Lazard Posts Worst 2-Day Drop Since IPO, Leading Bank Slumpby
Evercore, Greenhill also decline as Brexit dims deal outlook
Schlosstein says uncertainty ‘always slows down M&A’
Lazard Ltd. posted its biggest two-day decline since the company’s initial public offering in 2005, leading a slump of independent investment banks after the U.K. vote to leave the European Union.
Lazard, run by Chief Executive Officer Ken Jacobs, plunged 13 percent to $27 at 4:15 p.m. in New York. That’s 23 percent less than Thursday’s closing price. Rivals including Evercore Partners Inc., Greenhill & Co. and PJT Partners Inc. also fell at least 10 percent Monday.
Independent banks advise clients on mergers, acquisitions and restructurings. Volatile equity and currency markets have slowed dealmaking, pinching fee revenue after a record year for transactions in 2015.
“Uncertainty always slows down M&A activity,” Ralph Schlosstein, Evercore’s CEO, said Sunday in a Bloomberg Television interview with David Westin and Guy Johnson. “The price that buyers are willing to pay for companies weakens a little bit because there’s more risk, and more uncertainty.” Lazard declined to comment.
Larger, more-diversified rivals including Barclays Plc and Morgan Stanley have also tumbled after the U.K. referendum on Thursday. Analysts have cut earnings estimates for the biggest investment banks, which face risks to trading profits as well.
Lazard derived 34 percent of its net revenue from Europe in 2015, according to a year-end presentation on its website. Evercore generated about 23 percent from “Europe and other” regions during the same period, according to the New York-based firm, which counts the U.S. as its largest market and also has operations in Latin America.