The strong burst of deal-making this year has been good to Lazard.
The investment bank reported $81 million in first-quarter net income on Thursday, more than doubling what it earned in the period a year earlier as Lazard claimed significant merger advisory assignments.
That profit translates to 61 cents a share. On average, analysts expected the firm to earn 54 cents a share, according to Standard & Poor’s Capital IQ.
The latest results stem from one of the most robust starts to a year for deal-making. Over $1.1 trillion in mergers had been announced by April 25, according to Thomson Reuters.
Much of that resurgence has come from confidence among corporate boards and management teams that now is the time to buy companies, according to Kenneth M. Jacobs, Lazard’s chairman and chief executive. Favorable financing has been available for years, and companies’ valuations, while rising over the past year, still remain attractive for would-be buyers.
Now, corporate acquirers feel better about moving ahead on a deal, he said. And so long as the overall environment continues at this pace, deals should continue.
“We feel cautiously optimistic,” Mr. Jacobs said by phone.
So-called independent and boutique investments banks – Lazard is the largest of them – are seen as important bellwethers of the deal industry. Unlike more diversified firms like Goldman Sachs and JPMorgan Chase, their primary business is advising on transactions, without the distractions of other operations like trading desks.
Lazard has had its hand in a number of the big transactions this year. Among them were GlaxoSmithKline’s complicated asset swaps with Novartis, a series of transactions potentially worth more than $23 billion; TIAA-CREF’s $6.25 billion acquisition of Nuveen Investments; and the utility company Pepco’s $6.8 billion sale to Exelon.
Deals that closed during the quarter – an important distinction, since investment banks receive the bulk of their fees when a transaction is completed – included Health Management Associates’ $7.6 billion sale to Community Health Systems and AT&T’s $4.1 billion deal for Leap Wireless.
Over all, Lazard’s mainstay advisory business reported $275.5 million in revenue, up 64 percent from the period a year earlier.
Its asset management arm, which now oversees $189 billion in assets, disclosed a 9 percent gain in revenue, to $262.3 million. Mr. Jacobs said that while the business has bet in large part on the booming stock markets, it has rolled out financial products that cover an array of investment areas.
The firm also held the line on expenses. Its ratio of compensation payouts to revenue reached 58.8 percent in the quarter, about a percentage point lower than in the year-earlier period. Noncompensation expenses as a percentage of revenue fell to 19.1 percent from 24.1 percent.
Lazard’s first-quarter results compare favorably with those of its publicly traded competitors. Evercore Partners reported last week that adjusted profit from continuing operations fell 12 percent from the year-earlier period, while net income tumbled 98 percent at Greenhill & Company.
Shares in Lazard have risen 3.8 percent this year, closing on Wednesday at $47.05. By comparison, Evercore’s stock has fallen 10.6 percent and Greenhill’s about 13 percent.
Shares in the newest publicly traded independent investment bank, Moelis & Company, have risen about 6.2 percent since its market debut last month. Over that period, Lazard’s stock has climbed about 4.6 percent.
Mr. Jacobs ascribed his firm’s performance to its high level of senior deal makers with connections to corporate decision makers around the globe.
“There are very few firms around the world that can match that,” he said. “It’s what differentiates us from some of our newer competitors.”