Merrill Lynch Case Study

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Among other reasons existing of the acquisition of Merrill Lynch, we have come about four key reasons and rationales; the first, being that Bank of America’s CEO and Chairman of the board during 2008, Kenneth Lewis, had eyes on Merrill Lynch even before the financial crisis came about, thus he and the management believed that this would be the best time to buy over ML to extend the brawn of Bank of America’s muscle in wealth management.

Secondly, ML was facing severe liquidity issues. By the next trading day of 15th September 2008, ML would be unable repay to its short term debts. Simply, this acquisition gave ML a new lease of life.


Fourthly, that there was intense pressure by the New York Federal Reserve President Timothy Geithner and U.S. Treasury …show more content…

ML had been one of the five independent investment banks on Wall Street and with the acquisition of Merrill, BofA would be ‘uniquely positioned to win market share and expand our leadership position in markets around the world’ with 20,000 financial advisors and more than $2 trillion globally in client assets.

The 50 percent ownership of BlackRock Inc., itself having $1.26 trillion in assets on 30th September 2008 would also be a huge asset to BofA. Merrill, because there was not an overlap in the customer base, and more importantly for ML’s global reaches of clients. These add strength to BofA’s debt and equity underwriting, sales and trading etc., making it an opportunity for BofA to expand their horizons.

Thus, it can be said that ML would enhance current strengths of BofA and creates new strengths in debt underwriting, equities and even merger and acquisition advices. “Now Bank of America has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world” - said James Ellman from hedge fund Seacliff

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