Gary Parr, deputy chairman of Lazard Frères & Co. and Kellogg class of 1980, could not believe his ears. "You can't mean that," he said, reacting to the lowered bid given by Doug Braunstein, JP Morgan head of investment banking, for Parr's client, recognized investment bank Bear Stearns. Fewer than eighteen months succeeding trading at an all time high of $172.61 a share, Bear now had little choice but to accept Morgan's humiliating $2-per-share, Federal Reserve-sanctioned bailout offer. "I will need to get back to you." Hanging up the phone, Parr gave an exhausted sigh and leaned back. Time and again, the scrappy Bear appeared to have weathered the storm, although rumors had swirled around Bear since two of its hedge funds imploded as a consequence of the subprime housing crisis.
In the previous week, those rumors had reached a fever pitch, with financial analysts openly questioning Bear's ability to continue operations and its customers running for the exits. Now Sunday afternoon, it'd been a long weekend, and it'd probably be a long night, as the Fed-backed bailout of Bear would need onerous dialogues before Monday's market open. By morning, the eighty five-year-old investment bank, which had endured the Great Depression, the savings and loan disaster, and the dotcom implosion, would cease to exist as an independent business. Prior to calling CEO Alan Schwartz and the rest of Bear's board pausing, Parr allowed himself a moment of reflection. How had it occurred?
PUBLICATION DATE: March 06, 2009 PRODUCT #: KEL378-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
Related Case Solutions & Analyses:
Auditor Liability in Canada (A)
Rethinking the War for Talent
Dunlap Corporation
Motor City: A Disruptive Business Model (A)
Societe Generale (A): The Jerome Kerviel Affair
Transworld Auto Parts (A)
A Note on Long-Run Models of Economic Growth
BCE Inc.: World’s Largest LBO Deal in Jeopardy
TRX, Inc.: Initial Public Offering
Aussie Pies (D)
