A Private Equity Boardroom Coup

Jean-Charles Decaux, Eurazeo's chairman.
Jean-Charles Decaux, Eurazeo's chairman. Photo: Eric Piermont/AFP via Getty Images
William D. Cohan
February 8, 2023

Shortly after September 11, 2001, the late investment banker Michel David-Weill finally concluded a deal to bring Bruce Wasserstein to Lazard, then still a private partnership under Michel’s control. The courtship between David-Weill, the patrician fourth-generation scion of the firm’s founding family, which dates to New Orleans in 1848, and the grand investment banker Wasserstein, a Brooklyn ribbon manufacturer’s son who later bought New York magazine, was some 15 years in the making. One former Lazard partner told me that the deal Michel cut with Bruce was one “of desperation.” 

By that time, Michel was deeply concerned about the future of Lazard. He had tried unsuccessfully, and somewhat half-heartedly, to sell the firm to Lehman (that would have been a disaster), and to Credit Agricole, and to Merrill Lynch (another disaster in the making). He had tried a series of successive leaders for the firm, including Steve Rattner, Bill Loomis, and even his own son-in-law Éduoard Stern, who was later murdered by his mistress in Geneva. None of them had worked out to Michel’s satisfaction, mostly because Michel wouldn’t fully share day-to-day management of the firm to them. 

But after watching the Twin Towers collapse from his 62nd floor office at 30 Rockefeller Center, Michel was determined to finally land Bruce, then 53 years old, to keep Lazard both viable and the repository of Great Men who advised important companies on their significant M&A deals. So, of course, Bruce cut a deal that still amazes people more than 20 years later. Michel agreed to give up the day-to-day management of Lazard to Bruce, giving him total authority on hiring, firing, pay and promotions, the life blood of Wall Street and a responsibility that had previously resided almost entirely with Michel. He also agreed to pay Bruce a sliding scale of millions of dollars per year in compensation, depending on the profitability of the firm under his management. And he agreed to allow Bruce to buy 1 percent of Lazard for $30 million, which valued the firm at a relatively full $3 billion. (Today, Lazard is publicly traded and is valued at $4.3 billion.) Most importantly, however, he agreed to give Bruce another 7 percent of the firm for free. 

Thanks to Michel, Bruce had an 8 percent stake in Lazard, for which he had paid $30 million, just below Michel’s own direct 9 percent stake in the firm. (Michel also had a greater ownership of the firm through various indirect stakes, held by a series of French holding companies and French families that he controlled.) Michel remained chairman of the Lazard board of directors and kept a few key existential decisions for himself, such as being the sole authority to renew Bruce’s contract after 5 years and to decide whether to sell the firm or to take it public.

We know how this ended. What had started as a friendly partnership borne of necessity between Bruce and Michel ended with Bruce skillfully, and predictably, outmaneuvering Michel for ultimate control of Lazard and then Michel stewing in his own juices, wondering how he had allowed it to happen. In May 2005, with Michel’s begrudging blessing, Bruce took Lazard public, ending 157 years of private, family ownership. As a consolation prize for his 36 percent stake in Lazard—including Michel’s direct stake, the stakes held by the French holding companies that he controlled and of other partners that he also controlled—some $1.62 billion of the I.P.O. proceeds went to Michel, in cash, to buy back his stake in the firm. 

Through a combination of his own indifference, his poor planning and his desperation, Michel had lost control of his family’s birthright to a dealmaker who managed to out-Machievelli him, the ultimate prince of Wall Street. Stern’s murder guaranteed there would be no fifth generation of David-Weills, or David-Weill adjacents, at Lazard; Michel’s carelessness ensured that there would be no sixth generation. All of this and much, much more is captured in my 2007 book about Lazard, The Last Tycoons

Ironically, Bruce had the gift of cleverness, but not the gift of longevity; he died suddenly, of heart-related problems, in October 2009, at the age of 61. Michel passed away last year at age 89. But now, a mere eight months after his death, his heirs have ceded control of another heirloom: Eurazeo, the private-equity firm that Michel formed in France, in 2001. The unfolding drama has tout Paris buzzing. 

