Bonus Episode: Plunging Markets, Crypto Winters, and Elon’s Twitter Deal — with David Yermack

Deal Analysis

Elon Musk's acquisition plan for Twitter is unprecedented and fraught with challenges. David Yermack highlights the unusual nature of a single individual attempting to take a company of Twitter's size private, noting the immense financial and regulatory hurdles involved 1. Scott Galloway adds that the Delaware courts might need to set a precedent to prevent such deals from being easily abandoned, which could destabilize corporate mergers and acquisitions 1.

The Delaware courts, I think, are going to have to say a signal that if you start putting out offers on big corporations and having them accepted, you can't just start walking away.

--- Scott Galloway

The potential for regulatory intervention and the financial impracticality of the deal make its completion uncertain.

   

Legalities

The legalities surrounding Elon Musk's potential withdrawal from the Twitter deal are complex. David Yermack explains that breakup fees, typically around a billion dollars, are common in large transactions to deter parties from backing out without a valid reason 2. However, the concept of a material adverse change, which could justify Musk's withdrawal, remains legally ambiguous 2.

These cases always end in compromises. There was one with huntsman Chemical where it looked like Mister huntsman really wanted to take the buyer to the cleaners, but he compromised and settled at the 11th hour.

--- David Yermack

The courts may ultimately need to determine whether Musk's claims about Twitter's bots constitute such a change.