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12 Sep 2008, 11:07
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News keeps getting worse. Lehman is finished.
From CNBC: "One thing seems certain: Lehman Brothers will likely cease to be an independent investment bank by the end of the weekend"
Frantic negotiations are occuring right now to sell the bank. At the end of this weekend someone else will own them. It's likely they will be split into 3 parts with one firm getting the ibank, one getting the IM business and another getting the real estate and bad debt.
The number of bulge bracket ibanking jobs available is dwindling. It use to be that the prime spot to land post MBA was one of the 5 pure play banks. There are now only 3.
From CNBC: "One thing seems certain: Lehman Brothers will likely cease to be an independent investment bank by the end of the weekend"
Frantic negotiations are occuring right now to sell the bank. At the end of this weekend someone else will own them. It's likely they will be split into 3 parts with one firm getting the ibank, one getting the IM business and another getting the real estate and bad debt.
The number of bulge bracket ibanking jobs available is dwindling. It use to be that the prime spot to land post MBA was one of the 5 pure play banks. There are now only 3.
12 Sep 2008, 14:20
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I agree with the report and it's really very sad. This will be a totally different situation than with Bear Stearns. There were many on Wall Street that weren't all that sad to see Bear go. They were known to be tough to deal with (tough negotiators or just plain a-holes) and refused to help out when other firms had problems in the past. Anyone who's been on Wall Street for any amount of time has a story about how Bear was either tough or just plain unpleasant to work with.
Lehman is a different story. Lehman had (can't help but talk about them in past tense already) a reputation as a great trading partner and a great firm to do business with. They have survived several other near-death experiences and over the past 10 full years, their stock price had by far the best returns of any firm on Wall Street (better than 2x better than Goldman, the next closest). Lehman didn't have the general overall reputation of Goldman & Morgan, but was known for a positive employee culture and a sense of inclusion. Goldman is known as the hardest working and Morgan has a long-standing reputation of being extremely Waspy, but Lehman had a reputation of rewarding smart people that worked hard.
From the perspective of an MBA student, it's really a huge loss. Certainly, financials will come back at some point, and other firms will step in to fill the void. But it's a good bet that however that void gets filled, the combination of opportunity, culture, compensation, career enhancement (Lehman was a leader in all these areas) will be quite a bit inferior - meaning some prime MBA jobs will now be made up of less desirable pieces. If BofA winds up leading a deal for Lehman, it's hard to see how long it will take for jobs with the new firm to match up to those lost (perhaps never). Perhaps the result will be a lot of new boutique banks.
Lehman is a different story. Lehman had (can't help but talk about them in past tense already) a reputation as a great trading partner and a great firm to do business with. They have survived several other near-death experiences and over the past 10 full years, their stock price had by far the best returns of any firm on Wall Street (better than 2x better than Goldman, the next closest). Lehman didn't have the general overall reputation of Goldman & Morgan, but was known for a positive employee culture and a sense of inclusion. Goldman is known as the hardest working and Morgan has a long-standing reputation of being extremely Waspy, but Lehman had a reputation of rewarding smart people that worked hard.
From the perspective of an MBA student, it's really a huge loss. Certainly, financials will come back at some point, and other firms will step in to fill the void. But it's a good bet that however that void gets filled, the combination of opportunity, culture, compensation, career enhancement (Lehman was a leader in all these areas) will be quite a bit inferior - meaning some prime MBA jobs will now be made up of less desirable pieces. If BofA winds up leading a deal for Lehman, it's hard to see how long it will take for jobs with the new firm to match up to those lost (perhaps never). Perhaps the result will be a lot of new boutique banks.
14 Sep 2008, 20:01
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Things just turned really ugly on Wall Street. I think that this weekend will mark a historical shift in the banking business - probably more significant than anything in our lifetimes. Things are changing at a breakneck pace, but as it stands right now, it looks like Lehman is going to be liquidate, Merrill will Merge with BofA and AIG may or may not be able to stay alive (adding their pool of assets to the liquidation market could impact positions of all other financial institutions).
For people getting MBA's or with MBA aspirations, the job market just got a whole lot dimmer. It's hard to calculate the number of prime jobs lost at the MBA level, but it's unlikely that any other firms will be filling the void any time soon. It just feels like there has been a fundamental shift in the banking business. No doubt, something will move in to fill the void - boutiques or private equity firms perhaps - but Wall Street might take longer to recover this time around because the damage has never really been this widespread (at least not since the 1930s).
The indirect consequence is that jobs in other sectors will get tougher as well, as some top students that would have headed into investment banking start to target other sectors. Investment Banks, particularly the pure play banks, have traditionally had some of the most selective hiring standards. With dozens of candidates (perhaps hundreds at a place like Columbia or Wharton) shifting away from banking, competition at Big 3 consulting just got a whole lot tougher and the effects will trickle down to other jobs (and schools) where hiring hasn't traditionally been as selective.
The only thing we can hope for is an orderly open to the markets tomorrow. It's not completely out of the question that unwinding Lehman's $600B in assets could cause a shock to the worldwide economy with results that we cannot even imagine at this stage. Let's hope not.
For people getting MBA's or with MBA aspirations, the job market just got a whole lot dimmer. It's hard to calculate the number of prime jobs lost at the MBA level, but it's unlikely that any other firms will be filling the void any time soon. It just feels like there has been a fundamental shift in the banking business. No doubt, something will move in to fill the void - boutiques or private equity firms perhaps - but Wall Street might take longer to recover this time around because the damage has never really been this widespread (at least not since the 1930s).
The indirect consequence is that jobs in other sectors will get tougher as well, as some top students that would have headed into investment banking start to target other sectors. Investment Banks, particularly the pure play banks, have traditionally had some of the most selective hiring standards. With dozens of candidates (perhaps hundreds at a place like Columbia or Wharton) shifting away from banking, competition at Big 3 consulting just got a whole lot tougher and the effects will trickle down to other jobs (and schools) where hiring hasn't traditionally been as selective.
The only thing we can hope for is an orderly open to the markets tomorrow. It's not completely out of the question that unwinding Lehman's $600B in assets could cause a shock to the worldwide economy with results that we cannot even imagine at this stage. Let's hope not.
