SG Warburg was first, followed by Lazard Brothers, at that time one of three Lazard businesses, and Goldman Sachs. The other firms making up the top 10 were Bankers Trust, Hambros, Shearson Lehman, Drexel Burnham Lambert, Schroder Wagg, Morgan Grenfell and Kleinwort Benson.
The Lazard team was then shown the same league table with banks no longer in business removed. Of the top 10 firms, just Lazard Brothers and Goldman Sachs remained. Only three others in the top 20 were still in business, one of which was Lazard Freres NY.
Rucker, himself a Lazard man since 1987, liked the longevity that displayed.
And it didn’t hurt that at the time of the meeting, Lazard was again in second place for UK M&A work, according to Dealogic, up from sixth a year earlier. It’s still there and if the firm holds onto this spot until the end of 2016, it would be its best showing since it topped Dealogic’s ranking in 1997.
“We’ve stuck to a simple model: don’t deploy capital,” said Rucker, who has been the chief executive of Lazard in London since 2004. “As soon as you get into a capital business, scale destroys you. We’re here to look after our clients.”
Deals for the bucket list
Those clients often stick around. Lazard won the award for the best bank/corporate partnership at FN’s 20th Anniversary Awards in May for its work with beer company AB InBev. The firm advised Belgium’s InterBrew on its first international acquisition in 1995. Acquisitive Interbrew merged with AmBev in 2004 to form InBev, which bought Anheuser-Busch in 2008 to form AB InBev. Lazard worked on those and other deals, and advised AB InBev on its £82.6 billion acquisition of SABMiller.
These relationships are built on bankers as well as deals, and Rucker has spent time and effort in building the bench of dealmakers in London, where the firm had been criticised for being too reliant on a small number of big names, Rucker included. Now, the CEO said, Lazard has “started to bring the next generation through”. He said: “We’ve got a very good team who are starting to bring in plenty of business, a great cadre of people who will take the firm forward over the next 20 years.”
That includes seasoned managing directors including UK investment banking head Nicholas Shott; head of European capital markets advisory Charlie Foreman; and Cyrus Kapadia, deputy head of UK investment banking, who led the team advising chip designer ARM Holdings on its £24 billion takeover by Japanese tech company SoftBank.
It also includes long-time Lazard bankers such as financial institutions specialist Nick Millar, industrials-focused Richard Shaw – a former FN Rising Star – and real estate head Patrick Long. And then there are the younger MDs like Dale Raine, a healthcare specialist and another FN Rising Star who joined from Deutsche Bank in January, ex-Greenhill banker Richard Hoyle and David Burlison, who is joining from KPMG to head up the London restructuring business.
Bankers for life
Rucker is equally as focused, however, on Lazard bankers further down in the business: “We’ve put an enormous amount of effort into recruiting, training and development, performance measurement. And I think most investment banks are not very good at this stuff.”
When the firm hires analysts, Rucker said by way of example, “we hire for life”. “We’re hiring people with the real intention of those people being the feedstock for the future partners of the firm.”
Banks big and small have been struggling with how to attract, motivate and keep hold of younger talent, with many bosses noting that the millennial generation is looking for more variety and a better work/life balance than bankers might once have expected. Lazard has been carrying out an annual staff survey for the past three years, and work/life balance is a big issue for younger bankers. Addressing that can mean changing the way the firm does business, and Rucker said Lazard has introduced new initiatives on the back of the survey.
He said: “People don’t mind working very long hours if it’s on a live deal. What they hate is working really long hours on something they think is a waste of time or a marketing book that doesn’t get used. Take the worst examples of investment banking – the Friday night drop from the MD who says ‘I’m seeing so-and-so next week, prepare me a book on it’, with no guidance. We have some basic rules saying the MD has to be involved up front before any preparatory work starts. You can’t expect a 24-year-old to know exactly what you want to say to the chairman of a FTSE 100 company.”
The firm has also tried to limit the size of pitch books. Arguing that it takes more effort to make a succinct pitch rather than a rambling one, Rucker said “long books are often a substitute for thinking”, adding: “We’ve talked to our clients – they hate big books, and most people hate producing them, so we try to keep the length down.”
Rucker, who has been chief executive of Lazard in London since 2004, still works on deals, and said that transactions take up most of his time. “I sympathise with anyone who does only management in this industry,” he added. “The fun in this business is actually spending time with the clients and advising them.”
Helping Guinness when it merged with Grand Metropolitan in a £10 billion deal in 1997 – the largest M&A transaction in the UK that year – was a career highlight, Rucker said, as was working on the redomicile of jewellery company Signet in 2008.
More recently he worked with AB InBev on its takeover of SABMiller, alongside Lazard group chairman and chief executive Ken Jacobs. Rucker described the transaction as the type that should be on any investment banker’s “bucket list of deals”, “exhausting” but also “enormous fun” given the “sheer scale of complexity” involved: “If you don’t enjoy that then you probably shouldn’t be in the business.”
It hasn’t all been smooth sailing for the firm or for Rucker. In 2013 and 2014 Rucker appeared before the Business Innovation and Skills Committee to defend Lazard’s role in the privatisation of Royal Mail, which critics said had been priced too low.
And there may be fresh challenges – albeit of an altogether different nature – just around the corner.
The 2017 test
Brexit now injects new uncertainties into the M&A outlook. The UK’s vote to leave the European Union was a “a shock to all of us”, said Rucker, who was at his desk early on June 24 penning a memo to staff. Like many of his peers, he has been encouraged by how well dealmaking has held up in the weeks since the Brexit vote, although he acknowledges that “how much of that was pre-loaded is always hard to determine”.
The UK is “pretty good” at “finding a way to make things work”, Rucker added. But like his peers he is waiting to get a better sense of Brexit’s impact on the country’s financial services industry, and until that happens he’s not surprised that many City figures have shied from saying much on the topic.
He said: “I think most people in the City would say ‘we’d be very happy to have close to a recreation of what we’ve got’. It’s a difficult message to get out there, partly because the Brexiteers will scream ‘that’s not what we voted for’. I would say the City mood is keeping relatively quiet until we establish some direction.”
For now, he is more confident about the outlook than he’d predicted he’d be – yet still cautious. “Do I think this made the UK less attractive than it was before? Yes, of course it did. Does it make other places more attractive? I’m not sure it does. One private equity fund told me the UK will still be their single largest investment market in Europe. Right now it feels better than I expected, but it’s far too early to call. 2017 will be far more interesting than 2016 for testing the impact of Brexit.”