reorganization.

The entities comprising the CompanyEvercore LP are as follows:

In December 2003, the above entities were reorganized. Prior to the reorganization, these entities were operated as a series of limited partnerships with their own general partner entities. Under the terms of the reorganization, these limited partnerships were converted to limited liability companies. Pursuant to such conversions, the limited partnership interests were cancelled and, in consideration therefore, the holders of such limited partnership interests received limited partnership interest of EGH that corresponded to the respective limited liability companies into which such limited partnership were converted and were equivalent to the respective limited partnership interests held immediately prior to such conversions. The resulting limited liability companies are held by Evercore Partners Services East L.L.C., a wholly owned subsidiary of EGH. Subsequent to the reorganization, the former general partner entities were dissolved. The transaction was accounted for as a reorganization of entities under common control at historical cost.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

The Predecessor Company, prior to the Reorganization referred to above, was comprised of certain combined entities under the common ownership of the Members and common control of two of the Founding Members.

The Condensed Combined Financial Statements of the Predecessor are comprised of the following entities:

Where reference is made to the “Founders”).periods prior and subsequent to the IPO, the term “the Company” refers to the Predecessor Company and Successor Company, respectively.

The Company’s principal activities are divided into two businessreportable segments:

The Condensed Combined Financial Statements includeCompany’s sponsored private equity funds: ECP I, ECP II, EVP and Discovery Americas I, L.P. (the “Discovery Fund”), the accounts of the following entities all of which are under the common controlCompany’s principal investments in ECP II, GP Holdings, Discovery Fund and management of the Founding Members:EAM. Where reference

EVERCORE HOLDINGSPARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2005 AND& 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

Note 2 – 2—Significant Accounting Policies

Basis of Presentation – —The accompanying unaudited condensed combined financial statementsCondensed Combined/Consolidated Financial Statements of the Company have been prepared in accordance with the instructions to Form 10-Q. As permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”),SEC, the financial statements contain certain condensed financial information and exclude certain footnote disclosures normally included in audited combinedconsolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring accruals, necessary to fairly present the accompanying financial statements. For further information, refer to the combined financial statements for the year ended December 31, 2005 and footnotes thereto included in the Company’s Registration Statement on Form S-1. Operating results for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2006.

The Condensed CombinedCombined/Consolidated Financial Statements of the Company compriseare comprised of the consolidation of Evercore LP, EGH and its general partner, GP Holdings, Evercore LP’s wholly owned subsidiaries, with Evercore Group Holdings L.L.C., Evercore Advisors Inc., Evercore Properties Inc.Protego and, Evercore Group L.L.C., andprior to the Reorganization, the combination of its wholly owned and majority owned general partners of the Private Equity Funds and Founders, entities that are wholly owned or controlled by the Company.

The current period financials reflect each financial statement category including the activity as the Company stood prior to the Reorganization through the IPO date of August 10, 2006. For the remainder of the period after August 10, 2006, the results of just those entities contributed to Evercore LP under the Reorganization are reflected in the Condensed Consolidated Financial Statements.

The Company accounted for the Formation Transaction as an exchange between entities under common control and recorded the net assets and members’ equity of the contributed entities at historical cost.

Subsequent to the IPO, the Company became the sole general partner of Evercore LP. The Company’s interest in Evercore LP is within the scope of the Emerging Issues Task Force Issue No. 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (“EITF 04-5”). Although the Company has a minority economic interest in Evercore LP, it has a majority voting interest and controls the management of Evercore LP. Additionally, although the limited partners have an economic majority of Evercore LP, they do not have the right to dissolve the partnership or substantive kick-out rights or participating rights, and therefore lack the ability to control Evercore LP. Accordingly, the Company consolidates Evercore LP and records minority interest for the economic interest in Evercore LP held directly by the Members and Founding Members.

EGH has consolidated all operating companies in which it has a controlling financial interest, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 94, “Consolidation of All Majority-Owned Subsidiaries,” (“SFAS 94”) which requires the consolidation of all majority-owned subsidiaries.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

Investments in non-majority-owned companies in which the Company has significant influence are accounted for by the Company using the equity method.

These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

All material intercompany transactions and balances have been eliminated.

The following accounting policies apply to both the Predecessor Company and Successor Company unless otherwise specified.

Minority Interest– —Minority interest recorded on the Condensed Combined Financial Statements of the Predecessor Company relates to the minority interest of an unrelated third-party in EVM, the general partner of EVP.  TheEVM is owned by the two members, an unrelated third-party, which owns approximately 53%, and Evercore Venture Partners LLC, which owns approximately 47%. Evercore Venture Partners LLC is under common ownership of the Company consolidates EVM, which it controls but does not wholly own.and is the managing member of EVM. As a result, the Company includesconsolidates, including in its Condensed Combined Statements of Income all of the net income of EVM with an appropriate minority interest of approximately 53%. Minority interest recorded on the Condensed Consolidated Financial Statements of the Successor Company relates to the minority interest of the Members in Evercore LP and the portion of PCB not owned by Protego.

