The following discussion should be read in conjunction with Evercore Partners Inc.'s unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q.

Forward-Looking Statements

This report contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, which reflect our current views with respect to, among other things, our operations and financial performance. In some cases, you can identify these forward-looking statements by the use of words such as "outlook", "believes", "expects", "potential", "continues", "may", "should", "seeks", "approximately", "predicts", "intends", "plans", "estimates", "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. All statements other than statements of historical fact are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in Evercore's business. We believe these factors include, but are not limited to, those described under "Risk Factors" discussed in the Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on March 14, 2008. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated by reference in this report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Follow-On Offering of Evercore Partners Inc. Class A Common Stock

On May 23, 2007, we completed a follow-on offering of 1,581,778 shares of Class A common stock. For a complete discussion of the Follow-On Offering, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2007.

Key Financial Measures

Revenue

Total revenues reflect revenues from Advisory and Investment Management that includes transaction-related client reimbursements plus interest income and other revenue. Net revenues reflect total revenues less interest expense related to repurchase agreements, Senior Notes and other borrowings.

Advisory. Our Advisory business earns fees from our clients for providing advice on mergers, acquisitions, restructurings, leveraged buy-outs, recapitalizations and other corporate transactions. The amount and timing of the fees paid vary by the type of engagement. In general, fees are paid at the time we sign an engagement letter, during the course of the engagement or when an engagement is completed. The majority of our advisory revenue comes from fees that are dependent on the successful completion of a transaction. A transaction can fail to be completed for many reasons, including failure to agree upon final terms with the counterparty, to secure necessary board or shareholder approvals, to secure necessary financing or to achieve necessary regulatory approvals.

Investment Management. Our Investment Management business includes operations related to the management of the Private Equity Funds, Institutional Asset Management and other business activities that include wealth management. Revenue sources primarily include management fees, performance fees (including carried interest), fees earned from portfolio company fees and gains (or losses) on our principal investments.

Management fees are generally a percentage of committed capital or invested capital at rates agreed with the investment funds we manage or with the individual client. Performance fees are earned when specified benchmarks are exceeded. In certain circumstances, such fees are subject to "claw-back" provisions. Portfolio Company fees include monitoring, director and transaction fees associated with services provided to the portfolio companies of the Private Equity Funds we manage. Gains and losses include both realized and unrealized gains and losses on principal investments, including those arising from our equity interest in investment partnerships.

Net Interest Revenue. 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. Revenue and expenses associated with these transactions are recognized over the term of the repurchase or resale transaction. Net interest revenue also includes interest expense associated with the Senior Notes as well as income earned on cash deposited with financial institutions.

Transaction-Related Client Reimbursements. In both our Advisory and Investment Management segments we make various transaction-related expenditures, such as travel and professional fees, on behalf of our clients. Pursuant to the engagement letters with our clients or the contracts with the limited partners in the Private Equity Funds we manage, these expenditures may be reimbursable. We define these expenses as transaction-related expenses and record such expenditures as incurred and record revenue when it is determined that clients have an obligation to reimburse us for such transaction-related expenses. Generally, client expense reimbursements are recorded as revenue on the Unaudited Condensed Consolidated Statements of Operations on the later of the date an engagement letter is executed or the date we pay or accrue the expense.

Operating Expenses

Employee Compensation and Benefits Expense. The Company maintains compensation programs, including base salary, cash and equity bonus awards and benefits programs and manages compensation to estimates of competitive levels based on market conditions. Our level of compensation for the current period reflects our plan to maintain competitive compensation levels to retain key personnel during market down cycles, as well as the impact of new Senior Managing Directors, hired in 2007, on 2008 compensation expense, including grants of equity awards valued at 2007 stock prices.

We changed our annual compensation program during the second quarter of 2007 to include stock-based compensation awards as a component of the annual bonus awards for certain U.S. Senior Managing Directors. These equity awards are subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurred in early 2008; accordingly, the expense is being amortized over the vesting period.

Non-Compensation Expenses. The balance of our operating expenses includes costs for occupancy and equipment rental, professional fees, travel and related expenses, communications and information services, depreciation and amortization and other operating expenses. We refer to all of these expenses as non-compensation expenses. We incurred significant additional non-compensation expenses in 2007 associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Other Expenses

Other Expenses include stock-based compensation costs associated with the May 2007 Follow-On Offering, a 2007 stock-based compensation charge related to a severance agreement, a charge associated with deferred consideration pursuant to the Braveheart Sale and Purchase Agreement in 2008, amortization of intangibles

associated with the acquisitions of Protego and Braveheart and Special Charges in connection with the 2008 write-off of certain capitalized costs associated with ECP III and employee severance, accelerated share-based vesting and other costs related to the closing of the Los Angeles office.

