Zaoui & Co's massive increase in profit not matched by equally massive increase in pay
In 2017, the brothers Zaoui had an exceptional year. Recently released accounts published on the Companies House website in the UK reveal that their boutique M&A advisor, Zaoui & Co., increased its revenues by 241% on 2016, to £13m ($17m). The previous year's loss of £1.3m was transformed into a profit of £5.3m in the process.
The Zaouis, who are known for Italian suits and French panache, and who were formerly global head of M&A at Goldman Sachs (Yoel Zaoui) and chairman of European M&A at Morgan Stanley (Michael Zaoui), only employ 11 people at their tiny M&A boutique (sometimes referred to as a 'kiosk'). Last year, they worked on a series of major deals, including the £2.7bn acquisition of Berendsen by Elis, and the Carlyle Group and CVC Capital Partners €4.7bn acquisition of ENGIE’s E&P activities.
In the circumstances, you might presume that the Zaoui's handful of exemplary and very hardworking staff would be exceptionally well paid. In fact, this doesn't seem to be the case.
The boutique's 13 employees, including its directors (the Zaouis) were paid a total of £4.6m for 2017, amounting to an average of £353k ($467k) each. Much as this is an exorbitant amount of money, it's a lot less than Paul Taubman is paying over at PJT Partners in London, despite his large annual loss. It's also less than Evercore pays (globally). But it's on a par with pay at Perella Weinberg in London.
The Zaoui's comparative caution when it comes to paying their staff, seems to extend to paying themselves. The two brothers only paid themselves £300k each for 2017 according to the firm's accounts. This was the same as in 2016. In payroll terms, therefore, the directors are equal to the rank and file.
However, there's still that £5.3m of profits to be accounted for. Zaoui & Co. is a limited company, meaning the profits can be distributed among shareholders. In 2017 there were no dividends paid to shareholders at all. However, shareholders received dividends of £8.5m for 2016 (despite the loss). The controlling shareholders are, of course, the brothers Zaoui, who own their boutique through two other vehicles - Diadochi Limited, and Fusione Limited. Past performance suggests they might be saving up to pay themselves a generous dividend in 2018.
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