The winning bidder for Neuberger Berman, auctioned off this past Wednesday at the Federal Bankruptcy Court, was themselves. A group of portfolio managers, management team, and senior professionals acquired a majority interest in Neuberger Berman and the fixed income and alternative asset management businesses of Lehman Brothers’ Investment Management Division. Executives plan create a new independent investment management company that will manage $160 billion of assets.
In August 2008, as a last-ditch effort to raise capital and keep the bank afloat, former Lehman chief executive officer, Richard Fuld put the Lehman owned- Neuberger Berman, up for sale. Neuberger was originally set to be sold to Bain Capital partners and Hellman & Friedman, two private equity firms, for $2.15 billion. The transaction was expected to take place in early 2009 however, an unexpected competing bid was entered by the firm’s own management. Jim Fogarty, a managing director with Alvarez & Marsal and chief operating officer of Lehman Brothers Holdings, said the management bid was chosen because it offered the greatest value and certainty of closing.
Lehman creditors will receive no immediate cash payment. Instead, they will maintain a 49% stake with the hope that values will increase overtime. Considered one Lehman’s’ prized jewel, the formation of a new independent investment management firm, is a considerably great deal for Neuberger’s leaders. Neuberger executives seem to be old pros at this business game. They have sold their firm twice in the past decade at high valuations turning many employees into millionaires. The acquisition includes the businesses of Neuberger Berman (primarily equities products and services, mutual funds, and high net worth and institutional clients), Lehman Brothers Asset Management (fixed income, commodities, and quantitative portfolio management), and Lehman Brothers’ private funds investment group.
See original press release here