Provision for Income Taxes

We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities.

Minority Interest

We record significant minority interest relating to the ownership interest of our Senior Managing Directors and their estate planning vehicles in Evercore LP as well as the portion of PCB not owned by Evercore. Evercore Partners Inc. is the sole general partner of Evercore LP. Accordingly, although Evercore Partners Inc. has a minority economic interest in Evercore LP, it has a majority voting interest and controls the management of Evercore LP. As a result, Evercore Partners Inc. consolidates Evercore LP and records a minority interest for the economic interest in Evercore LP held by the Members.

During the nine months ended September 30, 2007, the vesting of additional Evercore LP partnership units in concurrence with the Follow-On Offering resulted in an increase in the minority interest relating to the ownership interest of our Senior Managing Directors and their estate planning vehicles in Evercore LP. This was offset by the exchange of our Class A common stock for Evercore LP partnership units and the purchase of additional Evercore LP partnership units by us in conjunction with the Follow-On Offering.

Results of Operations

Following is a discussion of our results of operations for the three and nine months ended September 30, 2008 and 2007. For a more detailed discussion of the factors that affected the revenue and operating expenses of our Advisory and Investment Management business segments in these periods, see the discussion in "Business Segments" below.

Operating Expenses include: a) employee compensation and benefits expenses that are incurred directly in support of the segments and b) non-compensation expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, legal, facilities management and senior management activities. Other Expenses include stock-based compensation costs associated with the May 2007 Follow-On Offering, a 2007 stock-based compensation charge related to a severance agreement, a charge associated with deferred consideration pursuant to the Braveheart Sale and Purchase Agreement in 2008, amortization of intangibles associated with the acquisitions of Protego and Braveheart and Special Charges in connection with the 2008 write-off of certain capitalized costs associated with ECP III and employee severance, accelerated share-based vesting and other costs related to the closing of the Los Angeles office.

                                           Three Months Ended                        Nine Months Ended
                                             September 30,                             September 30,
                                     2008          2007      % Change         2008         2007         % Change
                                                   (dollars in thousands, except per share data)
REVENUES
Advisory Revenue                   $ 51,447      $ 67,135         (23 )%    $ 149,870    $ 207,927           (28 )%
Investment Management Revenue         4,301         3,285          31 %         8,665       15,811           (45 )%
Interest Income and Other
Revenue                               9,970         7,693          30 %        24,893       15,712            58 %

TOTAL REVENUES                       65,718        78,113         (16 )%      183,428      239,450           (23 )%
Interest Expense                      8,905         5,714          56 %        22,009       11,643            89 %

NET REVENUES                         56,813        72,399         (22 )%      161,419      227,807           (29 )%

EXPENSES
Operating Expenses                   52,784        56,110          (6 )%      141,283      157,254           (10 )%
Other Expenses                        2,159         5,925         (64 )%       12,999      139,739           (91 )%

TOTAL EXPENSES                       54,943        62,035         (11 )%      154,282      296,993           (48 )%

INCOME (LOSS) BEFORE INCOME
TAXES AND MINORITY INTEREST           1,870        10,364         (82 )%        7,137      (69,186 )          NM
Provision for Income Taxes            1,475         3,217         (54 )%        3,642        8,795           (59 )%
Minority Interest                       863         4,828         (82 )%        2,872      (40,348 )          NM

NET INCOME (LOSS)                  $   (468 )    $  2,319          NM       $     623    $ (37,633 )          NM

DILUTED NET INCOME (LOSS) PER
SHARE                              $  (0.04 )    $   0.19          NM       $    0.05    $   (3.97 )          NM

As of September 30, 2008, Evercore's total headcount was 314 employees compared with 288 as of September 30, 2007. Evercore's increase in headcount is illustrated as follows:

                                                       As of September 30,
                                                           2008
                                          Evercore   Evercore   Evercore
                                            U.S.      Mexico     Europe    Total   2007
  Senior Managing Directors:
  Advisory                                      18          6          7      31     28
  Investment Management                          5          1          1       7      9
  Corporate                                      3         -          -        3      3
  Other Professionals and Support Staff        148        102         23     273    248

  Total                                        174        109         31     314    288

Three Months Ended September 30, 2008 versus September 30, 2007

Net revenue was $56.8 million in the three months ended September 30, 2008; a decrease of $15.6 million, or 22%, versus net revenue of $72.4 million in the three months ended September 30, 2007.

