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Thursday, April 22, 2021

Kenneth M. Jacobs: The Champion behind the Success of Lazard

Since November 16, 2009, Kenneth M. Jacobs took over the reins of the Chief Executive Officer (CEO) of Lazard Ltd., the firm witnessed phenomenal growth under his leadership. Jacobs is also the chairman of the board of directors of the firm. 

Kenneth M. Jacobs: A name that is Synonymous with Success

Born in 1958, Kenneth M. Jacobs started working with Lazard in 1988. With his diligence and sincerity, he became a partner of Lazard in 1991. He won the position of Deputy Chairman and Head of the Northern United States region in 2002. While functioning with this portfolio, Kenneth concentrated on boosting the commercial activities of the company by penetrating new marketplaces and incorporating innovative exercises, for example reorganizing private fund advisory, and strategic capital structure consultation. Besides, he emphasized drawing a new workforce who have specialized knowledge of engineering, energy, and healthcare industry

The financial consultancy services of Lazard have also witnessed significant growth under his leadership. Lazard has also acquired businesses in the US Middle Market, currently known as Lazard Middle Market. 

Kenneth M. Jacobs has a strong academic background. He holds a BA degree in economics from the University of Chicago and has an MBA degree from the Graduate School of Business, Stanford University. He enjoys the proud membership of the Board of Trustees of the Brookings Institution, the Washington policy institute, and the University of Chicago. Kenneth is also a member of the Steering Committee of the Bilderberg Group.       

After the death of Bruce Wasserstein in 2009, the Board of Directors of Lazard nominated Kenneth M. Jacobs as the CEO and chairman of the company. 

The Success Story of Lazard

Lazard Ltd, erstwhile Lazard Frères & Co., is an asset management and financial advisory organization that offers products and services related to portfolio management, investment banking, and other types of financial services. Lazard mostly deals with corporate clients.

At present, it is the biggest autonomous investment bank in the world with its main administrative offices located in major cities of the world such as London, New York City, and Paris.

Incorporated in 1848, Lazard now carries out its business operations from over 40 cities throughout 25 nations in Europe, North America, Australia, Asia, and South and Central America. The wide range of services that Lazard provides to its clients includes the following: 

  • Tactical matters 
  • Consultancy on mergers and acquisitions (M&A) 
  • Corporate finance and capital raising 
  • Capital structure and streamlining 
  • Asset management services to partnerships, corporations, government agencies, institutions, as well as individuals. 

As of December 2019, Lazard housed 3,018 employees.

Financial highlights of Lazard (2019-20)

  • Revenue was estimated at US$2.566 billion (2020)
  • Operating income stood at US$502.141 million (2020)
  • Net income was estimated at US$402.461 million (2020)
  • AUM (assets under management) amounted to US$258.642 billion (2019)
  • Total assets were valued at US$5.971 billion (2020)
  • Total equity stood at US$999.433 million (2019)

Success as a Financial Advisory Firm

Historically, Lazard offered financial consultancy services to a broad range of clientele on planning and economic problems faced by them. These services might incorporate expert consultation on the probable takeover of another commercial enterprise or firm or particular properties or sale of any other company, property, or business. Lazard is also famed for extending consultations regarding substitutes to a sale like spinoffs, recapitalization, split-offs, and carve-outs. The firm provides professional advisory on all facets of reorganizing to firms suffering from economic hardship or their beneficiaries. Following the global economic slump that started in the middle of 2007, Lazard offered consultation services to some of the biggest reorganizing ventures. Capital raising and capital structuring are two other areas where Lazard specializes. Capital structuring consultation incorporates evaluating and scrutinizing structural substitutes and aiding in long-standing strategies. In the area of capital-raising consultation, Lazard offers expert recommendations on private and public sector financing. The Sovereign Advisory Group of Lazard guides public sector enterprises and autonomous entities on strategizing and economic concerns.          

Asset Management

Kenneth, after becoming CEO and Chairman of the Lazard Board, has given particular stress on the area of asset management. The asset management operations of the firm offer financial advisory and investment management services to financial intermediaries, corporate clients, investment vehicles, and individual clients across the world. Lazard handles assets/funds on behalf of the following:

1) Corporate

(Labor unions, corporations, endowments, public pension funds, insurance providers, foundations, and banks; and via sub-consultancy associations, broker-dealers, mutual fund financers, and licensed consultants).

2) Individual clients

Mainly high-net-worth individuals (HNWI) and family offices. 

Latest Deals 

Lazard played the role of the exclusive financial consultant to Teladoc Health, Inc. that is an international virtual healthcare and telemedicine firm that came up with a declaration of a merger pact with Livongo with a valuation of $18.5 billion. The merger that took place was entirely a cash-and-stock deal. In this deal, the stockholders of Teladoc will possess 58% of the consolidated firm whereas the stockholders of Livongo will possess 42%. Morgan Stanley and Lazard in October 2020 functioned as financial consultants for Gilead Sciences, a US-based pharmaceutical enterprise that corroborated its purchase of Immunomedics against a valuation of $21 billion in an all-money deal. Of this entire amount, financing to the tune of $15 billion would take place via cash and $6 billion via freshly allotted institutional debt.

How could Kenneth M. Jacobs bring the Midas touch to Lazard?

When Ken Jacobs was appointed the CEO and Chairman of Lazard in 2009, he represented the young generation of bankers. He was just 51 at that time and outplayed Steven Golub, the acting CEO, who was 63 years old then. Golub vied for the CEO rank quite well and was assumed as a challenger for the same.

In his run for the CEO spot, Ken was chosen over Gary Parr, a 52-year-old man, who led the financial institution cluster of Lazard and was employed by Morgan Stanley as an initiative by Wasserstein to rejuvenate the company once a series of desertions took place in the former part of the decade. However, Parr was included in the Lazard Board of Directors. 

By picking Kenneth, the Lazard Board has chosen a banker who endured a lot of hostile backbiting that was proving to be detrimental for the firm as a whole soon before Wasserstein became the CEO in 2002.

At that moment, Jacobs was functioning as a part of the executive committee of Lazard. Perse, Kenneth had a ringside seat for the reorganizing endeavours of Wasserstein, which aided to pacify disgruntled bankers via offering a large number of them, equity in the company.

Jacobs has been working with Lazard for the last 33 years. In the early part of his career, he also served Goldman Sachs as a banker.  

“When you cut through it all we have a very simple business model, which we’ve adhered to almost religiously, which is built around intellectual capital and the advice business,” Jacobs stated in a discussion in January 2009 with the Investment Dealers’ Digest. “We don’t take existential risk.”   

This approach worked quite well for Lazard throughout the worldwide economic catastrophe.

Kenneth M. Jacobs always maintained a low-key profile, quite dissimilar from Bruce Wasserstein, who constantly preferred to stay in the limelight.

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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