The Need for Due Diligence and Financial Statement Analysis – The Bank of America-Merrill Lynch Case

Mr. Ken Lewis, Chief Executive of Bank America (BOA), was harshly questioned regarding BOA’s acquisition Merrill Lynch. This driven by an earnings release on January 16, 2009 indicating had massive losses for the 4th quarter 2008 due to Lynch acquisition. America’s stock fell $7.18, its lowest level in 17 years following announcement. Complicating matter that market capitalization America, including Lynch, just $45 billion, and American offered $50 billion acquire Merrill. These events led both insiders outsiders question What diligence should have been completed were there relevant accounting policies valuation issues concern? In this case, students are placed a decision-making role provide financial analysis considering different options assessing benefits detriments It provides opportunity apply principles real-life setting.