Total Operating Expenses were $52.8 million in the three months ended September 30, 2008 as compared to $56.1 million in the same period in 2007, a 6% decrease. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $40.3 million in the three months ended September 30, 2008 versus expense of $40.5 million in the same period in 2007. Non-compensation expenses as a component of Operating Expenses were $12.5 million in the three months ended September 30, 2008, a decrease of $3.1 million, or 20% over non-compensation operating expenses of $15.6 million in the three months ended September 30, 2007. Non-compensation operating expenses decreased in the three months ended September 30, 2008 as compared to the same period in 2007 primarily as a result of decreases in Professional Fees and Occupancy and Equipment Rental. The decrease was partially offset by an increase in Travel and Related Expenses and Communications and Information Services as a result of increase travel and research costs. The decrease in Professional Fees is primarily related to the completion of projects associated with Sarbanes-Oxley compliance as well as renegotiated contracts with vendors. The decrease in Occupancy and Equipment Rental is primarily related to excess office space which existed during the third quarter of last year.

Total Other Expenses of $2.2 million in the three months ended September 30, 2008, relate to Special Charges of $1.7 million in connection with employee severance, accelerated share-based vesting and other costs related to the closing of the Los Angeles office and $0.5 million of charges related to the amortization of intangibles associated with the acquisitions of Protego and Braveheart. Total Other Expenses of $5.9 million for the three months ended September 30, 2007 included a stock-based compensation charge related to a severance agreement of $2.2 million and costs related to the amortization of intangible assets of $3.7 million.

The provision for income taxes in the three months ended September 30, 2008 was $1.5 million, a decrease of $1.7 million versus $3.2 million in the three months ended September 30, 2007. The decrease was primarily due to a decrease of $8.5 million in operating income resulting in operating income of $1.9 million for the three months ended September 30, 2008 compared to operating income of $10.4 million for the three months ended September 30, 2007. The effective tax rate was 78.9% for the three months ended September 30, 2008 and 31.1% for the three months ended September 30, 2007. The effective tax rate for 2008 is higher than normal primarily as a result of the realized tax deduction, for certain share-based compensation awards, being lower than the deferred tax benefit recognized at the time of expensing such awards due to a decrease in the Company's share price.

Minority interest was $0.9 million in the three months ended September 30, 2008 compared to $4.8 million in the same period in 2007, reflecting lower net income before minority interest for the three months ended September 30, 2008.

Nine Months Ended September 30, 2008 versus September 30, 2007

Net revenue was $161.4 million in the nine months ended September 30, 2008; a decrease of $66.4 million, or 29%, versus net revenue of $227.8 million in the nine months ended September 30, 2007.

Total Operating Expenses were $141.3 million in the nine months ended September 30, 2008 as compared to $157.3 million in the same period in 2007, a 10% decrease. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $104.6 million in the nine months ended September 30, 2008, a decrease of $8.8 million, or 8%, versus expense of $113.4 million in the same period in 2007. The decrease is primarily due to lower amounts of discretionary compensation reflecting lower revenues in the first nine months of 2008. Non-compensation expenses as a component of Operating Expenses were $36.7 million in the nine months ended September 30, 2008, a decrease of $7.2 million, or 16% over non-compensation operating expenses of $43.9 million in the nine months ended September 30, 2007. Non-compensation operating expenses

decreased in the nine months ended September 30, 2008 as compared to the same period in 2007 primarily as a result of decreases in Professional Fees. The decrease was partially offset by an increase in Travel and Related Expenses and Communications and Information Services as a result of increased travel and research costs. The decrease in Professional Fees is primarily related to the completion of projects associated with Sarbanes-Oxley compliance as well as renegotiated contracts with vendors.

Total Other Expenses of $13.0 million in the nine months ended September 30, 2008 relate to Special Charges of $4.1 million in connection with the write-off of certain capitalized costs associated with ECP III and employee severance, accelerated share-based vesting and other costs related to the closing of the Los Angeles office, $7.5 million of deferred consideration pursuant to the Braveheart Sale and Purchase Agreement and amortization of intangibles associated with the acquisitions of Protego and Braveheart of $1.4 million. Total Other Expenses of $139.7 million for the nine months ended September 30, 2007 include costs incurred for the vesting of Evercore LP Units and stock-based awards associated with the completion of the Follow-On Offering in May 2007 of $125.9 million, a stock-based compensation component of a severance agreement of $2.2 million and the amortization of intangible assets of $11.6 million.

