Elon Musk and Twitter, a Deal Gone Wrong

In this episode, I'm joined by Kirk Michie, founder of Candor Advisors to discuss the unfolding saga of Elon Musk’s failed takeover of Twitter. From April through July 2022: 

• Musk disclosed his ownership of 9.2% of Twitter shares.
• Twitter’s board offered Musk a seat on the board so long as he would not buy more than 14.9% of its shares (a “stand-still agreement”).
• Musk declined to accept the Twitter board seat.
• Musk made an unsolicited offer to Twitter’s board to buy 100% of its stock for $54.20 (or $44 billion).
• Musk tweeted “Love me tender” hinting that he may commence a tender offer to buy shares directly from shareholders. 
• Twitter’s board adopted a “poison pill” rights plan, a mechanism to materially alter a company’s capital structure upon certain events (Musk crossing a threshold of ownership).
• Musk secured debt commitments and equity commitments to fund his acquisition.
• Twitter and Musk executed a merger agreement to cash out the current shareholders at $54.20 and give him 100% ownership.
• Musk and Twitter engaged in due diligence.
• Musk announced the deal was terminated due to Twitter’s failure to deliver data responsive to his due diligence requests, Twitter misrepresented facts (giving him the right to rescind the deal), Twitter is experiencing a “material adverse effect” on its business (allowing him to walk), and Twitter has failed to conduct business in the same fashion to preserve its organization.
• Twitter has promised it will sue to enforce the merger agreement.  
With such a high amount in controversy and a number of “factual” disputes, it seems likely that litigation will persist for a while.

For more than 30 years, Kirk has worked with closely held business owners on their strategic planning, liquidity, and legacy objectives. Kirk advises businesses and owners in the middle-market, those with revenue between $10 million and $500 million.

Selling a business is the American dream, the pot of gold at the end of the rainbow, the reward for years of hard work. Successful entrepreneurs make countless sacrifices in hopes that they would someday reap the benefits of their labor and live a new life of vacations, recreation, and prosperity.

You only exit your business once, so you should feel confident passing this milestone. A successful business exit reflects the preparation done beforehand. Failing to plan is planning to fail.

The owner of a privately held company has several alternatives on how to exit their business. In the absence of an exit strategy, events will inexorably dictate the final exit plan. A costly involuntary exit may be caused by death, disability, divorce, disagreement, or distress.

Selling Your Business with David King will help you take control of the sale process and make it positive one.