Finance · Profile from Finance Research Companion
Lehman Brothers Holdings Inc.
A 158-year-old firm that began as a dry-goods and cotton business in Montgomery, Alabama, became one of Wall Street's great partnership banks, was sold to American Express in 1984 and spun off again in 1994, then under Dick Fuld grew into the fourth-largest US investment bank on a balance sheet of mortgages, commercial real estate and leveraged loans funded overnight. Its Chapter 11 filing on September 15, 2008, with ~$639bn of reported assets, is still the largest bankruptcy in US history. It was the event that turned a credit crisis into a global panic, and its estate has spent more than seventeen years paying creditors back.
At a glance
- Founded
- 1844 (Henry Lehman's store in Montgomery, Alabama); "Lehman Brothers" from 1850, when Mayer Lehman joined Henry and Emanuel
- Founders
- Henry, Emanuel and Mayer Lehman, immigrants from Rimpar, Bavaria
- Headquarters
- New York (World Financial Center until 2001; 745 Seventh Avenue from 2001–02)
- Ownership / structure
- Partnership until 1984; part of Shearson Lehman / American Express 1984–94; NYSE-listed public company (LEH) from May 1994 to September 2008; since 2012 an estate run by the Lehman Brothers Holdings Inc. (LBHI) Plan Trust
- Leadership (at failure)
- Richard S. "Dick" Fuld Jr., chairman and CEO (1994–2008); Joseph Gregory, president and COO (to June 2008); Herbert "Bart" McDade, president from June 2008; Erin Callan, then Ian Lowitt, CFO
- Segment
- Investment bank and broker-dealer: fixed income and equities sales and trading, investment banking, principal investing, and investment management (Neuberger Berman)
- Scale at peak
- Total assets ~$691bn at November 30, 2007; ~28,600 employees (reported); record fiscal 2007 net revenue ~$19.3bn and net income ~$4.2bn (company results, reported)
- Leverage
- Gross leverage ~30.7x at fiscal year-end 2007; "net leverage" as Lehman defined it ~16.1x (reported)
- Failure
- LBHI filed Chapter 11 on September 15, 2008 with ~$639bn of assets and ~$613bn of debts (reported); the broker-dealer Lehman Brothers Inc. (LBI) went into SIPA liquidation on September 19; Lehman Brothers International (Europe) (LBIE) entered UK administration on September 15
- Aftermath
- Barclays bought the US business (~$1.75bn, including headquarters and data centres); Nomura bought the Asia-Pacific and European/Middle East franchises; LBHI plan effective March 6, 2012; ~$129.5bn distributed to creditors through the 32nd distribution in April 2026 (reported, verify)
9 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
1850
Founding Cotton Merchants
Founding
1984
Sale to Shearson American Express
Acquisition (Lehman as target)
1994
Spin Off from American Express
Spin-off / listing
2003
Neuberger Berman Acquisition
Acquisition
2006
Commercial Real Estate and Archstone Bet
Pivot (to principal investing) / acquisition (Archstone-Smith buyout)
2008
Capital Raises and Failed Rescue Talks
Funding round (equity raises) / failed sale
2008
Chapter 11 and Barclays Nomura Sales
Bankruptcy / divestiture
2008
Repo 105 Balance Sheet Window Dressing
Accounting and funding practice (failure / conduct)
2012
Estate Plan and Creditor Recoveries
Bankruptcy resolution (plan of reorganisation/liquidation and distributions)