Going to the Oracle: Goldman Sachs, September 2008

Posted: 10 Jun 2009

See all articles by Clayton S. Rose

Clayton S. Rose

Harvard University - Business School (HBS)

David Lane

Harvard University - Business School (HBS)

Date Written: May 27, 2009

Abstract

On September 23, 2008, in the midst of a historic crisis in the U.S. financial markets, Warren Buffet's Berkshire Hathaway invested $5 billion in Goldman Sachs. Goldman CEO Lloyd Blankfein said: 'We are pleased that given our longstanding relationship, Warren Buffett, arguably the world's most admired and successful investor, has decided to make such a significant investment in Goldman Sachs.' He added that the deal 'will further bolster our strong capitalization and liquidity position,' calling Buffett's decision 'a strong validation of our client franchise and future prospects.' For his part, Buffett called Goldman 'an exceptional institution' with '...an unrivaled global franchise, a proven and deep management team, and the intellectual and financial capital to continue its track record of outperformance.' This case provides an opportunity to evaluate Goldman's decision to raise capital, the cost of the firm of Buffett's investment and the decision by Warren Buffett to make the investment, all in the context of a profound market crisis that may have altered the usual metrics for such decisions.

Suggested Citation

Rose, Clayton S. and Lane, David, Going to the Oracle: Goldman Sachs, September 2008 (May 27, 2009). HBS Case No. 309-069, Harvard Business School General Management Unit, Available at SSRN: https://ssrn.com/abstract=1415981

Clayton S. Rose (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

David Lane

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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