NEW YORK – In a significant leadership transition at the helm of a major investment bank, Ken Moelis will step down as CEO of Moelis & Co this year, the firm announced Monday. Moelis, who founded the $4.6 billion boutique bank, will assume the role of executive chairman starting October 1, continuing to advise clients in his new capacity.
Immediate Impact
Moelis, 66, has been a pivotal figure in the investment banking sector, known for clinching mega deals and steering his firm through economic turbulence. His decision to step down marks a new chapter for the company he built from the ground up.
Navid Mahmoodzadegan, 56, co-founder and co-president of Moelis & Co, will succeed Moelis as CEO and join the bank’s board of directors. Meanwhile, Jeff Raich, 58, the other co-founder and co-president, will step into the role of executive vice chairman.
Shares in Moelis & Co dropped 1.9% on Monday morning following the announcement.
Key Details Emerge
The transition is described by Moelis as the “smoothest transition ever in the history of Wall Street,” despite the firm bearing his name. Moelis has been preparing for this moment by focusing on nurturing young talent and reinforcing client relationships.
Mahmoodzadegan, who has been with Moelis & Co since its inception, has played a crucial role in the firm’s strategic growth. “As Co-President, [Mahmoodzadegan] has been involved in every major decision we have made and has been a key driver of our Firm’s most impactful strategic growth initiatives,” Moelis stated.
Industry Response
Moelis began his career at Drexel Burnham Lambert in 1981, where he forged connections with influential entrepreneurs. After Drexel’s collapse, he moved to Donaldson Lufkin & Jenrette, eventually joining UBS before founding Moelis & Co in 2007 with Mahmoodzadegan and Raich.
“It’s not easy to lose talent like Kenny. It’s not a positive thing for DLJ,” commented Donald Trump at the time of Moelis’ departure from DLJ.
By the Numbers
Moelis & Co quickly made its mark by advising Hilton Hotels Corp. on its $26 billion sale to Blackstone Group. The firm went public in 2014, with Moelis retaining supervoting stock and special approval rights, some of which were struck down last year.
Moelis & Co’s shares hit an all-time high near $80 in February, but have since declined by about 20% this year.
What Comes Next
Despite the leadership change, Moelis & Co continues to secure major deals, including advising Hailey Bieber’s skincare brand Rhode on a $1 billion sale to elf Beauty and Skydance Media’s $8 billion acquisition pursuit of Paramount.
Both Moelis and Mahmoodzadegan express optimism about the firm’s future. “It’s funny, you advise clients all these years to do things at the right moment…and this is the right moment for the firm,” Moelis remarked.
Background Context
Boutique firms like Moelis & Co have gained significant market share in merger-and-acquisition fees, with last year marking the second-highest share ever in the US. “I’m not sure I would have guessed 20 years ago that this segment would be this large,” Moelis told the Journal.
Mahmoodzadegan and Raich were promoted to co-presidents in 2015, with succession plans in mind, preparing the firm for this seamless transition.
Expert Analysis
Industry experts suggest that Moelis & Co’s strategy of focusing on boutique deals positions it well amid changing market dynamics. The firm’s ability to adapt and thrive in a competitive landscape is seen as a key strength moving forward.
As the firm navigates this leadership transition, all eyes will be on Mahmoodzadegan to see how he steers Moelis & Co into its next phase of growth and innovation.
