by Brian DeChesare

Bear Stearns Episode 2: The Shareholders Strike Back

Depending on which finance sites you’re reading, you’ve probably heard by now that:

  1. Everyone below the VP level at Bear Stearns is getting fired.
  2. The investment banking division is going to be absorbed by the Death Star aka JPMorgan.
  3. All summer analysts are getting their offers revoked and thrown into the street.
  4. The shareholders have rebelled and may veto the deal now, until JPMorgan pays more or until someone else steps up to the plate.

Although it would make life more interesting if any of the above were true, they are all RUMORS and range from possible to unlikely to completely ridiculous (the Death Star one).

The reality is no one knows what’s going on.  Neither the CEOs of the companies, the Fed, nor any of the Managing Directors know what’s going to happen.

Will people be fired?  Yes.  But no one knows how many, who, or when, and anyone else saying otherwise is simply spreading false rumors.

Are the shareholders going to veto the deal?  Maybe, maybe not.

But in any case, do you gain anything by thinking about it 24/7?

No, not really.

Despite my post on Bear Stearns summer offers the other day in which I argued that no one really knows what’s going to happen and where I urged people not to panic, I’ve been getting lots of panicked questions and emails from readers.

So I thought it might be better to give a list of what NOT to do and what to do if you signed on to work at Bear.

What NOT To Do: Call Bear Stearns

Unless you are calling a very low-level contact (e.g. Analyst), this is pointless on a number of levels.

First, do you really think that senior people at Bear are particularly concerned with the fate of incoming college students who haven’t had real jobs before?

Not to sound harsh, but there are people here who have lost their life savings over this incident.  No matter how screwed you think you are, it’s not that bad because you haven’t even started your career yet and you don’t even have a savings to lose.

I was incredulous reading the “tip” posted on Dealbreaker the other day:

“I called the guy I had interviewed with originally this afternoon. He said he was busy, so I agreed to call back after 4:30. At 5 pm, I call, and some other guy picks up and says, “He no longer works here”.”

Even if we pretend for a split-second that this story is actually true, I don’t think anyone reading this site would ever do something like this.  At least, I hope not.

Resist the urge to contact Bear.  They will contact you.

What NOT To Do: Panic And Think Your Life Is Over

Also a bad move.  If you were smart and motivated enough to get a summer internship or full-time offer at Bear and at an investment bank in general, chances are you’re smart enough to find something else if your offer is not honored.

And if you really want to be in finance or investment banking, there numerous ways out of this situation…. going to a boutique, doing consulting, accounting, or something else related and then switching over or going to business school and getting in afterward.

Yes, you will be affected if you had planned to work at Bear, but it’s not the end of the world and you can still have a career in finance.

What NOT To Do: Panic If You’re Working At Lehman Brothers

This one just goes to show how often rumors come true (exactly 5% of the time).  Given Lehman’s earnings announcement the other day, there’s little to no reason to worry if you’re a summer intern or full-time hire there.  The “rumored liquidity problems” haven’t amounted to anything so far.

The same really applies if you’re going to be at any other bank rumored to be in some kind of financial difficulty.  Until something actually happens, don’t assume it will just because you read it on a message board somewhere (blogs, of course, are much more credible sources than message boards :) ).

What To Do: Explore Strategic Alternatives

You probably should be thinking of alternatives if you were planning on going to Bear, simply because no one knows what is going to happen. With even Goldman Sachs starting to cut back on expenses, you don’t stand too great a chance of getting hired at another bulge bracket unless you have a great connection and can network your way in.

Although I have recommended going to bigger banks for wider exposure, this is one scenario where it would probably be better to target boutiques in your search.

I don’t think this needs to be said, but don’t mention that you have already accepted with Bear when doing this… you’re just a smart, motivated college student looking to get into investment banking.

So there you have it.  Three strategies (if you want to call panicking a strategy) to avoid and one to consider.  I hope this is all I’ll have to write on Bear Stearns, but I have a feeling this saga is far from over.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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