Lazard’s Profit Falls 17% in First Quarter
When it comes to the mergers and acquisitions market, investment banks often go through unstable quarters due to the unpredictable nature of the deal timings. Unfortunately for Lazard, profits fell 17% this quarter when compared to the same time a year ago. Total revenue fell 17 percent as well.
A surprising detail is that Lazard had a decrease in revenue for both deals and restructuring. “The two are meant to be counters to each other, one waxing as the other wanes, as the economy does.” In contrast, Lazard’s asset management arm saw revenue rise by 14 percent and compensation expenses fell roughly 2.7 percent. Lazard’s rivals saw strong growth in the advisory practices.
The M&A market is difficult to use in predicting the economy’s future, in that the health of the market is never consistent. While Lazard claims that a surge of deals earlier in the year created a dearth of deals now, that does not explain how Lazard’s rivals were able to maintain revenue growth. Also, the fact that compensation is down could be considered a sign of weakness, although C.E.O. Kenneth Jacobs has advocated for more restraint concerning pay. Overall, however, I still remain positive about the M&A market, and I feel that the growth overall of deals can still be used as evidence that the economy headed in a positive direction at least for the corporate side.