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French roots In 1848, brothers from the Lazard family in France emigrated to New Orleans, where they started a dry-goods business. Following the destruction of the business by fire, the Lazard brothers moved to San Francisco in 1848, just in time to cash in on that city's explosive Gold Rush growth. The real growth started, however, after the Lazards turned their business over to cousin Alexandre Weill. By 1883, Weill had transformed Lazard Freres into a thriving banking concern, with offices in London, New York, San Francisco and Paris. The company has since remained in the hands of Weill's descendants (who hyphenated the family name David-Weill in the 1920s to add aristocratic luster). Chairman Michel David-Weill, took the helm of the company in 1977, reacquiring the long-lost London branch, revamping the New York office and increasing coordination between the three branches of Lazard Freres. The classic, chic M&A boutique Today, Lazard might be called the classic advisory boutique, specializing primarily in providing mergers and acquisitions advice. The firm also has a small underwriting and trading business and an asset management arm that has $65 billion dollars under management as of the summer of 1998. Despite the firm's specialization, Lazard's profits and influence are hardly limited. The firm has been tapped for such high profile mergers as Viacom/Paramount, Bertelsmann/Random House and IBM/Lotus. Lazard is known for a superstar culture: its elite, connected bankers are known as the trusted advisers of the princes of business. In the news (darn) However, changes may be in store for Lazard's manner of operation. The firm, known for its avoidance of publicity, has been in the news in recent years. In 1997, a partner was convicted of failure to disclose a conflict of interest to public clients. After a struggle between David-Weill and his son-in-law and intended successor, Edouard Stern, Stern left the firm in mid-1997. Also in 1997, Felix Rohatyn, the architect of New York City's recovery from bankruptcy in the 1970s, left to become U.S. Ambassador to France. In 1999, the firm ranked No. 8 in announced M&A advisory transactions, inching up from No. 9 in 1998. Uncomfortable changes In response, the firm has been reevaluating its management structure. In June 1999, Lazard announced a reorganization aimed at integrating its New York, London, and Paris offices. As part of the reorganization, the firm is setting up a new seven-person management committee, chaired by David Weill. Steven Rattner, who as deputy CEO had run the firm's day-to-day operations in New York (the firm's most profitable office), decided to step down from that hands-on role and will serve as vice chairman. (Rattner is close to Vice President Al Gore, and has been rumored to be interested in a potential administration post.) Taking his place is William Loomis, Jr. In March 2000, the company finalized the reorganization by completing a merger of the three "Lazard Houses" into one global investment bank known as Lazard. The firm has some positives going into the reorg. In 1998, the firm had merged its geographically disparate asset management businesses; Lazard is using that reorganization as a model for the current one. Furthermore, Lazard expects the unification of its European and American sectors to proceed more smoothly because of Pearson PLC's (the British media company) June 1999 decision to sell its holdings in the Lazard investment houses of London, Paris, and New York to the French investment group, Gaz et Eaux SA. In December 1999, Lazard announced the hiring of Vernon Jordan, powerful Washington insider and long-time friend of President Clinton, as a partner. Jordan, who resigned from law firm Akin, Gump, Strauss, Hauer & Feld to take the new position, told the Times "he won't be talking about how do you work some particular law. I'm going to be an investment banker giving strategic advice." Lazard senior executives hope Jordan will use his vast connections among corporate executives to help rebuild Lazard's reputation and business. Jordan is also currently on the board of 10 companies including Dow Jones & Co., American Express, and Revlon. While many investment bankers fear conflict issues and avoid board seats, Jordan told the Times "there is the possibility of a conflict, but I've dealt with conflicts before." One Lazard United under the single name of Lazard, the firm's previously separate operations New York, Paris and London have combined to form the world's last private global investment bank. Senior executives at the firm believe the merger creates a strong, singular identity. David Verey, cheif of Lazard's London office say that Lazard would now offer "a seamless team for our clients." Prior to the merger, rumors abounded in the industry of a takeover of Lazard. However, the company is still emphasizing its intentions to remain private advisory shop. According to the Financial Times Lazard management also emphatically insists it is "extraordinarily unlikely" that the firm will not go public. According to the Financial Times, after the merger Lazard is about 60% owned by its working partners. The balance of ownership belongs to the "capital partners," including the David-Weill and Meyer families.
