Lehman a big gamble for any buyer

Ladenburg's Bove said the company has had trouble raising capital as there is a gap between what the management thinks its assets are worth and what the market is willing to pay.

"Clearly the company does not believe that it has a serious balance sheet problem and it simply refuses to take what it believes are fire sale prices for its key assets," Bove wrote in a research note. "Buyers seem to believe that Lehman is overvaluing its assets and refuse to hit the bid."

UNKNOWN LIABILITY

Analysts said buyers with different motivations may be tempted to look at buying Lehman.

These could include foreign banks, such as KDB and Barclays PLC, which may want an investment banking franchise. Other companies such as investment manager BlackRock Inc could be attracted to Lehman for its asset management business.

"If the current stock price made it attractive, then the question is what the other parts are worth or what would they cost," said Joel Greenberg, a partner at law firm Kaye Scholer.

Potential suitors could also make unsolicited bids just for the part of the business they want, such as asset management, but that may be tough to pull off as well.

"There are lots of built-in shark repellents," Greenberg said. "There are lots of contracts that have change of control provisions in them."

Taking on the whole business will likely need government support, Farr said. "Somebody's got to be prepared to draw a line and say it won't get any worse than this."

Some say a bailout by Washington is less likely because of the rescue of Bear and last weekend's U.S. government takeover of housing finance behemoths, the government sponsored enterprises Fannie Mae and Freddie Mac.

"Given the combination of moral hazard and their focus on the GSEs, I would see it unlikely that Lehman would get a government bailout," said Tim Backshall, chief analyst at Credit Derivatives Research.

Without someone giving that kind of guaranty, it will be hard for a potential buyer to come to terms with the risk, Farr said.

"What do you pay for an unknown liability?" said Farr, whose firm manages more than $550 million. "Go to Las Vegas ... they will give you a free drink. You will have more fun when you lose your money."

(Additional reporting by Jui Chakravorty Das, Karen Brettell and Jonathan Stempel)

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