Lafarge-Holcim cements Zaoui brothers' place at M&A top table

LONDON Tue Apr 8, 2014 11:49am EDT

1 of 3. Yoel and Michael Zaoui in an undated photo.

Credit: Reuters/Zaoui and Co. LLP

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LONDON (Reuters) - The $60 billion merger of Lafarge and Holcim has propelled a company founded by two brothers just a year ago to Europe's No. 1 specialist advisory firm for deals, posing a threat to rival boutiques and big investment banks alike.

Thanks to its role on a transaction that will create the world's largest cement maker, Zaoui & Co has grabbed 15 percent market share of advisory work on European mergers and acquisitions (M&A) so far this year, based on deal values.

That has seen the company founded by Moroccan-born French bankers Yoel and Michael Zaoui overtake specialist rivals such as Greenhill and Perella that have been established for years.

What's more, the firm is also challenging large investment banks in the wider industry league table, ranking No. 8 in European M&A advisory since January, according to Thomson Reuters data.

The rise of the former Goldman Sachs and Morgan Stanley bankers highlights the trend among companies to seek advice from small, highly-focused businesses that put personal relationships at the heart of what they do - at the expense of the major investment banks, which are often trying to sell a number of other services to clients, including research and trading.

"Every senior banker's professional objective is to get close to CEOs and boards and to get the call when something major is being contemplated.", said Yoel Zaoui, 52, who has over 20 years of experience as a financial adviser, mainly at Goldman Sachs (GS.N) where he co-led the global M&A team.

"Michael and I are extremely focused on just that. When we are on a transaction, we attend every meeting and clients appreciate intense, senior focus."

Many big-name bankers have set up boutique advisory firms in the wake of the financial crisis, and their smaller size also tends to mean lower fees for customers. If a deal requires debt or equity to be raised to fund it, a boutique firm can work alongside a financing bank.

M&A boutiques have taken 32 percent of the European M&A advisory market so far this year, according to data compiled by Thomson Reuters. That compares with just 6 percent in the same period last year.

NO REST

The Lafarge-Holcim deal - with the Zaouis advising Lafarge - was the brothers' third announced transaction since they pooled their 50 years of combined M&A experience and opened their firm in London's plush Mayfair district, just a few blocks away from rivals including Robey Warshaw and Perella Weinberg Partners.

It took only a few months for business to kick in. They first helped the Peugeot (PEUP.PA) family on a complex $4.1 billion state-backed rescue deal with Chinese partner Dongfeng

(0489.HK).

A few months later, they advised the Bettencourt family, which controls L'Oreal (OREP.PA), to buy back 8 percent of the cosmetics company from food group Nestle (NESN.VX) in a 6 billion euros ($8.2 billion) deal.

Their secret? Experience, hard work and a focus on a few good clients.

"Because our model is based on our personal intense involvement, we do not want to, neither need to, focus on a large number of clients," said Michael Zaoui, 56, who led Morgan Stanley's (MS.N) M&A team to the top of European league tables for several years.

"It is like very good friends ... how many can you really have? On the other side, we are immediately available to clients 24/7 and they really value that."

Prior to joining forces, the brothers individually worked on such landmark deals as Indian billionaire Lakshmi Mittal's one-year battle to acquire steelmaker Arcelor in 2006; the Total Fina-Elf tie up in 1999, Alcan-Pechiney in 2003, Sanofi-Aventis in 2004 and PPR's move to take full control of Gucci in 2004.

Despite competing against each other, the brothers never let business get in the way of family. They have kept up a tradition of holidaying together at least once a year, usually on the Mediterranean coast, with their children, now teenagers, in tow.

The duo could have retired to a life of ease, but they wanted the challenge of running their own business together.

The brothers now attend an average of 20 meetings a week and since the beginning of the year have spent most of their weekends working.

The giant board room in their Mayfair office has been filled since the beginning of the year and the brothers are hiring to grow their current team of 10.

"We have a small and high-quality team. We are getting a lot of inward calls from people who want to work with us. Our criteria are simple: candidates need to be top performers and to want to join us," Yoel said.

"We are not in the business of trying to convince them to join us instead of an investment bank."

($1 = 0.7303 Euros)

(Editing by Carmel Crimmins and Mark Potter)

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