Commentary: Is "Bid-'Em-Up Bruce" the Right Guy for Lazard?

Without a strong leader, the company could end up as a small piece of a much larger bank

The latest twist in the saga of international investment house Lazard Frères & Co. sounds like a movie scenario: Brash, 50-something New York dealmaker (Bruce Wasserstein) takes on the challenge of a lifetime when the autocratic French patriarch (Michel David-Weill) of a 153-year-old bank hands him the reins and says: "Make this firm a powerhouse again."

The announcement on Nov. 15 that Wasserstein had taken the job as head of Lazard--after an on-and-off 15-year courtship--seemed great news for the fractious bank, whose Paris, New York, and London offices are as much rivals as partners. "Bid-'em-Up Bruce," one of Wall Street's hottest dealmakers in the 1980s and 1990s, is famous for his work on such deals as Morgan Stanley's acquisition of Dean Witter, Discover & Co., Axa's purchase of The Equitable Companies, and advising AOL (AOL ) on its merger with Time Warner. In January, he sold his mergers-and-acquisitions boutique, Wasserstein Perella, to Germany's Dresdner Bank (DRSDY ) for $1.37 billion.

The word inside Lazard is that working partners are thrilled. "This guy's a financial giant," says a London partner. "He will push us back to the center of the dealmaking stage. The David-Weill era is over."

BRAIN DRAIN. Alas, the odds are slim that this screenplay will win any Oscars. Wasserstein may have a gold-plated résumé, but he has never managed an organization of Lazard's size and complexity. And Lazard, which built its name on savvy and connections, is in real danger of becoming irrelevant without a strong leader. In recent years--while its houses squabbled over fees and bonuses--top talent left, and giant investment banks that could put casts of hundreds on every deal and provide capital as well stole Lazard's business.

Getting the focus back on deals will be a big job. "Lazard is an intricate, subtle place," says a former partner. "I'm not sure [Wasserstein] has the personality needed to bring the different parts of it together effectively." Skeptics say he can be charming, but also has a large ego. Once the honeymoon is over, touchy Lazard bankers may head for the door. Wasserstein's demanding temperament and his dearth of spectacular new deals grated at Dresdner. "He didn't seem to know how to work with us Europeans," says one Dresdner executive. "We were particularly upset when he declared he would be based in London. We wanted him in New York, where we really wanted to build up business." Things soured when insurer Allianz (AZ ) bought Dresdner and ditched plans to float the investment bank.

It's also uncertain how Wasserstein's relationship with David-Weill, 69, will pan out. The two men say they've admired each other since 1987. Still, David-Weill has fallen out with a series of potential successors, most recently former CEO William R. Loomis Jr., who quit last month.

There is one important difference this time. David-Weill, who effectively controls the bank through his family's 20% to 30% stake, finally yielded to rebellious senior partners and gave Wasserstein real authority, a condition he demanded. In return, Wasserstein will take a 5% to 10% stake in Lazard for $200 million. "I have complete authority, except that he's chairman of the board and has the right to veto a merger," says Wasserstein, 53. He could be in for a fight if he tries to reduce David-Weill's control over the bank--as close advisers say he will--by restructuring the cascade of listed holding companies with stakes in Lazard and European blue chips. Another touchy issue: Crédit Agricole. Insiders say Wasserstein wants to distance Lazard from the French bank, which rescued David-Weill from a raid by French financier Vincent Bolloré by buying Bolloré out. Crédit Agricole wants a full merger, say people familiar with both banks. Agricole won't comment. David-Weill wants to keep Lazard independent, but he sees Agricole as a counterweight to UBS Warburg (UBS ), another, more aggressive holding-company shareholder.

How the story plays out will depend on whether Wasserstein gets the deals. Skeptics say he's past his peak. His last big hit was the AOL-Time Warner deal, announced in January, 2000. Even with the backing of such a deep-pocketed group such as Allianz, he wasn't able to corral much business for Dresdner. At Lazard, he'll be selling pure advice again, though most clients want capital, too. If he can't make it work, stay tuned for the sequel--in which David-Weill sells his bank to the highest bidder.

By David Fairlamb

With Emily Thornton in New York

— With assistance by Emily Thornton

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