...Evaluation of Acquisition of Steinway Musical Instruments by John A. Paulson The Acquisition Back to the year 2011, the world’s most famous manufacturer of musical instrument, Steinway Musical Instruments Corporation, had begun to considerate the offer to acquisition. Two member of the board of directors, Dana Messina and John Stoner set up the special committee to discuss the acquisition deals. But Steinway turned down the Stoner-Messina offer in 2012,12 and declared that the company was not for sell. Now it’s time to take a fresh look at this issue. Kohlberg & Co. announced that they are going to offer a price of $448 million to take an overall acquisition, and Steinway accepted the $35-per-share Kohlberg proposal. However, at the last days in the 45-day “go-shop” period, a second, unidentified suitor offered a higher price: $38-per-share and $477 in total. This mysterious competitor is John Paulson, a hedge fund billionaire. In the end, Steinway announced that it would be acquired for approximately $512 million, $40-per-share, and the investment firm Paulson & Co. has completed its approximately $499 million purchase of Steinway in Sep, 2013. Kohlberg & Co. refused to increase its offer so Steinway will be required to pay Kohlberg a $13.35 million termination fee. This deal makes Steinway a private company, again. John A. Paulson Born in Queen, now John A. Paulson is one of the top American hedge fund mangers, or maybe the best. Warren E. Buffett...
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...bad investment in the subprime mortgage market, insolvency, and shattered investor confidence led to the inevitable downfall of Lehman. At the beginning, Lehman was looking for 30 to 50 billion dollars in financial support by Warren Buffett. Moreover, Lehman tried to seek the financial assistance of the Korea Development Bank. The bank also wanted the government to provide financial assistance. But the results have failed. On September 12, 2008, many different banks including bank of America, JP Morgan, Goldman Sachs, Merrill Lynch, and Barclays met at the Federal Reserve in New York to try to come up with a way to save Lehman Too Big to Fail chronicles the 2008 financial meltdown, focusing on the actions of U.S. Treasury Secretary Henry Paulson (William Hurt) to contain the problems during the period of August 2008 to October 3, 2008. Dick Fuld (James Woods), CEO of Lehman Brothers, is seeking external investment, but investors are...
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...Lehman due to its exposure to toxic housing assets. Paulson works towards trying to convince CEO’s from major banks to buy Lehman stocks discretely since the Treasury was “opposed” to offering any kind of bail out as occurred to Bear Sterns. Lehman expressed to have been negotiating the sale of the company with Bank of America and Barclays. However, Bank of America decided to purchase Merrill Lynch. While Barclays was beginning to accept the terms of this merger, British bank regulators refuse to approve the deal. At this point Paulson sees no other solution and advices the CEO of Lehman Brothers to file for bankruptcy. Paulson quickly learns that Lehman's counterparty risk is impacting the entire financial market and the stock market is in freefall. Another crisis arises as AIG begins to collapse. Paulson's team realizes that if AIG is allowed to fail, its entire insurance portfolio will default and the entire financial industry will suffer massive losses. The Treasury decides to takes over AIG. Ben Bernanke, Chairman of the Federal Reserve, then argues that the status quo is unsustainable and that the Congress must pass legislation to authorize any continued intervention by the Federal Reserve or the Treasury. Timothy Geithner, President of Federal Reserve Bank of New York, realized that the market couldn’t wait until Congress took action and attempted to merge consumer banks with investment banks with no success. Paulson then receives a call from...
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...Book Review: Andrew Ross Sorkin's Too Big To Fail The financial struggles of 2008 led to myriad books on why the crack-up occurred, and many have been reviewed here. Andrew Ross Sorkin, a writer for the New York Times, approaches what happened differently. He has written a very interesting behind-the-scenes account of the people within government and finance who saw the crisis up close. For those interested in what went down behind closed doors, Sorkin's “ Too Big To Fail” is essential. Thanks to his global access to the individuals involved, the interested reader can expand his or her knowledge about the events behind the events. Too Big To Fail begins in riveting fashion at J.P. Morgan CEO Jamie Dimon's Park Avenue apartment the day before the collapse of Lehman Brothers. Having spent part of the previous evening at the New York Fed, Dimon knew better than most what was ahead, and in a conference call with his top lieutenants, Dimon dismissed the view - one held by Lehman CEO Richard Fuld no less - that the prominent investment bank would be saved by Washington. Dimon's take was "That's wishful thinking. There is no way, in my opinion, that Washington is going to bail out an investment bank. Nor should they (my emphasis)." Instead, Dimon told the listeners on the call that "We need to prepare right now for Lehman Brothers filing. And for Merrill Lynch filing. And for AIG filing. And for Morgan Stanley filing." Before each company mention Dimon paused, then paused...