Use of Estimates – —The preparation of the Condensed CombinedCombined/Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed combined financial statementsCondensed Combined/Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Such estimates relate to the valuation of portfolio investments in companies owned by the Private Equity Funds (the “Portfolio Companies”), financial instruments, owned the allowance for doubtful accounts for accounts receivables, compensation liabilities, tax liabilities, deferred tax assets and liabilities, goodwill, intangible assets and other matters that affect reported amounts of assets and liabilities. Actual amounts could differ from those estimates and such differences could be material to the Condensed CombinedCombined/Consolidated Financial Statements.

Cash and Cash Equivalents – —Cash and cash equivalents consist of short-term highly liquid investments with originalremaining maturities of three months or less.

Restricted Cash – —At December 31, 2005 and JuneSeptember 30, 2006, the Company was required to maintain compensating balances of $1,519 as collateral for letters of credit issued, by a third party, in lieu of a cash security deposit, as required by the Company’s lease for certain of its New York office space.

Financial Instruments Owned and Pledged as Collateral—The Successor Company’s financial instruments owned, which consist principally of foreign government obligations, are recorded on a trade date basis and are stated at quoted market values. Related gains and losses are reflected in Interest Income and Other Revenue on the Condensed Combined/Consolidated Statements of Income. The Successor Company pledges the financial instruments owned to collateralize certain financing arrangements which permits the counterparty to pledge the securities.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase—The Successor Company has securities purchased under agreements to resell of $74.0 million at September 30, 2006, for which it received collateral with a fair value of $74.2 million at September 30, 2006. Additionally, the Company has securities sold under agreements to repurchase of $349.7 million at September 30, 2006, for which it pledged collateral with a fair value of $349.7 million at September 30, 2006. Securities purchased under agreements to resell and securities sold under agreements to repurchase are treated as collateralized financing transactions. The agreements provide that the transferor will receive substantially the same securities in return at the maturity of the agreement and the transferor will obtain from the transferee sufficient cash or collateral to

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

purchase such securities during the term of the agreement. These transactions are carried at the amounts at which

the related securities will be subsequently resold or repurchased, plus accrued interest payables or receivable. As these transactions are short-term in nature, their carrying amounts are a reasonable estimate of fair value.

Accounts Receivable – —Accounts receivable consists primarily of advisory fees and expense reimbursements charged to the Company’s clients, and transaction and monitoring fees charged to Portfolio Companies. Accounts receivable as of December 31, 2005 and JuneSeptember 30, 2006 include unbilled client expense receivables in the amount of $1,451 and $968,$780, respectively.

Accounts Receivable are reported net of any allowance for doubtful accounts. Management of the Company derives the estimate for the allowance for doubtful accounts by utilizing past client transaction history and an assessment of the client’s creditworthiness, and has determined that an allowance for doubtful accounts was $256 as of December 31, 2005 and June$250 as of September 30, 2006.

Fair Value of Financial Instruments – —The fair value of financial assets and liabilities, consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilitiesexpenses are considered to approximate their recorded value, as they are short-term in nature.

Investments – —The Company’s investments consist primarily of investments in the Private Equity Funds and assets managed by Evercore Asset Management, L.L.C. (“EAM”) that are carried at fair value on the Condensed CombinedCombined/Consolidated Statements of Financial Condition, with realized and unrealized gains and losses included in Investment Management Revenue on the Condensed CombinedCombined/Consolidated Statements of Income.

Realized and Unrealizedunrealized gains and losses on Available-For-SaleAvailable-for-Sale Securities are included in Accumulated Other Comprehensive Income as a separate component of Member’s Equity, but are excluded from net income.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

The Private Equity Funds consist primarily of investments in marketable and non-marketable securities of the Portfolio Companies. The underlying investments held by the Private Equity Funds are valued based on quoted market prices or estimated fair value if there is no public market. The fair value of the Private Equity Funds’ investments in non-marketable securities areis ultimately determined by the Company in its capacity as general partner.Company. The Company determines fair value of non-marketable securities by giving consideration to a range of factors, including but not limited to market conditions, operating performance (current and projected) and subsequent financing transactions. Due to the inherent uncertainty in the valuation of these non-marketable securities, estimated values may materially differ from the values that would have been used had a ready market existed for these investments.

Investments in publicly traded securities are valued using quoted market prices.

Available-For-SaleAvailable-for-Sale Securities and Trading Securities are valued using quoted market prices for publicly traded securities or estimated fair value if there is no public market.

Goodwill and Intangible Assets—SFAS No. 142, “Goodwill and Other Intangible Assets,” does not permit the amortization of goodwill and indefinite-lived assets. Instead, these assets must be reviewed annually (or more frequently under certain conditions) for impairment. Other intangible assets are amortized over their estimated useful lives.

