Is Lazard even an investment bank anymore?
Lazard has a long and storied history as a bank. Institutional Investor credited it as having “virtually invented the modern M&A deal,” for example. One of these days, however, its position as a leading boutique investment bank might be retired – because Lazard is busy with other stuff these days.
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It was Lazard’s Q3 results day today. On paper, things weren’t so bad: revenue in the first nine months of the year increased from $2.19bn to $2.38bn, about 8%. But that figure included a 23% increase in asset management revenue – and a 1% decrease in banking fees. As such, the asset management to financial advisory ratio at the firm went from around 41:59 to around 47:53.
If trends continue, that means that Lazard will make more money from its asset managers than its bankers by the end of the year. But this isn’t the first time this has happened – or rather threatened to have happened. Lazard posted higher asset management revenues than financial advisory revenues in 9M 2023, and 2023 ended up being more heavily weighted towards banking than asset management, anyway.
Either way. Banking isn’t doing well – and asset management is. Despite that, Lazard seems to have raised pay. It’s hard to make a side-by-side comparison as the firm has historically rounded some figures, but last year it paid an average of $614k per head, and this year it’s on track to pay an average of $644k, a lean 5% increase.
Headcount has also increased since the start of the year – from 3,309 to 3,362. According to the firm’s investor presentation, at least 10 – a fifth – of the heads responsible for that increase were investment banking managing directors (MDs). As the firm is targeting 10-15 net MD growth per year, there’s still some slack to hire a fistful more by the end of the year.
If that seems rather MD-heavy, well, it was, but it isn’t anymore. It’s a brave new world, and a deal team that currently has six people on it might have just three in the future. If anything, Lazard’s hiring seems antiquated, although it is unclear how much of that 53 person headcount increase were bankers who weren’t MDs specifically.
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