Comparing Wells Fargo And Wachovia

Companies analyze their strength and weakness to evaluate and project how they can improve or make profit in the coming years. So some companies will go through financial leverage by using debt to acquire additional assets as Wells Fargo did in acquiring Wachovia according to San Francisco & Charlotte, N.C (Business Wire 2008). Wells Fargo acquired all outstanding shares of common stock of Wachovia in stock-for-stock transaction, including preferred equity and indebtedness. They did this to expand their business in other states and cities. Other companies will sell shares, stock and use other means with the exception of acquiring debt to raise money.

According to Karen Firestone (20120). Leverage can be positive, thanks to the countless individuals
and businesses in existence that have relied on a loan to get started. Leverage can and does work under the right circumstances. Lending would not still be in existence after thousands of years if it wasn’t a useful tool in careful hands. But careful analysis and preparation by the borrower of several possible scenarios, good and bad for the business, project, or investment are necessary to really know what you are getting into. Otherwise, debt will be your worst enemy.

In this situation the family and shareholders can choose not to use debt in planning for the future growth of the company but will have to weigh in whether the company is financial sound enough or has the capital to under take the necessary project to profit the future growth.