Lazard Beats Estimates on Record Advisory Revenue

Lazard Ltd. Chief Executive Officer Ken Jacobs
Lazard Ltd. Chief Executive Officer Ken Jacobs said, “It’s the best it’s been since before the crisis and probably at this point, the most sustainable.” Photographer: Michael Nagle/Bloomberg

July 24 (Bloomberg) -- Lazard Ltd., the largest independent merger-advisory firm, posted second-quarter profit that beat analysts’ estimates on record revenue from advising on takeovers and asset management.

Net income more than doubled to $85.2 million, or 64 cents a share, from $31.4 million, or 24 cents, a year earlier, the Bermuda-based firm said today in a statement. The average estimate of 14 analysts surveyed by Bloomberg was for adjusted profit of 57 cents.

Deal activity has gained steam following an extended slump precipitated by the global credit crisis. The value of announced mergers and acquisitions worldwide jumped about 75 percent to $2.1 trillion this year through June 30, the most in seven years, according to data compiled by Bloomberg.

“It’s the best it’s been since before the crisis and probably at this point, the most sustainable,” Chief Executive Officer Ken Jacobs, 55, said in a phone interview. “The question now is whether it accelerates.”

Financial-advisory revenue rose 7 percent to $281 million from a year earlier, while asset management climbed 18 percent to $286 million, the firm said. Total operating revenue for the quarter was a record $571 million, up 12 percent from a year earlier, according to the statement.

Compensation expenses increased 9 percent to $335.9 million from a year earlier, while the ratio of compensation to revenue dropped to 58.8 percent from 60 percent, the firm said.

Deals Completed

Among the deals completed in the quarter that Lazard advised on were Anheuser-Busch InBev NV’s $5.8 billion acquisition of South Korea’s Oriental Brewery Co. and Oil States International Inc.’s $3 billion spinoff of Civeo Corp., the company said.

Lazard slid 0.7 percent to $50.88 in New York trading yesterday. The shares have gained 12 percent this year, outpacing the 4.7 percent advance of the 228-company Russell 1000 Financial Services Index.

Evercore Partners Inc., the advisory firm founded by former Deputy U.S. Treasury Secretary Roger Altman, reported second-quarter profit yesterday that beat analysts’ estimates as investment-banking revenue increased 4.8 percent to $192.3 million. Greenhill & Co. and Moelis & Co., both independent merger-advisory companies, are scheduled to report results next week.

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To contact the editors responsible for this story: Peter Eichenbaum at Steven Crabill, Dan Kraut