Sudden-death overtime at W.R. Lazard: after the loss of its CEO, can the black investment banking firm continue to thrive?

May 11, 1994 should have been a great day for Wardell R. Lazard, the founder and CEO of W.R. Lazard & Co., one of the nation's leading municipal bond underwriters. On that fateful Wednesday, W.R. Lazard would be recognized in BLACK ENTERPRISE's 22nd Annual Report on Black Business as No. 4 among the nation's largest black-owned investment banking firms, with $492.4 million in senior-managed issues last year.

Tragically, May 11 became a memorable day in the life of Wardell Lazard for all the wrong reasons. Only two weeks before his 45th birthday, the husband of wife Betty and father of three children was found in a Pittsburgh hotel room--dead of an accidental overdose of cocaine and alcohol. His achievements were further clouded by subsequent reports that his investment bank was the focus of an ongoing criminal inquiry by the Manhattan District Attorney's Office into possible conflicts of interest in its municipal financing deals.

While the circumstances of Lazard's death have sketched a Jekyll-and-Hyde portrait of a role model for blacks on the Street, the fate of the firm he founded in 1985 hangs in the balance. "We will sincerely miss Wardell...as a professional...and as a visionary," says Melvin L. Eubanks, who was elected acting chairman and CEO of W.R. Lazard in an emergency board meeting held the day after Lazard's body was discovered.

Similar sentiments were expressed the last time a major black Wall Street firm faced the sudden death of its founder. In 1988, Travers J. Bell Jr., co-founder and head of Daniels & Bell Inc. (D&B), the first black investment firm to have a seat on the New York Stock Exchange, died of a heart attack. The management of the company fell to Bell's two children, Rhonda and Darrell. With no experience in the securities industry, they made a series of management decisions that riled several of the company's principals, moving some of them to jump to other firms, including Lazard's. Among the notable defectors was Lazard executive and former Pittsburgh Steeler All-Star Dwight White, who initially succeeded Bell as D&B's chairman. (In a twist of tragic irony, Wardell died while in Pittsburgh to meet with White on company business.) D&B has yet to fully recover from the turmoil resulting from the death of its founder.

W.R. Lazard specializes in three areas: investment banking, financial advisory services and asset management. Unlike Bell, who personally drove the success of D&B, Lazard decentralized his firm's management structure, adopting a five-person executive committee so that his company did not rely on him to personally drive the deals. As a result, says Kenneth Glover, a vice chairman and head of Lazard's investment banking/financial advisory department, "There is no chaos here."

However, even with a seamless transition, W.R. Lazard must deal with some difficult challenges. In addition to the criminal inquiry, Lazard's personal obligations--a $400,000 mansion in Morris County, N.J., that has been mortgaged three times; a $68,000 tax lien from the Internal Revenue Service; and other debts exceeding $100,000--call into question whether W.R. Lazard can maintain access to the cash it needs to survive on the Street. Neither Betty Lazard nor Eubanks were available to comment on how assets in the firm are tied to personal obligations.

Lazard revised the management structure of his investment bank largely because he wanted it to avoid D&B's fate. "About a year and a half ago Wardell called me from an airplane about a newspaper article on the demise of Daniels & Bell," Glover recalls. "He said, 'We really have to get serious about a plan of succession.'" Few people would have guessed how chillingly prescient Lazard would prove to be.