Lazard CEO Expects an ‘Unprecedented’ Level of Deals to Continue

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Lazard Ltd. Chief Executive Officer Ken Jacobs expects a record level of deal flow to continue unabated, seeing “unprecedented levels of activity” as interest rates remain low and CEOs adjust to a new macroeconomic environment.

“There continues to be just enormous technological change going on and people adapting to that, and using M&A as a tool,” Jacobs said in a phone interview Friday after Lazard reported record operating revenue for both the second quarter and first half of 2021.

Lazard CEO Expects an ‘Unprecedented’ Level of Deals to Continue

As it seeks to meet demand, Lazard is bulking up on talent. The firm hired more than a dozen senior dealmakers this year, and expects to add more through the end of 2021, Jacobs said. Compensation is rising across the industry amid competition for bankers handling elevated transaction levels. At Lazard, costs tied to banker pay climbed to $489 million in the second quarter from $326 million a year earlier.

Deals are also being driven by climate-change awareness, with businesses shifting toward a carbon-free world, Jacobs said. He also sees buyout firms, which are raising record sums, fueling more transactions.

“You also have much more liquidity sources in private equity, so private equity can afford lower returns” due to the increased ability to get deals done, Jacobs said. “It’s easy to exit. There’s less illiquidity in private companies than there’s probably ever been.”

Lazard’s shares are up 8.3% this year through Thursday, trailing the 18% gain in the S&P 500.

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