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...Goldman Sach vs. SEC By: Lemar Clayton The Goldman Sachs situation presents a leadership ethics dilemma. Is it okay for banks to bet against their customers to manage risk and hedge their bets? In fact, I’m willing to bet that opposing sides in the argument don’t even see this as a dilemma. “The senate subcommittee grilled Goldman executives for 11 hours because they clearly think that what Goldman did was morally wrong, if not illegal.” ("Sec charges goldman," 2010) Contrast that with Goldman’s shareholders, who probably think it’s unethical for Goldman’s executives not to hedge against a mortgage collapse. There is a middle position that says the hedging itself wasn’t wrong, it was how Goldman did it that was questionable. Goldman should have disclosed its short position and possibly even details about the origins of those CDOs to customers. Let me begin by explaining what is a CDO, Goldman takes a reference portfolio, or a bunch of bonds. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Each set of bonds is senior to all the bonds below it, and they pay principle in order of their seniority. You can view it as a pyramid with different slices. The portfolio is giving a rating by Wall Street. Each slice has a different maturity and risk associated with it. The higher the risk, the more the CDO pays. Level E will take losses before D, and level C will take losses before B. It’s important to note the bonds don’t have...
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...people have driven Goldman Sachs’ success for 130 years through sustained, superb execution across a range of markets and products. The best way to maintain that advantage is by recruiting, training and mentoring people as we always have—one at a time, with great care. We want Goldman Sachs to be a magnet for the very best people in the world—from new graduates to senior hires. At the same time, we are focusing on developing our very deep bench of talented people and improving and extending our skills. We are, for instance, placing young leaders in demanding positions that stretch their abilities. We are also devoting more time and attention to the formal training and development of leaders, particularly senior leaders. — Henry M. Paulson, “Letter to Shareholders,” Goldman Sachs, 1999 Annual Report Late on the evening of November 7, 1999, a small cadre of senior leaders huddled around a conference table on the 22nd floor of 85 Broad Street, deep in the heart of New York City’s financial district. The heady atmosphere and high-octane blend of intensity, anticipation, and quiet professionalism were not unusual for one of the world’s most storied investment banks. Tonight, however, eleven of Goldman Sachs’ finest were working not on a major acquisition or IPO, but on a revolutionary leadership development plan for the firm. In June 1999, Goldman’s Management Committee had selected a diverse, experienced group to form the Leadership Development Advisory Committee (see...
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...The film Inside Job offers in-depth evidence of the complex relationship between government and business by showing how business under the auspice of capitalism and government under the mantle of democracy is collusive and incestuous in their ultimate pursuit of profit and power. The film clearly captures the systemic corruption of the United States by greedy and morally unbalanced industry leaders and their cohorts who engineered a financial catastrophe in 2008 not seen since the great depression. The film’s writer and director Charles Ferguson contends that the collapse of the financial industry could have been prevented had there been more regulation of Wall Street. He clearly establishes his line of reasoning through a series of interviews with many of the major players in government and the financial industry who indirectly and in some cases directly contributed to the financial fiasco of 2008. The financial collapse was caused by three main contributing factors; first, a toxic sub-prime mortgage market engineered by the financial industry; second, government’s failure of regulatory enforcement of the financial industry and Wall Street; and third, a collusive relationship between business leaders and government officials elected to curtail the same crisis they helped create. The financial collapse of 2008 resulted from a toxic sub-prime mortgage market engineered by an out-of-control industry that led to its inevitable implosion. In September 2008, the global financial...
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...This movie reveals what was really going on in the Stock Market during 2008. Hank Paulson, Secretary of Treasury, finds himself in a position where he is forced to make some very unfavorable decisions as the investment banks, such as Lehman Brothers and Bear Sterns, begin to fall. When Bear Sterns was almost forced into bankruptcy, the Department of Treasury offered them a bailout, and was able to save the bank. Richard Fuld, CEO of Lehman Brothers, expects the same treatment when his bank begins to fall. Because of some of the investments Lehman Brothers had made, outside investors were wary of putting money into this bank for fear that it might put them in the same spot in a short period of time following their investment. It is also revealed the Dick Fuld was offered many deals that he denied because he believed that Lehman Brothers was worth much more then was being offered. Hank Paulson is then put into the position to decide whether to offer Lehman Brothers a bailout or force them into declaring bankruptcy. Paulson soon realizes that a snow ball effect is in occurrence. Once the investment banks start failing, so do other companies such as AIG, who depended on the investment banks, and GE, who is also failing on daily obligations. Soon enough the whole economy is at risk, as Paulson is trying to solve the investment banks issues. Ben Bernanke, Chairman of the Federal Reserve, advises Paulson that legislation must be passed through Congress that allows the Department of Treasury...
