Strong Buy on The Last Tycoons

Catching up on my reading has been made more difficult by a commitment to WillIam D. Cohan's The Last Tycoons, The Secret History of Lazard Freres.

The book was released last spring to a bit of fanfare, all of which was lost on me as I was traveling. This book is a fascinating account of the nonsense that is typical of day to day life at the most political corporations in America, otherwise known as investment banks.

Lazard, of course, is not just any investment bank, and dominated the league tables worldwide, making wealthy men of many partners. The authors stint was a brief one near the end of its long run as a partnership, encompassing 6 years in the early 1990's.

Still, Cohan performed exhaustive research to bring the 700-page tome together, and covers the origins of the firm and the succession of "Great Men", legendary and mercurial bankers who the current crop of working stiff MBA's can only hope to emulate. Of course, that is probably a good thing given the petty politics, backstabbing, deception, and greed displayed in the offices and boardrooms of Wall Street. The sterotype usually fits, although their are thankfully some exceptions.

Cohan covers everything from one of the first known rogue traders, who nearly bankrupted the firm in the 1930's, to the mad dash of many European partners to escape one step ahead of the Nazi's, to the eventual public offering of Lazard that enriched Bruce Wasserstein at the expense of many long-time employees.

Power and greed are everyday themes on Wall Street, along with sexual escapades. The book insinuates that Felix Rohatyn got busy behind locked doors, on the desk in his office, with Andre Meyer banging on the door telling the saviour of New York City to get a room. The many sexcapades of Rohatyn, Michel David-Weill and Wasserstein are chronicled along with the death of Edouard Stern, whose bizarre murder thankfully took place before the rise of most of the current crop of Wall Street blogs came of age. They would have had a field day with this one.

Within hours of Stern’s death, bizarre theories were thrumming through Geneva, Paris, and New York, many dealing with investments he was rumored to have made in Russia, others having to do with a vicious lawsuit he was fighting with a French company in which he had invested. Then, 48 hours after the body was found, a Swiss newspaper, the Tribune de Geneve, dropped a bomb: Stern had in fact been murdered, shot four times. But the even more jaw-dropping disclosure was that he had been found encased in a flesh-colored latex bodysuit. A murder mystery that had first appeared laden with political and corporate intrigue suddenly took a sharp swerve toward the kinky.....The Man in the Latex Suit; Vanity Fair, July 2005

Anyone with a stake in today’s dealmaking climate will find this book of interest, whether they are hoping to learn from the previous machinations of cutthroat executives as they angle for a bigger bonus, or merely for entertainment’s sake. Andre Meyer is long departed, and Rohatyn no longer in the daily headlines, but Steven Rattner and Bruce Wasserstein might continue influence the M&A environment in the years ahead.

Food for thought was provided this summer by the erstwhile author, who proposed on CNBC that the market cap of Lazard is justified by its asset management operation alone, and that the firm might be a nice fit for Blackstone.. If Wasserstein’s health is in question this might not be so far fetched. Too, William von Mueffling is long gone, but Lazard is managing in the neighborhood of $125 billion according to Cohan on CNBC, and continue to build its alternative assets under management. Due diligence is necessary,as the fully diluted share count will have to be taken into consideration. Lazard’s IPO was a tangled nightmare, and green eyeshades need to be employed in deciphering the complex financials and footnotes.

Go buy this book to as a gift for your favorite banker and for yourself to read over the coming holiday’s. And although the deal making environment might not be as dire as we though, given how busy our favorite bulge bracket media banker seems to be, our opinion of many bankers can be summed up by a quote in the book:

“Investment bankers, as a class, are the Ernest Hemingways of bullshit,” explained one well-known private-equity investor.

Amen.

The Last Tycoons
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position LAZ

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