In the space of two years, Bruce Wasserstein has brought peace to Lazard, a company legendary for the squabbles between star bankers who controlled small fiefdoms within the institution, write James Politi and Peter Thal Larsen in an FT news analysis.
But as Wall Street’s investment banks prepare for the end of the dealmaking binge, a debate is simmering inside and outside Lazard about whether Mr Wasserstein has equipped it with a sustainable model that can thrive.
After a flat first quarter, and with Lazard stuck at the wrong end of the premier league of investment banking rankings, there are worries Lazard could suffer in the long term because it lacks the resources of larger rivals in M&A and does not have strong relationships with a sufficiently broad base of clients in certain industries.
Also, while many of the big hires that Mr Wasserstein made in recent years, such as Gary Parr, the financial institutions banker formerly at Morgan Stanley, have been extremely productive, is not clear that Lazard is developing a fresh batch of younger dealmakers.
Also, there are fears that once the lock-up imposed at the time of the Lazard IPO two years ago expires, a number of high-profile fee earners will not have a strong incentive to remain at the firm.
Mr Wasserstein has yet to pull one of the strategic masterstrokes that he is known for.
Lex notes that while shares in Lazard have jumped 85 per cent since flotation, the bank’s role in life is less obvious than it used to be.
In particular, the emergence of several successful “boutiques”, such as Greenhill and Evercore, makes its independence – a valuable asset amid worries about conflicts and rules on corporate governance – less unusual.
There is scope for growth. While sensibly shunning the temptation to venture into new areas such as capital markets, Lazard is expanding geographically. In the past two months, it has made a co-operation agreement with Raiffeisen Investment in central and eastern Europe and Russia and taken a stake in MBA in Latin America. There are obvious benefits to this approach: it is a cautious and relatively cheap way of gaining a presence in new markets. But, with Lazard shares trading at 19 times 2007 estimated earnings, tolerance for lumpy earnings may fade rapidly.