Mood Grim, But Business as Usual, at Neuberger Berman

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As recently as mid-August, Lehman Brothers was reportedly trying to raise cash by selling off one of its few remaining valuable assets, the venerable asset manager Neuberger Berman, which it acquired in 2003. The sale didn't happen fast enough and now, in the wake of Lehman Brothers' demise over the weekend, Neuberger Berman employees are wondering what comes next.

"The mood is tense," says one portfolio manager who declined to be named. "Most of us are getting our news of what's happening on Wall Street from the TV, just like everyone else."

A seventy-year-old firm which manages over $125 billion in assets, Neuberger Berman isn't included in the Lehman bankruptcy proceedings and is expected to be sold. In August, numerous private equity firms reportedly expressed interest in Neuberger, including Carlyle Group, Hellman & Friedman, General Atlantic, Kohlberg, Kravis & Roberts, J. C. Flowers, the Blackstone Group, and Apollo Management.

"Every day there is gossip that a different firm is going to buy us," says another insider, who also wished to remain anonymous. "A letter went out to clients saying that we are in 'advanced discussions' with a number of firms, but there is no clear information on who the buyer will be."

As at Bear Stearns and Lehman, many employees at Neuberger Berman were affected on a personal financial level as owners of Lehman Brothers stock. The portfolio manager confirmed that, since the acquisition, a portion of executive salaries has been paid in Lehman Brothers stock, some of it restricted.

Amidst the distractions, Neuberger insiders say employees are trying to focus on their primary work of managing portfolios and communicating with clients. A notice on the firm's Web site emphasizes its "portfolio management, research, and trading operations are fully functional, and our portfolio managers continue to actively manage our clients' assets and will do so going forward. All mutual fund assets are segregated from Lehman Brothers and are held by the custodian, State Street Bank & Trust."

"There are a lot of angry, frustrated people around here," the portfolio manager observes. "But we are trying to focus on business and take care of our clients."

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