The HBR Interview with Bruce Wasserstein CEO Lazard

GIVING GREAT ADVICE. By: Stewart, Thomas A., Morse, Gardiner,
Harvard Business Review,
Jan 2008, Vol. 86, Issue 1

Some important points

LAST SPRING, Bruce Wasserstein received Harvard Law School's 2007 Great Negotiator Award, joining a select group that includes Sadako Ogata, a former United Nations high commissioner for refugees, and George Mitchell, the former U.S. senator who led the peace talks in Northern Ireland.

In presenting the award, Harvard Business School professor James Sebenius cited in particular the masterful deal making that went into Wasserstein's 2005 coup at Lazard, in which he famously disassembled a century and a half of family ownership and took the fractious M&A and financial advisory firm public.

He is a graduate of Harvard's business and law schools and Cambridge University.
At Cambridge University, he wrote a thesis on British merger policy.

Marketing initiative at First Boston:

"How do we market the business?" and "What are we marketing?" and "How can we possibly compete with larger M&A businesses?" We decided first to execute deals really well and then to market that track record. Our competitors often delegated deal implementation to lawyers, which we felt was a mistake. We realized that understanding the nuances of deal terms and structure could have a tremendous financial impact.

We decided to separate the M&A advice, which was a CEO business, from the financing advice, which was a treasurer or CFO business, and appeal directly to the CEOs in our marketing.

We also developed a "creative department." Its job was to think about the dynamics of industries and what changes within them would take place over the next five years.

We helped companies identify and focus on their hidden core strengths.


When I came to Lazard, it had a variety of counterproductive structures. One was what I called the cell-theory structure: You hire a banker. He or she has three assistants. They keep all their information to themselves, and they fight for revenue with other cells. Another was our fee-splitting system. These are counterproductive because Lazard's competitive advantage is working on difficult, complex assignments, so having a very deep, global team is a necessity, especially in light of the impact that globalization has had on industries.

We have a somewhat less centrally managed structure and we sacrifice some degree of efficiency by deliberately having a less centrally managed culture.

We have and want to attract a network of stars - people who communicate and cooperate but are entrepreneurial and stand out as quality individuals, who are not the cogs in a corporate machine.

What we can do is help the CEO think through an array of options, partly by asking the necessary questions, but also by inserting some very practical observations about the effects of specific decisions.

A good banker can ask the right questions, marshal the arguments, highlight the risks, and detail the options from the financial market and practical implementation perspectives.

Whether a deal makes sense relates directly to the question of the CEO's objectives, of course. Having an appreciation of the personality of your client, both the corporate personality and the individual personality, is key.


Similarly, in the deal business, to be a buyer you should have a conviction that is stronger than consensus.Winning may not be about paying $1 more or less but about creating opportunities for the future, managing the target well after the closing, and not being unduly pressured by an inappropriate financing structure. And sometimes winning is not doing the deal at all.