Changing a corporate culture that harks back to 1848 isn't done overnight, but Lazard (NYSE:LAZ) Chairman and CEO Bruce Wasserstein, who took the venerable firm public in 2005, is undeterred. On Wednesday, the boutique investment bank announced management changes intended to foster greater cooperation between its two major European offices in Paris and London.

George Ralli was named Chief Executive of European Investment Banking and William Rucker was elevated to Deputy Chief Executive. Both men will retain their responsibilities as heads of Lazard Paris and Lazard London, respectively. In addition, three Paris-based bankers -- Erik Maris, Mathieu Pigasse, and Antonio Weiss -- were appointed Vice Chairmen of Lazard European Investment Banking.

These appointments are meant to create a rapprochement between offices that traditionally operated as independent entities under a loose umbrella structure. While Lazard's bankers are already formally organized by industry groups rather than geography, effective inter-office co-operation is essential to win mandates for, and execute cross-border transactions in, a healthy European M&A environment. Aggregate M&A activity (announced transactions) in the region was $905 billion over the first half of 2006, overtaking the U.S. market and posting a 76% gain year over year, according to Thomson Financial. In Europe, Lazard was 12th in the league tables for the first half with 95 announced deals worth $175 billion (it held the same ranking over the same prior-year period).

Lazard's former chairman and a descendant of the founding family, Michel David-Weill, encouraged a Darwinian culture that was famously competitive and political. However, young bankers tired of this environment and jumped ship to U.S. investment banks in the 1990s. U.S. houses offered an enticing alternative as they began to eat into Lazard's dominant franchises in the UK and France.

As a public company, Lazard should be run in the best interests of its shareholders, rather than as a collection of competing fiefdoms. The stakes could not be clearer when one looks at the fortunes of two other former partnerships that have gone public within the last 10 years. Founded in 1869 as a commercial paper specialist, Goldman Sachs (NYSE:GS) was propelled forward in the 1990s by a management that had the ambition to turn the firm into a truly global investment bank. Mission accomplished, but this achievement was only possible in a corporate culture rooted in a strong sense of teamwork (this is explicit in the firm's Business Principles).

You might counter that Goldman's example is ill-chosen and that Lazard never shared such an ambition. Fine, but compare then what Robert Greenhill and his partners have achieved in just a decade at his namesake boutique firm. Founded in 1996, Greenhill & Co (NYSE:GHL) focuses exclusively on M&A advisory and private equity investments and operates out of just three offices (New York, London, and Frankfurt). Despite the fact that Lazard had a big head start as an M&A powerhouse in New York, London, and Paris, Greenhill now sports a higher market capitalization and a significantly higher earnings multiple.

Bruce Wasserstein built his own firm from the ground up (Wasserstein Perella & Co, which he sold to Dresdner Bank AG), and he overcame enormous opposition to take Lazard public. With that hard-won battle behind him, Wednesday's announcement is a sign that he is still working to realize the full potential of the firm's collection of talent.

Earnings Growth (Est. 5 years)

Forward P/ E1

Mkt Cap2

Goldman Sachs



$75.3 B

Geenhill & Co



$1.87 B

Lazard Ltd



$1.75 B

1,2 Based on closing prices at 09/21/2006

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Fool contributor Alex Dumortier has no beneficial interest in any of the companies mentioned in this article. He welcomes your (constructive) feedback. The Motley Fool has a strict disclosure policy.