(PrivateEquityCentral.net) Nine placement agents have defected from Merrill Lynch & Co. to join financial services boutique Lazard Freres & Co., leaving the once-dominant Merrill fund-raising business without any senior sales professionals.
Managing directors Ben Sullivan and William Riddle resigned from Merrill to join Lazard’s New York office. Today, managing directors Mike Sutka, Scott Church and Tim O’Gara joined the exodus, bringing with them Greg Myers, Robert White, Mark Christopher and Fran Lolli, according to sources.
Merrill’s placement business, which is headed by Kevin Albert in New York, now has only a handful of junior professionals on the distribution side.
One source said the moves indicate a big push at Lazard to build a third-party private equity placement business. Overseeing that push are senior Lazard executives Charles Stonehill and Charles Ward. Ward came to Lazard last year after serving as Credit Suisse First Boston’s co-head of global investment banking and private equity alongside Tony James, who is now co-chair of The Blackstone Group. Stonehill, who also joined Lazard last year, was head of US investment banking at CSFB. Lazard’s chief executive officer is Bruce Wasserstein, the founder of Wasserstein, Perella & Co., now part of Dresdner Kleinwort Wasserstein.
At Merrill, Sullivan interfaced with general partner groups and oversaw due diligence on funds. Riddle was head of sales. Sullivan and Riddle could not be reached for comment. A number of sources said that Lazard had been attempting to woo placement agents for some time. The firm apparently had difficulty hiring a team purely to raise Lazard funds. Lazard’s private equity affiliate is called Lazard Capital Partners. The group invests in buyouts and industry consolidations and, through Lazard Technology Partners, in venture capital deals.
The departures make uncertain the fates of a number of Merrill clients, which include Doughty Hanson, Terra Firma Capital Partners, Intermediate Capital, TDR Capital, Charterhouse Group International, H&Q Asia Pacific, and a fund to be managed by former Thomas Weisel private equity head Alan Menkes.
It is unclear which, if any, funds will follow the Merrill group to Lazard. Placement agent engagement letters often include penalties when GPs reassign engagements. One source said the Merrill placement agents were “unexcited” about a number of the clients.
This departure mirrors a similar one that took place in 1994 when a team led by Phil Pool left Merrill to establish a successful placement business at Donaldson, Lufkin & Jenrette (now CSFB).
Since 1998, more than 20 professionals have left Merrill’s placement group. Layoffs and departures at Merrill and other placement businesses, such as that of CSFB, have accelerated as the private equity market has suffered from poor returns and skittish investors over the past three years. “We’re trying to maintain the right size for the placement business in this market, which is smaller,” said Albert.