Going to the Oracle: Goldman Sachs, September 2008 Harvard Case Solution & Analysis

On the September 23rd, 2008, in the midst of a historical disaster in the U.S. financial markets, Warren Buffet's Berkshire Hathaway invested $5 billion in Goldman Sachs. Goldman CEO, Lloyd Blankfein, said: "We are thrilled that given our longstanding relationship, Warren Buffett, arguably the world's most admired and successful investor, has decided to make such a substantial investment in Goldman Sachs.

"He added that the deal "will further strengthen our strong capitalization and liquidity position," calling Buffett's choice "a strong corroboration of our client franchise and future projection." For his part, Buffett called Goldman "an outstanding institution" with "...an unrivaled international franchise, a proven and deep management team, and the intellectual and monetary capital to continue its history of operation." This case provides an opportunity to assess Goldman's choice to raise capital, the cost of the firm of Buffett's investment, and the choice by Warren Buffett to make the investment, all in the context of a profound market crisis that may have altered the usual metrics for such selections.

PUBLICATION DATE: May 27, 2009 PRODUCT #: 309069-PDF-ENG

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