Lazard's (NYSE:LAZ) CEO Bruce Wasserstein says his firm's business model is simple: corporate advisory on one side, asset management on the other. Both segments have been strong growth drivers -- but investors have already baked much of that growth into Lazard's stock price.

In its fiscal first quarter, Lazard increased revenue 11% to $382 million, while its income rose 5% to $55 million, or $0.47 per share. Within those numbers, revenue from mergers & acquisitions (M&A) advisory rose only 1% to $196.1 million. Because of its large transaction sizes and uncertain closure rates, the M&A business can be volatile.

Juicy M&A assignments bring in big money, but while there's no shortage of deals on the market, Lazard is still plagued by some nagging issues. For example, it's advising Barclays (NYSE:BCS) in its $90 billion offer for ABN Amro (NYSE:ABN) -- a bid that's now being challenged by Royal Bank of Scotland. The bulk of Lazard's investment fee here is in jeopardy if Barclays doesn't win out.

In happier news, revenue in the asset management division spiked 23% to $146.9 million, and Lazard commands about $125 billion under management. The company has spent the past three years building this business, striking key alliances with companies like Vanguard.

Lazard has also snagged some interesting advisory engagements, including the bankruptcy of subprime operator New Century. Still, despite the booming financial markets, Lazard's restructuring division has seen little action. Its revenue for Q1 fell 29% to $9.6 million.

Lazard has done a fine job growing its asset-management business, but the firm remains highly dependent on volatile M&A fees. It also faces intense competition from the likes of Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). At 23 times earnings, Lazard trades at twice the multiples of these two venerable competitors, though more in line with other boutiques. For me, its price is simply too rich, given the potential risks in the company's otherwise simple business model.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,610 out of 28,402 in CAPS.