Furniture, Equipment and Leasehold Improvements – —Fixed assets, including office equipment, hardware and software and leasehold improvements, are stated at cost, net of accumulated depreciation and amortization. Furniture, equipment and computer hardware and software are depreciated using the straight-line method over

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

the estimated useful lives of the assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of the term of the lease or the useful life of the asset.

The Company capitalizes certain costs of computer software obtained for internal use and amortizes the amounts over the estimated useful life of the software, generally not exceeding three years. Capitalized internal-use software costs include only external direct costs of materials and services consumed in developing or obtaining the software. Capitalization of these costs ceases no later than the point at which software development projects are substantially complete and ready for their intended purposes.

Upon retirement or disposition of assets, the cost and related accumulated depreciation or amortization is removed from the accounts and the resulting gain or loss, if any, is recognized as a gain or loss on disposition of assets in other operating income or expense. Expenditures for maintenance and repairs are expensed as incurred.

Leases – —Leases are accounted for in accordance with SFAS No. 13, “Accounting for Leases.” Leases are classified as either capital or operating as appropriate. For capital leases, the present value of the future minimum lease payments is recorded as a liability. Amortization of capitalized leased assets is computed on the straight-line method over the lesser of the lease term or useful life of the asset.

Advisory Revenue – —The Company earns advisory revenue through a) retainer arrangements, b) success fees based on the occurrence of certain events which may include announcements or completion of various types of financial transactions, b) retainer arrangements and c) fairness opinions.

The Company recognizes advisory revenue when the services related to the underlying transactions such as mergers, acquisitions, restructurings and divestitures are completed in accordance with the terms of its engagement agreements.

Fees that are paid in advance are initially recorded as deferred revenue and recognized as advisory revenue ratably over the period in which the related service is rendered.

Investment Management Revenue – —Investment Management revenue is derived from the Company’s activities in private equity and traditional asset management and consists of a) management fees from the Private Equity Funds, b) portfolio company fees, c) gains (losses) on investments in the Private Equity Funds, and d) Carried Interest.Interest, e) asset management fees (Successor Company only) and (f) net interest revenue (Successor Company only).

Management Fees – —Management fees are contractually based and are derived from investment management services provided in originating, recommending and consummating investment opportunities to the Private Equity

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

Funds. Management fees are payable semi-annually in advance on committed capital during the Private Equity Funds’ investment period, and on invested capital, thereafter. Management fees are initially recorded as deferred revenue and revenue is recognized ratably, thereafter, over the period for which services are provided.

The Private Equity Funds partnership agreements provide for a reduction of management fees for certain portfolio company fees earned by the Company. Portfolio company fees are recorded as revenue when earned and are offset, in whole or in part, against future management fees. Such offsets amounted to $0$977 and $552$2,583 for the sixnine months ended JuneSeptember 30, 2005, and 2006, respectively.

The ECP II partnership agreement also provides that placement fees paid by its limited partners are offset against future management fees. Such offsets amounted to $1,243$1,865 and $0 for the sixnine months ended JuneSeptember 30, 2005, and 2006.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

Portfolio Company Fees – —Portfolio company fees include monitoring, director and transaction fees associated with services provided to the portfolio companiesPortfolio Companies of the private equity fundsPrivate Equity Funds the Company manages.

Monitoring fees are earned by the Company for services provided to the Portfolio Companies with respect to the development and implementation of strategies for improving operating, marketing and financial performance. Monitoring fee revenue is recognized ratably over the period for which services are provided.

Director fees are earned by the Company for the services provided by Members who serve on the Board of Directors of Portfolio Companies. Director fees are recorded as revenue when payment is received. This policy does not yield results that are materially different compared to recording revenue when services are provided, as required by U.S GAAP.

Transaction fees are earned by the Company for providing advisory services to Portfolio Companies. These fees are earned and recognized on the same basis as advisory revenue.

Gains (Losses) on Investments in the Private Equity Funds –—Prior to the IPO, the Company’s Investments in the Private Equity Funds consist of the Company’s general partnership interest and related commitments in investment partnerships that it manages. TheseSubsequent to the IPO, these investments are accounted for on the fair value method based on the Company’s percentage interest in the underlying partnerships. The Company recognizes revenue on investments in the Private Equity Funds based on its allocable share of realized and unrealized gains (or losses). See Note 6,7, Investments.

Carried Interest – —The Company records incentive fee revenue from the Private Equity Funds when the returns on the Private Equity Funds’ investments exceed certain threshold minimums. These incentive fees (or “Carried Interest”) are computed in accordance with the underlying Private Equity Funds’ partnership agreements and are based on investment performance over the life of each investment partnership. Prior to the IPO, all of the Carried Interest earned from ECP I, ECP II and EVP was included in revenues. For the period subsequent to the IPO, the Company recognizes as revenue, through its equity interest in the general partner of ECP II, its pro rata share of any Carried Interest.

