At this point from what we've heard from the conference call, and from the ongoing Press Conference on CNBC, Ken Lewis worked with Christopher Flowers and his firm, J.C. Flowers in their acquisition of Merrill Lynch. Apparently Flowers had previously conducted serious diligence on Merrill semi-recently, and had a very detailed view of the moving parts, especially the complex debt securities Merrill was holding on their books.
No one works for free, especially opportunistic Private Equity firms such as J.C. Flowers, but we've yet to get any detail on what Flower's incentive was for playing nice-nice with Bank of America. What could they have to gain though? A commitment from BofA/Merrill to fund future buyouts? Was there a cash payment much like what traditional M&A advisors receive?
Interestingly enough, Ken Lewis mentioned that Chris Flowers said Merrill's books were "Night and day" versus what he'd seen when they first conducted their analysis. If this was indeed the case though, it begs the question as to why couldn't Merrill simply continue as an ongoing concern on their own? Hmmmm...
I don't expect these question to be answered anytime soon, but its interesting to ponder what we can only surmise must be a symbiotic relationship between the Private Equity firm and the Bank (slash Broker).