Essay about Lehman Case Study Writeup
Lehman Case Analysis
Lewis Glucksman who scrapped his way up through Lehman's unprestigious but increasingly profitable stock-and bond trading department, was able to take control of the firm after a bitter power struggle against its former CEO, Peter Peterson. Glucksman was victorious in the end as he proved himself to be an indispensible part of Lehman’s operations.
During the times leading up to the power struggle, the power dynamic within Lehman was steadily shifting as trading profits became increasingly more important to Lehman versus traditional investment banking profits. Thus, Glucksman was able to step into the spot light and Peterson became more expendable. Peter Peterson’s core …show more content…
In Addition, the investment banking industry is highly cyclical. Traditionally, investment banks relied on fostering long term client relationships to generate revenues through fees charged for directly or indirectly financing companies and their projects. Such projects include mergers and acquisitions, and generally take place more often in bear markets when the prices of such acquisitions appear to be attractive. During more recent times, proprietary trading also became a significant profit driver for investment banks. Although such trading profits can be sustained regardless of underlying economic environments, they are usually much larger during bull markets as compared to bear markets.
As a result, leading sources of revenues and profits for investment banks vary with economic and market cycles, leading to shifts of power within firms. Many historical examples support this conclusion, such as the rise in power of the investment bankers during the industrial expansionary era of the United States, and the more recent rise in power of the real estate and securitization brokers during the sub-prime boom, as well as the rise in power of the traders prior to the power struggle between Glucksman and Peterson at