Lazard has put its feet firmly in the big boys’ camp. The advisory and asset management firm didn’t just make progress on financial targets that its chief executive, Kenneth M. Jacobs, set two years ago. Its bankers also goosed revenue in the second half of the year. That makes Lazard look more like Goldman Sachs, Morgan Stanley and JPMorgan Chase than smaller rivals Evercore Partners and Greenhill.
Advisory revenue in the six months to December fell 18 percent at Evercore and 26 percent at Greenhill. Lazard and its bulge-bracket competitors, meanwhile, raked in more: Lazard by 27 percent and JPMorgan by more than a third.
They can thank the return of the kind of big-ticket deals that major banks live for. Lazard, for example, participated last year in two-fifths of completed deals above $10 billion and in 30 percent of those of $5 billion or more.
The boutiques, of course, aren’t necessarily excluded from the lofty side of the market. Greenhill’s chief executive, Scott L. Bok, and Ralph Schlosstein at Evercore both told investors last week that a bigger chunk of their firms’ top line came from larger deals. They also pointed to various data that showed the companies winning market share in recent years at the expense of mega banks.
That growth seemed to stall in the second half of last year, but not for Lazard, which may have closer relationships with the biggest clients. Its revival was well timed. Without the extra revenue, Mr. Jacobs’s firm might have struggled to hit its 21 percent adjusted operating margin for 2013. Now, he has to show he can crank that up to this year’s 25 percent goal - regardless of what size companies are hunting for deals.
Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.