The provision for income taxes in the nine months ended September 30, 2008 was $3.6 million, a decrease of $5.2 million versus $8.8 million in the nine months ended September 30, 2007. The decrease was primarily due to the fact that there were non-deductible compensation items related to the Follow-On Offering in 2007. The effective tax rate was 51.0% for the first nine months of 2008 as a result of certain adjustments; however, the effective tax rate excluding these adjustments would have been approximately 33.7%. The normalized 33.7% effective tax rate increased from the normalized 27.8% effective tax rate in the first nine months of 2007 primarily as a result of the fact that the public company increased its ownership interest in Evercore LP over the period; therefore a higher percentage of income was subject to corporate level federal, state and city taxes in 2008. For the full year ended December 31, 2008, the effective tax rate is expected to be approximately 48%.

Minority interest was $2.9 million in the nine months ended September 30, 2008 compared to $(40.3) million in the same period in 2007, reflecting higher net income before minority interest for the first nine months of 2008.

Business Segments

The following data presents revenue, expenses and contributions by business segment. Each segment's Operating Expenses include: (1) compensation and benefits expense incurred directly in support of the businesses of the segment
(2) non-compensation expenses, which include directly incurred expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services and equipment and (3) an allocation of indirect support costs (including compensation and other operating expenses related thereto) for administrative services. These administrative services include certain accounting, tax, legal, facilities management and senior management activities. Such support costs are allocated to the relevant segments based on various statistics such as headcount, square footage, transactional volume and revenue. Corporate level Operating Expenses for prior periods have been allocated to their appropriate business segments to conform to the current presentation. Other Expenses include stock-based compensation costs associated with the May 2007 Follow-On Offering, a 2007 stock-based compensation charge related to a severance agreement, a charge associated with deferred consideration pursuant to the Braveheart Sale and Purchase Agreement in 2008, amortization of intangibles associated with the acquisitions of Protego and Braveheart and Special Charges in connection with the 2008 write-off of certain capitalized costs associated with ECP III and employee severance, accelerated share-based vesting and other costs related to the closing of the Los Angeles office.

Advisory

The following table summarizes the operating results of the Advisory segment.



                                          Three Months Ended                       Nine Months Ended
                                            September 30,                            September 30,
                                     2008        2007      % Change         2008         2007         % Change
                                                             (dollars in thousands)
ADVISORY REVENUES
Advisory Revenue                   $ 51,447    $ 67,135         (23 )%    $ 149,870    $ 207,927           (28 )%
Interest Income and Other
Revenue, Net                          1,071       1,849         (42 )%        2,580        3,231           (20 )%

NET ADVISORY REVENUES                52,518      68,984         (24 )%      152,450      211,158           (28 )%

ADVISORY EXPENSES
Operating Expenses                   45,701      46,151          (1 )%      120,369      131,246            (8 )%
Other Expenses                          464       4,788         (90 )%        8,867      110,244           (92 )%

TOTAL ADVISORY EXPENSES              46,165      50,939          (9 )%      129,236      241,490           (46 )%

ADVISORY CONTRIBUTION              $  6,353    $ 18,045         (65 )%    $  23,214    $ (30,332 )          NM

For the three and nine months ended September 30, 2008, the level of merger and acquisition ("M&A") activity was lower than for the three and nine months ended September 30, 2007, as evidenced by the following industry statistics regarding the volume of transactions:

                                                       Three Months ended        Nine Months ended
                                                         September 30,             September 30,
                                                       2008         2007          2008        2007
Industry Statistics ($ in billions) *
Value of North American M&A Deals Announced          $     355    $     377    $      989    $ 1,490
Value of North American M&A Deals Completed          $     268    $     433    $      736    $ 1,362
Value of Global M&A Deals Announced                  $     861    $     882    $    2,408    $ 3,271
Value of Global M&A Deals Completed                  $     634    $     866    $    2,024    $ 2,719
Evercore Statistics **
Total Number of Advisory Clients                            79           68           122        119
Advisory Clients With Fees of at Least $1 million           15           16            38         36

* Source: Thomson Financial October 20, 2008

** Includes revenue generating clients only

As of September 30, 2008, Evercore's total headcount in its Advisory segment was 204 employees, compared with 172 as of September 30, 2007. Evercore's Advisory headcount is as follows:

                                                   As of September 30,
                                                       2008
                                      Evercore   Evercore   Evercore
                                        U.S.      Mexico     Europe    Total   2007
       Senior Managing Directors            18          6          7      31     28
       Other Advisory Professionals         82         34         12     128    110
       Direct Support Staff                 28         10          7      45     34

       Total                               128         50         26     204    172

Advisory Results of Operations

Three Months Ended September 30, 2008 versus September 30, 2007

Advisory Revenue, including Interest Income and Other Revenue, net, allocated to this segment, was $52.5 million in the three months ended September 30, 2008 . . .