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...This movie reveals what was really going on in the Stock Market during 2008. Hank Paulson, Secretary of Treasury, finds himself in a position where he is forced to make some very unfavorable decisions as the investment banks, such as Lehman Brothers and Bear Sterns, begin to fall. When Bear Sterns was almost forced into bankruptcy, the Department of Treasury offered them a bailout, and was able to save the bank. Richard Fuld, CEO of Lehman Brothers, expects the same treatment when his bank begins to fall. Because of some of the investments Lehman Brothers had made, outside investors were wary of putting money into this bank for fear that it might put them in the same spot in a short period of time following their investment. It is also revealed the Dick Fuld was offered many deals that he denied because he believed that Lehman Brothers was worth much more then was being offered. Hank Paulson is then put into the position to decide whether to offer Lehman Brothers a bailout or force them into declaring bankruptcy. Paulson soon realizes that a snow ball effect is in existence. Once the investment banks start failing, so do other companies such as AIG, who depended on the investment banks, and GE, who is also failing on daily obligations. Soon enough the whole economy is at risk, as Paulson is trying to solve the investment banks issues. Ben Bernanke, Chairman of the Federal Reserve, advises Paulson that legislation must be passed through Congress that allows the Department of Treasury...
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...Phoenix Advertising Interoffice Memorandum Phoenix Advertising Interoffice Memorandum May 19, 2015 To: Gregory S. Forest, President; Stephen Summers, Chief Executive; Hank Paulson, Vice President of Operations; Jamie Richey, Vice President of Human Resources; Bill Johnson, Vice President of Public Relations Operations; Sandy Jones, Vice President of Marketing Operations; Cindy Xiong, Vice President of Advertising Operations; Bob Thomas; Vice President of Finance From: Jamie Richey, Vice President of Human Resources Subject: Roanoke Branch Update In recent months, the Roanoke office has had complaints from four of its clients and there is a feeling that the decline in customer satisfaction could be due in part to low morale among the branch’s employees. It has come to my attention that some of the graphic designers and art directors feel that they and their works are not being treated fairly and their ideas are not being taken seriously. All the while, they are being asked to work longer hours without a satisfactory work life balance, or proper compensation, either monetarily or in time. All have threatened to leave the company. We must give our immediate attention to this situation as Roanoke handles some of our biggest clients. We must also be sure the employees we hire are being treated as part of a team, and adequately trained as well as perform and overall compensation review. As an executive team, I feel it is very important to reach out to the Roanoke...
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...* Which forces in Goldman Sachs external environment have accounted most for The fortunes of fate “that the company- indeed, the investment banking industry – has experienced since 2008? Ans: The external environment is everything outside organizations boundaries that might affect it. Included in the external environment that surrounds an organization, is the economic dimension, which encompasses the overall health and stability of the economic climate that the company operates in. In the case of Goldman Sachs, the firm was inevitably touched by the global financial crisis and was forced to convert from an investment bank to a holding-company bank in 2008. Although executives attempted damage control, there were factors in play beyond their control, causing Goldman Sachs company stock price to fall approximately 50% at the height of the financial collapse. * Explain the roles of Goldman’s partners, both as owners and as employees, in forming and managing its internal environment. Ans: 470 of Goldman Sachs 35000 employees enjoy profit-sharing benefits, as partial owner of the financial giant. The author also states that the owners of a business are those who hold legal property rights over the organization, so we can interpret that these 470 select individuals play a dual-role in Goldman Sachs. On one end, their performance as employees directly affects the company profitability and customer retention, and on the other, those same individuals reap the benefit of their...