Lazard's investment banking division recruits at undergraduate colleges and business schools, but other departments, such as asset management, fill their open slots primarily through word-of-mouth, insiders say. A recruiting schedule for investment banking and contact information for other departments are available at the firm's web site, located at www.lazard.com. In investment banking, Lazard hires its associates largely through its summer program. Explains one insider: "They want the summer people to work out and get a look at them, rather than take a crapshot with someone you met at a Super Saturdays." B-school insiders report mostly two-on-one interviews. At some schools, after the initial screening round, "they call you later on that night and have you come back and do some more interviews, and they will give you the offer then," but at others "they fly people to New York." "They don't interview many people," says one insider. While it is not an explicit requirement, "you need to have M&A experience to work at Lazard [as an associate]." Insiders advise showing up for your interview with a "nice expensive suit." "The people that they hire - there's no way to say this really - but they tend to be attractive people," says one Lazard insider. "They're not looking for the nerdy number cruncher that you get at some of the banks like Goldman. They want it so when there's a meeting, you can tell Lazard walked in the door." Reports one recent interviewee: "One question they like to ask is 'What was the hardest thing you did - what was the most complicated deal? If you brought up an M&A deal, then from talking to you about that deal, they can tell where you are." Says that insider: "I strongly stress for anyone who wants to work there as an associate - you've got to be a banker. They expect you to walk in the first day and be ready. My first day, my phone rang, and they said you're late. I said, "I'm late? I just walked in the door." It was a secretary of one of the senior people, and she tells me 'There's a meeting up on 62 and you've got to get up there.' I get up there and there's the CEO and he's talking about what type of company he wants to acquire. I start taking notes. That evening and the rest of the night I cranked out merger models."
You have no life To say Lazard "demands total commitment," is an understatement. "Working hours are just crazy," says one insider, who sometimes wishes for "more time for family, friends, and non-professional areas of interest." Says another: "You will definitely work over one hundred hours during an average workweek." Another insider puts the figure at "110 to 130" hours weekly. One employee criticizes the "superhuman expectations" at the firm. "You can't work any harder than they work," one former Lazard banker says. "There were people carried out by ambulance - they had collapsed from exhaustion." How bad it is for Lazard bankers depends almost entirely on where one is on the totem pole, insiders say. Contacts concur that "analysts have no life." Explains one insider: "The attitude is that the analysts are not bankers. It's 'I want to work you for two years and then spit you out, and you're lucky to be here." That contact continues: "The analysts do not exercise, they do not leave, they are there all the time." "The analysts for the most part are extremely bitter," says one associate. "I think they're going to do better in the future, because they're starting to realize that it's not good," says that contact. Associates don't have it much better, insiders say, but "they know what they're getting into" and morale is pretty high. "The first three years as an associate - you're throwing those years away," says an insider. "You're just trying to survive." Why do associates put up with the intense work? For the promotion to VP that happens in four or five years. "If you can survive the four years, you're looking at a pretty good lifestyle," explains one insider. "A VP at Lazard is very different from a VP at other places. At other places, the VP gets dragged down to do associate work, and still gets dragged into the office on weekends. A VP at Lazard - they really know their shit, and if they want to, which pretty much everyone wants to, they refuse to do associate-level work. They want to be working on getting clients and things like that." Although during the week, VPs are there "till 9 o'clock - even MDs put in long hours at Lazard," on the weekends "they?ll be at the Hamptons with a fax machine." I've never seen so much decadence "Lazard is like Wall Street was in the early 1980s," says one insider. "Cigar smoke is thick on the floor by 10 in the morning, they're all smoking. They play Polo, they've got their polo gear in the office. I've never seen so much decadence in a firm. They all had huge houses in the Hamptons, and they didn't mind talking about it - 'Oh, the roof in my Hampton's house is leaking, and now I can only sell it for $3 million.'" The amazing luxury that the Lazard lifestyle affords is the reason the firm's bankers endure the almost unconscionable hours. "Bankers at Lazard are usually paid 25 to 50 percent more than the market salary, compared to comparable positions at other banks," says an analyst. Says one associate: "Your first full year, you can get close to $200,000 by the end." For summer associates going back for their second year of B-school, "they offer to pay for your second year [of business school], and no one else does that." "They basically tell you that their goal is to be the highest paying firm, and they're looking to start private equity stuff up in order to expand what they can do as far as compensation," reports one insider. This is serious stuff "If you consolidate all the worldwide M&A transactions completed between 1987 and 1997, Lazard ranks number one," says a former Lazard banker. Insiders agree that Lazard is at the top of the list when it comes to prestige. "It's an amazing place," says one insider. "They really do have great relationships with the CEOs of major companies." Says another: "We're the cutting edge of management and finance theory. The culture is very focused on production, merit and profits." Says a former banker: "They're not spinning their wheels working their hours. They really put in some time and thought into the work they're doing." Not great diversity One employee maintains that the firm is "relatively progressive, with active recruitment of women and minorities," but notes that "there are very few women investment bankers at Lazard, not because we do not hire them, but because many of them leave due to the inhumane working environment." Another I-banking insider is more caustic: "There's one female managing director, and then there's some among the associates, but basically it's men. And it's not very diverse at all, it's a bunch of white guys." Says that contact: "It's a lot more of the old boy Waspy network rather than the Jewish network at other banks." One employee criticizes Lazard's "limited resources," noting the firm's lack of consolidated databases forces employees to "fish for information using highly unorthodox methods, sometimes making life miserable. If you were working at a bulge bracket firm, most of the information would be a telephone call or a click of the mouse away."
Human Resources
Mergers and Acquisitions advisory
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