Wasserstein's legacy

Bruce Wasserstein: No banker did more to make the dispensation of mergers and acquisitions advice an industry in its own right than Bruce Wasserstein. That legacy hasn’t always benefitted investors. But even after the Lazard chairman’s death at 61 on Wednesday, there’s no question it will continue to define Wall Street’s character for generations.

Wasserstein’s career arc matched that of the takeover boom almost from the instant he began counselling corporations on deals at First Boston in 1977. At the time, financial advisory was a poor cousin to the fee-generative businesses of stock-broking and trading. Though titans of finance like Lazard’s Andre Meyer and Felix Rohatyn — or Sigmund Warburg in the City of London — were trusted advisors to corporate bosses, none of them brazenly marketed their advice as a product the way Wasserstein did.

Wasserstein didn’t just act as consigliere-in-chief to executives, whose appetites curved higher as the nascent junk-bond market made financing cheaper and easier to come by. He actively urged them to consider daring manoeuvres, such as Kohlberg Kravis Roberts’ bid for RJR Nabisco in 1989, or to swoop on weaker rivals — a case in point being Kraft’s recent offer to buy Cadbury.

Of course, it was this trait that earned Wasserstein the unflattering sobriquet “Bid’em up Bruce”. It also made him the bane of many investors who found their interests sacrificed by empire-building executives. Robert Campeau, the Canadian real-estate developer who sought Wasserstein’s advice on his ill-fated purchases of Allied Stores and Federated Department Stores, comes to mind.

Where Wasserstein really excelled, though, was in mastering and profiting from deals of his own creation. After he and Joseph Perella had built the First Boston M&A department into Wall Street’s finest, they eviscerated the place when they left with much of the talent to set up their eponymous boutique advisory shop. In 2000 he sold Wasserstein Perella to Dresdner Kleinwort for the staggering sum of $1.4 billion.

Those riches did little to vanquish Wasserstein’s ambitions. After falling out with his new German masters in less than a year, Wasserstein soon outfoxed Michel David-Weill at the head of Lazard. There, he managed to quell infighting and so successfully united its partners in Paris, London and New York that the firm was able to launch an initial public offering four years ago. Its stock price has nearly doubled since.

Without Wasserstein’s large ego at the helm — eclipsing those of its many other partners - there is a risk Lazard will return to infighting. That would certainly tarnish one of the highlights of Wasserstein’s career. Even so, the art of the deal — or, more to the point, the packaging of deals as art — will be associated with his name for years to come.