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...Bloomberg News Coca-Cola Is Said to Weigh Investment in Spotify Service By Andy Fixmer and Duane D. Stanford on October 11, 2012 * Tweet * Facebook * LinkedIn * Google Plus * 0 Comments * Email * Print More from Businessweek * * Odd Jobs: The Picasso of Parking Lots * * Post-Debt Crisis, No Consequences * * The Other Affirmative Action Battle: Thomas v. Wells * * The World's First 3D-Printed Guitar * * Algae Are a Growing Part of San Diego's Appeal Companies Mentioned * KO Coca-Cola Co/The * $38.23 USD * 0.12 * 0.31% * GS Goldman Sachs Group Inc/The * $120.2 USD * -1.79 * -1.49% Market data is delayed at least 15 minutes. Company Lookup ------------------------------------------------- Top of Form Go Bottom of Form Coca-Cola Co. (KO) is in discussions to invest about $10 million in Spotify Ltd., the subscription music-streaming service, according to two people with knowledge of the discussions. An agreement isn’t assured, said one of the people, who sought anonymity because the talks are private. An agreement may be reached in the next few weeks, Sky News reported yesterday, citing people close to the beverage company. Coca-Cola, owner of the world’s most-valuable brand, has increased its ties to entertainment so it can market products to young consumers in a subtle way. The Atlanta-based company reached a deal in April to add Spotify to its...
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...What caused the global economic crisis, and what could have been done (by governments or the private sector) to prevent this? Also, give your personal thoughts on this issue. My personal thoughts on this issue: After watching all five parts of the movie, I think the global economic crisis key factor was caused by deregulation which began since Reagan administration, because it contributed to the real estate bubble and allowed greedy and overpaid banks to go on unreasonable leverage. Regulatory bodies allowed privatization of the banks, dropped the regulations that limiting the investments of the banks and amounts they could borrow. The banks, Wall Street traders and investors and mortgage lenders failed to look at what they bought and ignored risk management. When the going is good, they pocket more than their fair share. The banks borrowed more than several times of their value. Derivatives allowed the lender to repackage the loan and sell to investment banks, which in turn repackage and sell them to investors without considering if the customer ever pays the loan back, since they have their money. Banks and greedy lending groups were showered with incentives to give loans to anyone for exorbitant interest rates, and since nobody cared if the loans were repaid, the commission alone was all that mattered. The massive amount of liquidity in the system and the hunger for mortgages resulted them to repackaged the loans into collateralized debt obligations (CDOs), with numerous...
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...Are Science and Religion in Conflict? Name PHI 103 Instructor Date The economic crisis that struck the world between 2008 to 2009 had such resounding adverse impacts that brought even the mightiest economies to its knees. Even at present, the far-reaching effects of the crisis remain almost palpable and may be seen in high unemployment rates, economies still in recession and seemingly insurmountable national deficits. The United States, where the crisis had its beginnings continues to suffer from the recession even if it is gradually recovering. The present problems in the Euro zone may be partly attributed to the recession of 2008. Because of these, many scholars, economic analysts, researchers and businessmen continue to endeavor up to now to discern what the real cause of the economic crisis was in the hopes that it will not happen again. Many people attribute the global economic meltdown to the collapse of the subprime sector in the United States. To put it simply, the mortgage sector was blamed for the crisis because of how many financial instruments were collateralized by mortgages of people who had bad credit histories. When too many of them failed to meet their obligations, it began a series of defaults that ultimately collapsed not only the mortgage industry but the financial industry as well. All those that have investments in both sectors, local and foreign entities, also became affected as they lost what they have invested...
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...value business model, and rocked other banks. The SEC move came as President Barack Obama made a final push for financial reform in the Senate Goldman and one of its vice-presidents of failing to disclose that in 2007 the hedge fund Paulson & Co had a major role in creating a collaterised debt obligation, a security backed by subprime mortgages, so that it could bet against it. d the firm and its position of Lloyd Blankfein CDO but did not name any executives. Goldman shares closed nearly 13 per cent lower to $160.70. The civil complaint alleges that Goldman and Fabrice Tourre, one of its vice-presidents, hid from investors the fact that Paulson & Co, which has not been charged, had a heavy hand in influencing the composition of loans that made up the CDO. Mr Tourre could not be reached for comment. - Within nine months of the creation of the CDO, 99 per cent of its loans had been downgraded, yielding Paulson & Co a profit of $1bn. Investors around the globe including IKB, the German bank which became the first casualty of the credit crisis in July 2007, lost $1bn, the complaint said. Goldman was paid a $15m fee and received a further $841m from Royal Bank of Scotland, which had bought ABN Amro. Most of the RBS payment was passed on to Paulson & Co. ABN had taken on the risk associated with parts of the CDO. RBSwas on Friday night considering whether they could take legal action against Goldmanlegal action...
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