The Decaux Deal

Michel had always been interested in private equity. And once upon a time, Lazard, under André Meyer, was a pioneer in the buying and selling of companies for its own account. Meyer and Lazard made a killing, buying and then selling the likes of Avis, the rental car company, back in the day. Lazard had its own private equity business—Corporate Partners—as the private investment business matured and became more institutionalized. As part of his deal with Bruce, Michel let Bruce retain his own private equity firm, Wasserstein & Co., at the same time as he was head of Lazard. There was an obvious conflict of interest but Michel ignored it. 

In the months before Michel cut his Faustian bargain with Bruce, Michel decided he wanted his own private-equity firm, too, in Paris. In April 2001, he formed Eurazeo from a combination of two Lazard-controlled investment companies, Azeo and Eurafrance, to invest his fortune and then to manage money for other European institutions. Under the leadership of former Lazard partner Patrick Sayer, Eurazeo went about its business of buying and selling companies, including Moncler and Europcar, among many others. 

In May 2017, the investment firm Tikehau Capital bought a 7.6 percent stake in Eurazeo, for some 330 million euros. The purchase made Tikehau, which is named after an atoll in French Polynesia, one of the largest shareholders in Eurazeo. Credit Agricole, the big French bank, controlled 15.4 percent of Eurazeo. The public shareholders owned about 55 percent of Eurazeo. Then came word that Tikehau, with about 11 billion euros of assets under management at that time, was thinking of buying Credit Agricole’s stake, which would have increased Tikehau’s ownership stake in Eurazeo to 23 percent, more than David-Weill’s 16 percent and enough to take effective control of the firm. 

Needless to say, the Tikehau rumblings made Michel quite nervous about potentially losing control of Eurazeo. He decided he needed to find an ally to buy Credit Agricole’s stake in order to thwart Tikehau. He turned to the billionaire Decaux family, which controls J.C. Decaux, the largest outdoor advertising company in the world with a market value of $4.6 billion.

A month later, Michel had succeeded, or so he thought. In June 2017, Eurazeo announced that the Decaux family office was buying Credit Agricole’s 15.4 percent stake of Eurazeo for 790 million euros, effectively thwarting Tikehau, which eventually sold its stake in Eurazeo into the market in bunches, with the last tranche departing in December 2021. As part of its agreement with Eurazeo, the Decaux family was granted two Eurazeo board seats. The Deacauxs also agreed not to buy more than 23 percent of Eurazeo stock and to not sell any of its Eurazeo stock for three years and then to give Eurazeo a right of first refusal to buy its stock after that. Jean-Charles Decaux, one of the two Decaux brothers, and another Decaux family representative would be on the compensation, audit and finance committees of the Eurazeo board, with Jean-Charles serving as vice-chairman of the finance committee. 

Michel seemed happy to have found a friendly ally for Eurazeo. “We are very pleased to welcome the Decaux family as a new core shareholder, with whom we share the same strategic vision, the same entrepreneurial DNA and the same commitment to Eurazeo’s independent model,” he said at the time. Eventually, Jean-Charles was named vice-chairman of the Eurazeo board, with Michel remaining as chairman. 

In April 2022, after 20 years as chairman of the Eurazeo board and at 89 years old, Michel decided to step down and relinquish the chairman’s job to Jean-Charles Decaux, with Michel remaining on the Supervisory Board, which is the French equivalent of a U.S. board of directors. Michel wouldn’t be disappearing from Eurazeo, but rather just moving one seat over. Once again, the families seemed unified. “This transition shows the support, cohesion and long-term commitment of the Decaux and David-Weill families, who are Eurazeo’s main shareholders,” noted a Eurazeo press release. “In his new role, Jean-Charles Decaux will continue to bring his experience as an entrepreneur and C.E.O. of a company that is a world leader in its sector, together with his growth ambitions and high standards in terms of performance.” At the same time, Eurazeo announced that Virginie Morgon, its C.E.O., and the rest of the Eurazeo executive team would serve for another four years. 

The Deals That Didn’t Age Well

Morgon, one of the few women in the world to lead a major private equity firm, was selected to run Eurazeo, starting in March 2018 and her contract was renewed in November 2021. Under her leadership, Eurazeo’s stock basically remained flat, with several big highs (August 2021) and big lows (April 2020, like everyone else) along the way. But the Eurazeo stock was down around 8 percent in the past year, despite the firm’s assets under management growing to some 32 billion euros and its investment strategies diversifying. There was a sense with Morgon at the helm that the market was failing to appreciate what Eurazeo was doing. The Decauxs were getting antsy.

