Lazard Seen Rebounding From Wasserstein Death
October 15 2009 - 3:58PM
Dow Jones News
The death of Lazard Ltd. (LAZ) Chief Executive Bruce Wasserstein
raises questions about the investment bank's future without the
guiding hand of a Wall Street rainmaker.
Though analysts agree that Wasserstein's loss is a blow to
Lazard, there is consensus the firm ultimately will regain its
momentum. Earnings have surged this year as Lazard climbed up the
ranks to become fifth for advising on the most global merger and
acquisition deals, according to Dealogic.
Wasserstein, who passed away at 61 on Wednesday, was viewed as a
transformational banker who took Lazard public and reinvigorated
the firm's cachet globally. Investors sent the shares 1.6% lower to
$42.57 on Thursday, though the decline wasn't out of line with
other securities firms.
"Wasserstein is an industry legend," said David Trone, a banking
analyst at Fox-Pitt Kelton. "But, they have a very deep bench
there. Bruce did a very good job bringing in quite a few M&A
legends in their own right, and the franchise is going to be
fine."
Lazard quickly named Vice Chairman Steven Golub as interim CEO.
Golub, 63 years old, has been with the firm since 1984, serving as
chief financial officer and chairman of Lazard's financial advisory
business.
JPM Securities analyst Michael Hecht points out that Lazard has
more than 150 senior managing directors - nearly three times the
amount of rivals such as Greenhill & Co. Inc. (GHL) and
Evercore Partners Inc. (EVR). The talent pool of future CEOs
include Lazard President Charles Ward, financial institutions head
Gary Parr and North America CEO Kenneth Jacobs.
"Lazard has an ample bench of very talented people that suggest
that it can re-emerge as a major factor in mergers and acquisitions
and restructuring after Mr. Wasserstein's death," Rochdale
Securities analyst Richard X. Bove said.
The company has advised on 152 deals so far this year, totaling
about $280.7 billion, according to Dealogic. And Lazard is still
involved with what could be this year's biggest deal by advising
Kraft Foods Inc. (KFT) in a takeover attempt of Britain's Cadbury
PLC (CBY, CBRY.LN).
Lazard will release third-quarter results within the next few
weeks. Analysts are looking for a profit of 37 cents a share on
revenue of $398 million, according to Thomson Reuters. A number of
analysts believe Lazard will be able to surpass those
projections.
Investors, and Lazard employees, can also take heart in history.
There have been dozens of instances where companies - from Texas
Instruments Inc. (TXN) to Coca-Cola Co. (KO) - have rebound after
the death of a CEO.
In fact, the situation isn't unique on Wall Street.
John A. Mulheren Jr., a charismatic trader, died in 2003 from a
heart attack while at the helm of specialist firm Bear Wagner. The
firm, then majority owned by Bear Stearns, increased revenue by $40
million in 2004 compared with the previous year, according to a
regulatory filing.
-By Joe Bel Bruno, Dow Jones Newswires; 212-416-2469;
joe.belbruno@dowjones.com