Lehman's Neuberger Berman Sale

Author:
Publish date:
Updated on

The Financial Times, The New York Times and The Wall Street Journal are all reporting this morning on Lehman's plans to sell Neuberger Berman, its asset management business. A bunch of private equity firms have received detailed financial information about Neuberger. The Journal names Carlyle Group, Hellman & Friedman LLC and General Atlantic LLC, while the NY Times adds Kohlberg, Kravis & Roberts, J. C. Flowers, the Blackstone Group, and Apollo Management.
As fun as it is to watch the papers play catch up on this story, coming weeks late and dismissing earlier reporting as "speculation," let's dwell on the fact DealBreaker readers have known about this story for weeks, thanks to our deep investigative reporting repeating Charlie Gasparino's CNBC reports.)
The real news here is what this tells us about Lehman's financial health and internal politics. Selling Neuberger Berman seems like a desperation move. It's executives are said to be threatening to leave due to Lehman's share price. Mass departures would likely result in client defections as well. In short, if Lehman doesn't sell now it could find there's nothing left to sell a year from now.
What's more, the attempt to sell Neuberger Berman is being read as a leading indicator of huge losses at Lehman. With just two weeks left in the third-quarter, Lehman may be scrambling to raise money by selling assets to make up for credit market write-downs. The attempt to sell CMBS isn't going very well, so a Neuberger Berman sale is the last, best option.
Here's the question that's probably unfair to ask: if they sell Neuberger, what will Lehman do if it has fourth quarter write-downs?

Related