Michel was a big supporter of Morgon. But when he died, last June, the 16 percent stake in Eurazeo he controlled—his “concert,” as it was known—went to, among others, his four daughters, none of whom is involved in the business, although Olivier Merveilleux du Vignaux, Natalie’s husband, is vice chairman of the Eurazeo Supervisor Board, as well as to the Solages family (David-Weill’s cousins) and the Guyot family. Michel’s daughters controlled 9.4 percent of Eurazeo; the Solages controlled 5.4 percent. As of September 2022, the Decauxs owned 18 percent of Eurazeo, while the public shareholders were still in control of 55 percent of the firm. 

Last December, Michel’s four daughters, as well as the Solages and Guyots, cut a new deal of support with Eurazeo by re-upping their shareholder agreement, which otherwise would have expired this April, for another three years. Morgon was pleased. The three families “have now confirmed their commitment to Eurazeo, ensuring the stability of our ownership structure,” she said at the time. “I am particularly proud that the agreement between the David-Weill family and Eurazeo has been renewed. The support of Michel David-Weill’s children and grandchildren represents a vote of confidence that is essential in terms of pursuing Eurazeo’s growth strategy. I offer them my sincere thanks.”

But in the last week, the apple cart has been upset. Last Friday, the Supervisory Board turned what was supposed to be a short morning meeting into an all-day affair. It concluded that Morgon had not articulated a cogent strategy for Eurazeo and that the share price had underperformed during her nearly five years at the helm. Morgon had done a fair amount of venture-capital type investing at Eurazeo. Those investments performed fabulously well during the bull market but were now valued at considerably less. The Decauxs, whose voting control of Eurazeo has increased to 25 percent because they have held their shares for more than two years, have decided that Morgon had to go. The David-Weill “concert” went along. 

The Supervisory Board, led by the Decauxs and their effective control of Eurazeo, met again on Sunday to make the move official: Morgon was out, as well as two of her allies at Eurazeo; in are a combination of Christophe Bavière, the founder of Idinvest Partners, a debt firm that Morgon arranged for Eurazeo to buy in 2018, and William Kadouch-Chassaing, a veteran of JPMorgan Chase and Societe Generale who joined Eurazeo only last year. Once again, Michel had brought in an ally who had outmaneuvered him, or his heirs: In the end, Michel’s four daughters went along with the decision, conceding that they did not have the power or the votes to alter what the Decauxs wanted to do—or just deciding that it was for the best. (They have declined to comment.)

Les Echos, the French newspaper, described it as the end of the era of Lazard at Eurazeo. There were forced statements of support all around, including from both Jean-Charles Decaux and Morgon. But those in the know tell me that Morgon has been treated “abysmally.” A spokesman for Eurazeo, David Sturken, told me there would be no comment from Eurazeo beyond what was in the Sunday press release.

The End of an Era

The Lazard family saga has finally come full circle. The family’s control of one of the great financial firms of the 20th century went up in smoke in 2005 after Michel made the mistake of bringing into Lazard what he hoped would be a friendly Bruce Wasserstein, ignoring the admonitions of people who knew the real Bruce. Now, the family’s control of a bunch of industrial assets, through Eurazeo, has also gone poof, almost six years after Michel brought in the Decaux family hoping Jean-Charles Decaux would be a friendly force in the boardroom, only to discover that he, like Bruce at Lazard, had swiped control of Eurazeo from Michel’s heirs eight months after his death. One longtime observer of the David-Weill family lamented this outcome, as of course do I. “There’s a lot that could have been done,” this person said, “both to make Lazard a great firm forever [and to do the same at Eurazeo.] There could have been both family involvement and greatness. But somehow, there’s neither in the end.”

The David-Weill family is plenty wealthy, with homes in Paris, Long Island, New York City, California and Cap d’Antibes. And, of course, Michel’s heirs now control one of the finest art collections in the world. But as for controlling the fate of a once-great financial company and a once-great industrial company for future generations of the David-Weill family, it seemed like Michel didn’t quite care. It is, finally, the end of the David-Weill dynasty on Wall Street. 1848-2023. I, for one, shall miss it, if for no other reason than the sense of drama and entitlement that he brought to nearly everything he did. R.I.P.