Lazard: An incredible family saga

Return to the foundation of the myth of Lazard, one of the most powerful historic French banks, who has reshaped the global landscape business for almost a century.

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The Lazard Bank, what a story: a true family saga begun in the mid-nineteenth century. Over the years, the bank became an unavoidable actor in world affairs. Combining blows and sometimes mistakes, it has conquered the world through hard work and because of the vision of managing partners who succeeded at its head. It will certainly remain in the pantheon of banks that have had the greatest influence on business life and global capitalism. The chronicle of a saga.

Everything really started with Alexandre Lazard. Grandson of Abraham Lazard, immigrated to Lorraine, in the 1840s Alexandre took the road to the United States, thus following the largest wave of Jewish emigration to America at this time. Arriving in New Orleans, he started in small business. Cotton fabrics, tissue, then coffee, sugar, he was into everything. His businesses took off and he was soon joined by his three brothers: Lazare, Elie and Simon, then by their cousin Alexandre Weill, who lent a hand. In 1848, the business is formalized and the Lazard Brothers is born. After several successful years, two of the Lazard Brothers, Alexandre and Lazare, returned to Paris while the other two, Elie and Simon as well as their cousin Alexandre Weill, opened offices in San Francisco. The Civil War that broke out in 1861 would be a tipping point: It would cause incredibly growth in the family’s assets.

Indeed, the gold exchange business allowed the Lazard Brothers and their cousin to get rich quickly through arbitration on the differences between the gold dollar and the paper dollar. The family’s success is due to the vision of Alexandre Weil, recognized as the real architect of this success. He quickly realized the profits that their business could make from the civil war and from the resulting changes in the price of gold. In 1864 Alexandre Weil took the keys to the business for good and decided to end the small businesses: from now on the principle business of Lazard is gold, money and banking. This would be the beginning of an ascent that nothing could stop. In 1880, he opened an office on Wall Street and became the first transporter of gold between Europe and the United States and the biggest trader of commercial paper within the United States. The bank quickly won its place on Wall Street.

In 1884, Alexandre Weil decided to return to Paris. On site, because of the domination of the Rothschild’s and other well-known banks, Alexandre Weil claimed nothing. He bided his time. The Lazards and the Weils would benefit from their wealth by integrating into Paris’ “haute bourgeoisie” and enjoying the high life. In 1897, David Weil, the son of Alexandre Weil, joined the bank. Meanwhile Elijah Alexandre and Simon Lazard, the pioneers, had passed away, and David took the reins of the business a few years later, appointed by his father as the natural successor. It was actually under his reign that Lazard succeeded its first major operation on French soil: succeeding in “saving” the French franc after its meltdown after the first war. It was this battle won by Lazard in 1924 on international markets that forged lasting relationships between the bank and the public administration.

Unfortunately, a few years later, in 1931, losses (hidden and accumulated over the years) of the Belgian subsidiary exploded into open air, spelling bankruptcy for Lazard. With the Great Depression two years before, the family business was largely compromised in France as in the United States. But fortunately, one man showed up into the banks fold. This man was a certain Andrew Meyer. Discovered in 1924 by David Weil during the time Lazard was maneurvering to save the franc, Meyer was a skilled broker: he was already taking advantage of arbitrage opportunities on the fluctuation of the franc between Paris and London. His genius didn’t escape David Weil. Finally hired in 1929, his “arrival changed Lazard’s destiny. No managing partner ever had as much control, as much influence on the bank’s destiny and, in some ways, on the transformation of capitalism on both sides of the Atlantic"[1].

Fleeing the Nazi horror begun in 1940, it completely reshaped Lazard: investments in real estate or in small businesses, he established the bank as “the first powerful business of merger and acquisition.” At that time, Pierre David-Weil remained at the head of the bank even though Andre Meyer and Felix Rohatyn, his major collaborator, were responsible for managing its core operations. The two men were at the heart of the institution’s transformation. Michel David-Weil, the son of Peter, and Bruno Roger joined them in the group in 1957 while Antoine Bernheim arrived in 1967, just when the bank was reasserting its influence and power on the French ground.

These five key people (André meyer, Felix Rohatyn, Michel David Weil, Bruno Roger and Antoine Bernheim) would be the main architects of Lazard’s myth, and its omnipotence that would remain for many years. They were at the base of many changes in the business world: the creation of large empires like LVMH, Danone and Cap Gemini, the rearrangement of Finance in New York City and many other issues of particular sensitivity. After long years of waiting, Michel David-Weil took control of the bank in 1979 upon the death of Andre Meyer. He continued the work begun by this predecessor. Thus, between 1986 and 1989, Lazard ranked first among French banks for mergers and acquisitions and Michel David Weil exerted his influence in business circles and political networks. He also realized his life-long dream: to merge three family businesses, the ones in London, Paris, and New York in January 2000, at the same time thinking he could resolve the systemic problems growing within the group. A choice that sounded the death toll of the omnipotence of Lazard, some might say looking back.

Because the world of business is what it is: booms often leave room for large lulls and even terrible recessions. And that is what happened: conflicts of interest continued to lower the morale of the family business, the concentration of big profits centered around only a few major shareholders, file sharing remained almost nonexistent, the sharing of information and clients were particularly difficult. All the problems that had justified the merger remained intact. It would be a failure. Meanwhile, market activities had taken precedence over the consulting business and mergers and acquisitions in all banks including Goldman Sachs, Merrill Lynch and Salomon Brothers, became superpowers. Lazard, which wanted to “avoid the market” and keep its historic counseling business would no longer make the weight faced with these mastodons. It could never adapt in the new landscape.

After years of internal wars, Bruce Wasserstein, who took the head of the bank to give it more momentum, finally got the better of Michael David Weil. On May 5, 2005 on Wall Street, he signed the opening of Lazard onto the open market. It’s the end of a myth. But it’s also the end of a story: the transformation of global capitalism and global business. The Lazard story is dead. And Michael Weil Davil has nothing more than tears to cry. Make way for the new Lazard!

Paul Monthe June 2008

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[1] Ces Messieurs de Lazard, Martine Orange



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