Future investment underperformance of the Private Equity Funds may require amounts of Carried Interest previously distributed to the Company to be returned to the respective investment partnerships. As required by the Private Equity Funds’ partnership agreements, the general partners of each Private Equity Fund maintain a defined amount in escrow in the event that distributions received by such general partner mustfunds to be returned due to investment underperformance. These escrow funds are not included in the accounts of the Company.returned. The Members, in their capacity as members of the general partnerspartner of ECP I, have severally but not jointly guaranteed their pro rata share of the Private Equity Funds, have guaranteed theECP I general partners’partner’s obligation (which may arise due to investment underperformance) to repay or refund to outside investors in the Private Equity Funds interimECP I amounts of Carried Interest previously distributed to the Company.ECP I general partner. The Members, in their capacity as members of the general partner of ECP II, including the Company for the period after the IPO, have jointly and severally guaranteed their pro rata share of the ECP II general partner’s obligation (which may arise due to investment underperformance) to refund to outside investors in ECP II amounts of Carried Interest previously distributed to the ECP II general partner, however each member’s obligation pursuant to such guarantee is capped at 125% of such member’s pro rata share of such amount.

As required by the ECP I and ECP II partnership agreements, the general partner of each of ECP I and ECP II have established third party escrow accounts and deposited a portion of Carried Interest in such accounts to satisfy any obligation of such general partner, including the obligation to return all or a portion of Carried Interest previously distributed to such general partner due to investment underperformance of the related fund. Prior to the IPO, these escrowed amounts were not included in the Company’s accounts. Subsequent to the IPO, the Company reflects its pro rata share of ECP II Carried Interest held in escrow on its balance sheet.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

Asset Management Fees—Subsequent to the IPO, asset management fees are contractually based and are derived from investment management services provided in originating, recommending and consummating investment opportunities to clients of PCB. PCB receives fixed management fees, success fees and earns a spread when transacting certain securities orders on behalf of clients. These fees are recognized over the relevant contract period, generally quarterly or annually.

Net Interest Revenue—Subsequent to the IPO, Net Interest Revenue is derived from investing customer funds in financing transactions by PCB. These transactions are primarily repurchases and resales of Mexican government securities.

Client Expense Reimbursement – —In the conduct of its financial advisory service engagements and in the pursuit of successful Portfolio Company investments for the Private Equity Funds, the Company receives reimbursement for certain transaction-related expenses incurred by the Company on behalf of its clients. Such reimbursements

are classified as either Advisory or Investment Management Revenues, as applicable.

Transaction-related expenses, which are billable to clients, are recognized as revenue in accordance with EITF 01-14, “Income“Income Statement Characterization of Reimbursement Received for Out of Pocket Expenses Incurred”Incurred,” and recorded in accounts receivable on the later of a) the date of an executed engagement letter or b) the date the expense is incurred. The Company reported such expense reimbursement as revenue on the Condensed CombinedCombined/Consolidated Statements of Income in the amount of $1,099$676 and $2,463$972 for the sixthree months ended JuneSeptember 30, 2005 and 2006, respectively, and $1,775 and $3,435 for the nine months ended September 30, 2005, and 2006, respectively.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 ANDShare-Based Payment—On December 16, 2004, the Financial Accounting Standards Board, (“FASB”), issued SFAS No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”), which is a revision of SFAS No. 123 “Accounting for Stock Based Compensation.” SFAS 123(R) supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” Prior to the IPO, the Company operated as a series of partnerships, limited liability companies and sub-chapter S corporations and did not historically issue stock-based compensation awards. The Company adopted SFAS 123(R) on January 1, 2006

(dollars and the impact on the company’s condensed consolidated financial condition and results of operations subsequent to the IPO is discussed in thousands unless otherwise noted)Note 12.

Compensation and Benefits – —Compensation includes salaries, bonuses (discretionary awards and guaranteed amounts) and severance and excludesbut historically excluded any compensatory payments made to Members. After the Company’s IPO, compensatory payments made to Members are included in Compensation. Bonuses are accrued over the service period to which they relate. Benefits includes both Member and employee benefit expense.

Foreign Currency Translation—Subsequent to the IPO, foreign currency assets and liabilities have been translated at rates of exchange prevailing at the end of the periods presented. Income and expenses transacted in foreign currency have been translated at average monthly exchange rates during the period. Translation gains and losses are included in the foreign currency translation adjustment as a component of other comprehensive income in the Condensed Consolidated Statement of Changes in Members’ and Stockholders’ Equity.

