Lehman Brothers

The Future of Lehman Brothers Private Equity

Lehman Brothers Holdings is a finance giant that has dominated the news this week with speculation that the firm would file for bankruptcy. This rumor was confirmed when Lehman Brothers filed for Chapter 11 bankruptcy protection on the morning of September 15, 2008.

In response, Lehman Brothers' shares plummeted bringing the Dow Jones to its largest drop since the wake of September 11, 2001. Aside from the broader economic implications, what does this mean for Lehman Brothers' substantial private equity business?

Since entering private equity in 1984, Lehman Brothers has been a major player in private equity by investing in merchant banking, venture capital, real estate, credit related investments, infrastructure and private fund investments. The private equity department of Lehman Brothers has amassed $30 billion in assets under management, according to the firm's website. With a dim future for the company, the future of the private equity department is in jeopardy.

The only hope is to seek out potential buyers that would absorb the private equity branch. According to the Street Insider, the top firms that may buy the investment management division are limited to Bain Capital, Hellman & Friedman and Clayton Dubilier & Rice. Lehman Brothers will likely take its time searching out potential buyers and selling off the remaining assets of the company. The fall of Lehman Brothers Holdings is only the latest in a series of major blows to the market, following the government takeover of mortgage giants Freddie Mac and Fannie Mae. Ultimately, the impending purchase of the Lehman Brothers' investment management division will decide how private equity is directly effected.

Lehman Brothers Private Equity WSJ

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