Income Taxes – —The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of assets and liabilities. The Company’s operations arewere historically organized as a series of partnerships, limited liability companies and sub-chapter S corporations. Accordingly, the Company’s income iswas not subject to U.S. federal income taxes. Taxes related to income earned by these entities represent obligations of the individual members, partners or shareholders and have not historically been reflected in the accompanying Condensed CombinedCombined/Consolidated Financial Statements. Income taxes shown on the Company’s historical Condensed Company’s CombinedCombined/Consolidated Statements of Income are attributable to the New

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

York City Unincorporated Business Tax and the New York City general corporate tax. After the Company’s IPO, the income from operations attributable to the Company is taxed at the prevailing federal, state and local and foreign income tax rates.

Net Income Per Share—Subsequent to the IPO, the Company computes net income per share in accordance with SFAS No. 128, “Earnings Per Share – The.” Basic Net Income per Share is computed by dividing income available to common shareholders by the weighted average of common shares outstanding for the period. Diluted Net Income per Share reflects the assumed conversion of all dilutive securities. See Note 11. Prior to the Reorganization, the Company has historically operated as a series of related partnerships, limited liability companies and sub-chapter S corporations under the common control of the Founding Members. There iswas no single capital structure upon which to calculate historical earnings per share information. Accordingly, historical earnings per share information has not been presented.presented for the Predecessor Company.

Comprehensive Income – —Comprehensive income consists of net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains and losses that are included in Accumulated Other Comprehensive Income as a separate component of Members’ Equity but are excluded from net income. The Company’s other comprehensive income is comprised of unrealized gains on Available-For-Sale Securities.Available-for-Sale Securities and foreign currency translation.

Net Income – —As a result of the Company operating as a series of partnerships, limited liability companies and sub-chapter S corporations, payment for services rendered by the Members has historically been accounted for as a distribution from Members’ capital rather than as compensation and benefits expense. As a result, the Company’s operating income historically has not reflected payments for services rendered by its Members. These compensatory payments that occur after the Company’s IPO are included in Compensation and Benefits on the Statement of Income.

The Members have historically received periodic distributions of operating proceeds which are reported in the Statements of Changes in Members’ Equity as distributions. The amount of cash and non-cash distributions received by the Members was $76,427,$107,214 for the sixnine months ended JuneSeptember 30, 2006.

Note 3 – 3—Recently Issued Accounting Pronouncements

SFAS 123(R) – On December 16, 2004, the Financial Accounting Standards Board, (“FASB”), issued SFAS No. 123 (revised 2004), “Share-Based Payment,” or SFAS 123(R), which is a revision of SFAS No. 123 “Accounting for Stock Based Compensation.” SFAS 123(R) supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the Condensed Combined Statements of Income based on their fair values. Pro forma disclosure is no longer an alternative. The Company has operated as a series of partnerships, limited liability companies and sub-chapter S corporations and has not historically issued stock-based compensation awards. The Company adopted SFAS 123(R) on January 1, 2006 and there was no material impact on the Company’s condensed combined financial condition or results of operations.

FIN 47 – —In March 2005, the FASB issued Financial Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). FIN 47 clarifies guidance provided in SFAS No. 143, “Accounting for Asset Retirement Obligations.” The term, asset retirement obligation, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Entities are required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 was effective for fiscal years ending after December 15, 2005. The adoption of FIN 47 did not have a material effect on the Company’s condensed combinedcombined/consolidated financial condition or results of operations.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

SFAS 154 – —In May 2005, the FASB issued SFAS No. 154 “Accounting Changes and Error Corrections,”, which replaces APB Opinion No. 20 and SFAS No. 3, and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, although early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date SFAS 154 was issued.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

The adoption of SFAS 154 did not have a material effect on the Company’s condensed combinedcombined/consolidated financial condition or results of operations.

Emerging Issues Task Force Issue No. 04-5 – In June 2005 the Emerging Issues Task Force reached a consensus on Issue No. 04–5,“Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights.” Under Issue 04–5, the general partners in a limited partnership or similar entity are presumed to control that limited partnership regardless of the extent of the general partners’ ownership interest in the limited partnership. A general partner should assess the limited partners’ rights and their impact on the presumption of control. If the limited partners have either a) the substantive ability to dissolve the limited partnership or otherwise remove the general partners without cause or b) substantive participating rights, the general partners do not control the limited partnership. For general partners of all new limited partnerships formed and for existing limited partnerships for which the partnership agreement is modified, Issue 04–5 is effective after June 29, 2005. For general partners in all other limited partnerships, Issue 04–5 is effective for the first reporting period in fiscal years beginning after December 15, 2005, and allows either of two transition methods. As of December 31, 2005 the Company determined that consolidation of the Private Equity Funds will not be required pursuant to Issue 04-5.

SFAS 155 – —In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments – Instruments—an amendment of FASB Statements No. 133 and 140”140”(“SFAS 155”).SFAS 155 permits an entity to measure at fair value any financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS 155 is effective for all financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The Company is currently assessing the impact of adopting SFAS 155, but does not expect the standard to have a material impact on the financial condition, results of operations, and cash flows of the Company.

SFAS 156– —In March 2006, the FASB issued SFAS No. 156156““Accounting for Servicing of Financial Assets – Assets—an amendment of FASB Statement No. 140”140”(“SFAS 156”), which requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable, and for subsequent measurements, permits an entity to choose either the amortization method or the fair value measurement method for each class of separately recognized servicing assets and servicing liabilities. SFAS 156 also requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. SFAS 156 is effective in fiscal years beginning after September 15, 2006. The Company is currently assessing the impact of adopting SFAS 156, but does not expect the standard to have a material impact on the financial condition, results of operations, and cash flows of the Company.

FIN 48– —In July 2006, the FASB issued Financial Interpretation No. 48“Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”(“FIN 48”), which clarifies the criteria that must be met prior to recognition of the financial statement benefit of a position taken in a tax return. FIN 48 provides a benefit recognition model with a two-step approach consisting of a “more-likely-than-not” recognition criteria, and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. FIN 48 also requires the recognition of liabilities created by differences between tax positions taken in a tax return and amounts recognized in the financial statements. FIN 48 is effective as of the beginning of the first annual period beginning after December 15, 2006. The Company is currently assessing the impact of adopting FIN 48 on the financial condition, results of operations, and cash flows of the Company.

SFAS 157 – —In September 2006, the FASB issued SFAS No. 157 “Fair“Fair Value Measurements”Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective in fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of adopting SFAS 157 on the financial condition, results of operations, and cash flows of the Company.

SFAS 158—In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS 158”), which requires an employer to recognize the overfunded or underfunded status of a defined benefit post-retirement plan (other than a multi-employer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 is effective in fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of adopting SFAS 158 on the financial condition, results of operations, and cash flows of the Company.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

SAB 108—In September 2006, the SEC released Staff Accounting Bulletin No. 108 (“SAB 108”). SAB 108 permits the Company to adjust for the cumulative effect of immaterial errors relating to prior years in the carrying amount of assets and liabilities as of the beginning of the current fiscal year, with an offsetting adjustment to the opening balance of retained earnings in the year of adoption. SAB 108 also requires the adjustment of any prior quarterly financial statements within the fiscal year of adoption for the effects of such errors on the quarters when the information is next presented. Such adjustments do not require previously filed reports with the SEC to be amended. The Company is currently assessing the impact of adopting SAB 108 on the financial condition, results of operations, and cash flows of the Company.

Note 4 – Related Parties4—Business Changes and Developments

Business Combination with Protego—The Company combined its business with that of Protego and its subsidiaries and Protego SI, a leading investment banking boutique in Mexico. The Protego combination happened prior to but in conjunction with the Formation Transaction and the closing of the IPO on August 16, 2006. Protego approaches its advisory business in much the same way as Evercore, by building long-standing relationships and acting as a trusted advisor to company management, free from the conflicts that larger institutions may encounter. Pursuant to the executed contribution and sales agreement, which is referred to collectively as the “Protego Combination:,”

Of the $7.0 million in notes issued in consideration for the Protego Combination, $6.05 million was paid in cash and $0.95 million was issued in shares of Class A common stock valued at the IPO price of $21.00 per share. The Company issued 45,238 shares of Class A common stock upon the repayment of such notes. In addition, Protego distributed to its Directors cash and, to the extent cash was not available, notes or interest in certain accounts receivable, so as to distribute to its Directors all earnings for the period from January 1, 2005 through the closing date of August 9, 2006.

For U.S. GAAP and financial statement purposes, the Company accounted for the vested partnership units of Evercore LP issued in the Protego Combination as a component of the estimated purchase price pursuant to SFAS No. 141 “Business Combinations.” The estimated value of the vested Evercore LP partnership units was determined by management. The estimated value of the vested Evercore LP partnership units was determined by estimating the total value of the Company, post Formation Transaction, including Protego, as of the date of the contribution and sale agreement. The total value of these entities was then multiplied by the percentage ownership implied by the vested Evercore LP partnership units issued in connection with the Protego Combination.

For U.S. GAAP and financial purposes, the Company accounted for the unvested partnership units issued in the Protego Combination as future compensation expense and not as part of the purchase consideration. In accordance with SFAS No. 123(R), the unvested partnership units of Evercore LP will be charged to expense at the time a vesting event occurs or, if earlier, at the time a vesting event becomes probable. The expense will be based on the grant date fair value of the partnership units of Evercore LP, which will be the IPO price of the Class A common stock into which these partnership units are exchangeable.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

The results of operations for Protego subsequent to the IPO are reflected in the September 30, 2006 Condensed Consolidated Financial Statements of Evercore Partners Inc.

If the Protego Combination was effective as of January 1, 2005, the additional impact on the operating results of the Company would have been:

Supplemental pro forma disclosure and the nature of any material, nonrecurring items of the Protego Combination is included elsewhere within this Form 10-Q as part of Item 1A Pro Forma Financial Information.

Pursuant to the executed contribution and sales agreement, the final purchase price of the combination had been allocated to the assets acquired and liabilities assumed using the fair values as of the acquisition date. The computation of the purchase price to net assets of Protego—based on their respective fair values as of August 9, 2006—and resulting goodwill are presented below.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

The Intangible Assets were valued at the date of acquisition at their fair value, as determined by management. The assets will be amortized over their useful lives, ranging from 0.5 years to 5 years.

Acquisition of Braveheart Financial Services Limited—On July 31, 2006, the Company entered into a sale and purchase agreement to acquire Braveheart Financial Services Limited (“Braveheart”), a private company limited by shares incorporated in England, which provides for a business referral arrangement. Braveheart was organized to provide corporate finance and private equity advisory services, subject to its receipt of applicable regulatory approvals. In exchange for 100% of the outstanding share capital of Braveheart, the Company would pay, subject to the terms and conditions of the sale and purchase agreement, initial consideration, deferred consideration and earn-out consideration, each of which is subject to reduction in the event that the value of Braveheart on the date of the sale and purchase agreement declines prior to the date on which such consideration is payable. The initial consideration will be comprised of 1,181,213 shares of Evercore Partners Inc. Class A common stock. The deferred consideration, payable not later than the seventh anniversary of the closing, will be comprised of additional shares of Class A common stock of not less than 50% and not more than 100% of the number of shares of Class A common stock issued as initial consideration, which percentage shall be determined by the Company based on the success of Braveheart’s business over the period from the consummation of the acquisition to the date of issuance of these shares. The Braveheart shareholders are also eligible to receive earn-out consideration based on gross revenues generated by the financial advisory business carried on by the Company and Braveheart in Europe. The maximum aggregate amount of earn-out consideration issuable to the Braveheart shareholders, collectively, is $3,000. Any earn-out consideration payable to the Braveheart shareholders will be paid in the form of loan notes due 2010 which bear interest at LIBOR plus 1% per annum and which are redeemable by the holder at any time after the date which is six months after the date of issuance. The closing of the Braveheart acquisition is subject to a number of conditions, including the recent IPO of the Company, the absence of any breach of law and the receipt of the approval of the change of control of Braveheart from the United Kingdom Financial Services Authority. The closing of the Braveheart acquisition is expected to occur no later than the first half of 2007. As stated as part of Item 1, Note 5—Related Parties, on July 20, 2006 EGL, paid Braveheart a retainer fee in the amount of $933, pursuant to the Co-Operation Agreement. See Note 5—Related Parties.

Note 5—Related Parties

The Company remits payment for expenses on behalf of the Private Equity Funds and is reimbursed accordingly. During the sixnine months ended JuneSeptember 30, 2005 and 2006, the Company disbursed $432,$462, and $733,$830, respectively, on behalf of these entities. Included in Receivable from Uncombined Affiliates on the Statements of Financial Condition as of December 31, 2005 and JuneSeptember 30, 2006 are accrued and unpaid management fees, reimbursable expenses relating to the Private Equity Funds and investment advances made to an affiliate in the amounts of $1,255 and $2,923,$1,688, respectively. Payables to Uncombined Affiliates amounted to $440 and $18$0 as of December 31, 2005 and JuneSeptember 30, 2006, respectively. These payables represent obligations of the general partner pursuant to the respective partnership agreements of the Private Equity Funds and are payable to the Private Equity Funds.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

Included in Receivable from Members and Employees on the Condensed CombinedCombined/Consolidated Statements of Financial Condition are loans to Members, employees and former employees of the Company. These loans are collateralized by the Members, employees, or former employees respective investments in the Private Equity Funds, are carried at face value and bear interest at the prime rate. The amount of such loans outstanding as of December 31,

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

2005 and JuneSeptember 30, 2006 were $83 and $85,$56, respectively. Interest on these loans was $3$(1) and $3,$1, for the quarters ended JuneSeptember 30, 2005, and 2006, respectively, and $4$1 and $4 for the sixnine months ended JuneSeptember 30, 2005 and 2006. This interest revenue is included in Interest Income and Other Revenue on the Condensed CombinedCombined/Consolidated Statements of Income. Subsequent to June 30, 2006, the amounts receivable from Members were received by the Company. Advances in the amount of $61 made to individuals who havehad accepted employment offers with the Company, are also included in Receivable from Members and Employees on the Condensed Combined StatementsStatement of Financial Condition as of December 31, 2005 and June 30, 2006.2005.

Also, included in Receivable from Members and Employees are advances made by the Company on behalf of such individuals in connection with their general partner obligation to the Private Equity Funds. These advances are non-interest bearing and the amounts outstanding as of December 31, 2005 and JuneSeptember 30, 2006 were $1,540 and $1,257,$0, respectively. Subsequent to June 30, 2006, the amounts receivable from Members were received by the Company. Payable to Members and Employees for Private Equity distributions amounted to $659 and $0 as of December 31, 2005 and JuneSeptember 30, 2006.

Amounts due in connection with personal expenses paid by the Company on behalf of Members and employees totaled $51 and $17$22 as of December 31, 2005 and JuneSeptember 30, 2006, respectively, and are included in Receivable from Members and Employees. These receivables are non-interest bearing and are repaid to the Company on a periodic basis. Subsequent to June 30, 2006, these amounts were received by the Company.

The general partner investment interests of one of the Members and the general partner and Founder interests of one of the founding membersFounding Members serve to collateralize their personal loans with a third party financial institution.

Included in Payable to Members and Employees, is $1.9 million related to the assignment of certain accounts receivable that Protego has recorded as payable to shareholders of Protego as a part of Protego’s distribution of pre-combination profits.

Effective October 28, 2005, EGH acquired (indirectly through a wholly owned subsidiary) the right to invest in EAM, a newly formedan entity engaged primarily in the asset management business. The Company’s investment in EAM is accounted for under the equity method. Although EAM is considered a variable interest entity, the Company is not the primary beneficiary, and thus, not required to consolidate it.EAM.

Co-Operation Agreement with Braveheart Financial Services Limited – —On April 19, 2006, EGL entered into a Co-Operation Agreement with Braveheart Financial Services Limited (“Braveheart”), a private company limited by shares incorporated in England, which provides for a business referral arrangement. Braveheart was organized to provide corporate finance and private equity advisory services, subject to its receipt of applicable regulatory approvals.Braveheart. The arrangement under the Co-Operation Agreement is intended to generate incremental fee income for each of Evercore and Braveheart through mutual business referrals for financial advisory work and the sourcing and execution of private equity fundraising and investment opportunities. Pursuant to the Co-Operation Agreement, Braveheart will refer matters in North America to Evercore and Evercore will refer matters in Europe, the Middle East or Africa to Braveheart. Each of the parties is obligated to pay fees to the other party for services provided under the Co-Operation Agreement. On July 20, 2006, EGL paid Braveheart a retainer fee in the amount of $900,000.$933. The Co-Operation Agreement may be terminated by either party at any time on or after December 31, 2007, and will terminate upon consummation of the Company’s pending acquisition of Braveheart. See Note 15 – Subsequent Events.

EVERCORE HOLDINGS

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS—(Continued)

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006

(dollars in thousands unless otherwise noted)

Note 5 – 6—Deferred Offering and Acquisition Costs

The Company completed an initial public offeringIPO of its Class A Common Stock on August 16, 2006. The Company consummated a number of internal reorganization transactions to transition the Company to a corporate structure form. Costs directly attributable to the Company’s initial public offering have beenIPO were deferred and capitalized. These costs were charged against the proceeds of the offeringIPO once completed.

EVERCORE PARTNERS INC.

NOTES TO UNAUDITED CONDENSED COMBINED/CONSOLIDATED

FINANCIAL STATEMENTS—(Continued)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2006

(dollars in thousands, except per share amounts, unless otherwise noted)

The Company also executed a definitive agreement to acquire all the outstanding capital stock of Protego Asesores S.A. de C.V, a foreign investment bank based in Mexico, in exchange for both cash and equity consideration. The transaction was consummated immediately prior to but in conjunction with the initial public offeringIPO referred to above. The direct costs incurred in connection with the acquisition have been deferred and capitalized, and these costs will behave been allocated to the purchase price upon the completion of the acquisition.price.

The Company entered into a sale and purchase agreement to acquire Braveheart, an investment banking firm based in the U.K., inUnited Kingdom. In exchange for all orof the outstanding share capital of Braveheart, the Company wouldwill pay cash and equity consideration. The direct costs incurred in connection with the acquisition have been deferred and capitalized, and these costs will be allocated to the purchase price upon the completion of the acquisition. Costs related to an unsuccessful acquisition will be charged to operations at the termination date. See Note 15, Subsequent Events.

As of December 31, 2005 and JuneSeptember 30, 2006, respectively, $5,138 and $9,892$1,639 of costs incurred in connection with the initial public offeringIPO and the acquisitions, described above, were capitalized and are shown on the Condensed CombinedCombined/Consolidated Statements of Financial Condition in Deferred Offering and Acquisition Costs. The costs remaining as of September 30, 2006 were specifically related to the Braveheart acquisition (as described in Note 4).

Note 6 – 7—Investments

Investments

The fair value of the Company’s investments reported in the Condensed CombinedCombined/Consolidated Statements of Financial Condition are as follows: