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So, it was a simple corporate raid after all. Welcome back to the 70s: energy markets problems, inflation, and now finally some good old corporate raiding with

So, it was a simple corporate raid after all. Welcome back to the 70s: energy markets problems, inflation, and now finally some good old corporate raiding with LBOs. PS. https://en.wikipedia.org/wiki/Corporate_raid https://en.wikipedia.org/wiki/Corporate_raid

twawaaay 4y ago
Twitter has been taken private so this is not corporate raid. Corporate raid is aimed at making changes to the company specifically to increase share price. The idea is that the resulting share price increase covers at least significant part of the cost of getting majority stake. This makes the buyout relatively cheap or even free. Which of course makes little sense if you are also taking the company private. I would also like to point out that the whole point of buying a controlling stake in the company usually is to exert some control. And to buy it out completely and take it private is to exert complete control without having to explain yourself (too much). There is, of course, possibility of the investor buying shares because they are content with current management and do not plan to interfere even after they have acquired majority stake. But this, in my experience, is quite rare.
- NationalPark 4y ago
  Taking a company private via LBO, firing a quarter of the staff so you can afford the debt payments, and then streamlining and flipping the profitable parts of the business is the classic corporate raid playbook. So far he's done the LBO part, and is apparently doing the layoff part. Of course, he's the richest person in the world and his finance partners are well connected Saudis, so there are obviously many plausible reasons to operate it at a loss and never do the actual looting part of the corporate raid.
  - twawaaay 4y ago
    > Of course, he's the richest person in the world and his finance partners are well connected Saudis, Care to point to your sources or are you just spreading misinformation? Saudis are second largest shareholder in Twitter but their share is relatively slim. Also, just because Saudis bought the same thing I bought does not immediately mean they are my finance partners even if it somehow helped my goal.
    - camel_Snake 4y ago
      CTL+F "Saudi" https://www.tesla.com/blog/update-taking-tesla-private https://www.tesla.com/blog/update-taking-tesla-private Saudi finance partners were the reason he tweeted 'Funding Secured' in relation to Tesla. That's Tesla, not Twitter, but does show he has partnerships with the 'well connected Saudis'
    - NationalPark 4y ago
      https://www.reuters.com/markets/deals/saudis-kingdom-holding-company-maintain-twitter-stake-2022-10-28/ https://www.reuters.com/markets/deals/saudis-kingdom-holding... Here, official Saudi statement that they are maintaining their $2bn stake in the company because it is in the long term interests of the Kingdom. So, maybe just business partners, not finance partners, although that's $2bn of cash that Musk won't have to pay out. Anyway, the substance of the point remains intact - there are many plausible reasons the current owners of twitter could want to continue operating it that are not in the classic corporate raiding plan.
      - gunapologist99 4y ago
        2 / 44 still equals 1/22, even with B's after the numbers.
  - pessimizer 4y ago
    > streamlining and flipping the profitable parts of the business Good luck finding some at Twitter.
    - tommica 4y ago
      Sell data?
      - speed_spread 4y ago
        You don't sell "data" if you can avoid it. If you have enough of it, you refine raw data in-house and _then_ sell "influence" for much, much more.
    - PixyMisa 4y ago
      Sure. But Musk is betting that Twitter is not profitable because of the people running it. And Twitter was profitable for a while before the marked management change in late 2018.
      - deleted 4y ago
        [deleted]
      - phire 4y ago
        It's not a result of bad management. Twitter is only non-profitable because they choose to spend all that excess revenue on R&D; Partly because, that's what tax law incentives, partly because that's what investors in tech companies want: Growth If you look at twitter's own financial filings, they could easily be profitable if they just dropped their R&D budget. The filings claims in the 2021 year it only cost about $500 million to "operate" the platform, and the platform bought in over $5 billion in revenue. All Musk is doing is switching the company priorities from growth to profit extraction. In theory, you can drop the R&D spending to zero, and you can sit there claiming a cool 90% profit ratio. However, some of that R&D spending is probably "necessary" to the continued functioning of twitter as a platform, and it's improvement. If you dropped R&D to zero twitter (the platform) would slowly wither and die, but theoretically there is a happy medium where you can maximise for long-term profit and extract the maximum value over time (though, it still might be profitable to run the company into the ground eventually)
- deleted 4y ago
  [deleted]
zaptrem 4y ago
Twitter had massive layoffs planned anyway that they put on hold when Musk started the buyout.
- themitigating 4y ago
  Source ?
yieldcrv 4y ago
Focus on what you can control Elon wanted to back out and the executives finessed him masterfully. Everyone with vested shares is a recipient of a $44,000,000,000 cash infusion into the bay area economy, while media stupidly focuses on cliffs and parachutes that wont be paid.
barnabee 4y ago
No idea if it’ll turn out to be just a corporate raid but I’ve become so disillusioned and disgusted with nearly everything about companies like Twitter, Google, and Meta that I do not think a realistic solution exists for the problems they cause that doesn’t involve a complete change of leadership and firing a significant percentage of all of them. I don’t care what Elon does with Twitter tbh, as long as it’s something different. Good luck to him.
- malermeister 4y ago
  I'd argue that companies run by Elon are at least as bad. I agree Big Tech sucks, but Tesla is one of the worst of them. Musk won't change anything for the better.
  - barnabee 4y ago
    Tesla doesn't show drivers ads. I hate their data collection and the fact you rent rather than own aspects (all?) of their cars, and the T&Cs (I hate them so much I wouldn't buy a Tesla, in fact), but I think ads are worse. (Plus there's plenty of competition for cars, I have a choice.) On the other hand Musk's other companies don't seem to be as bad. I will delay judgement on Twitter until I see what he does. There's no need to come to a strongly held conclusion about what he'll do from Twitter at this point. Everyone who's doing so is showing more about their opinions and prejudices than anything else at this point IMO.
tootie 4y ago
Raids are typically distressed companies that are squeezed for every asset and sold for parts. Not buying a thriving enterprise and driving into the ground. He paid a premium for Twitter and is probably $10B in the hole already. This has to be a sincere attempt to increase profitability. Just seems like a really bad one. Conspiracy theory is that owns a wad of that Truth Social SPAC and every dollar he drains from Twitter goes there.

twawaaay 4y ago

Twitter has been taken private so this is not corporate raid. Corporate raid is aimed at making changes to the company specifically to increase share price. The idea is that the resulting share price increase covers at least significant part of the cost of getting majority stake. This makes the buyout relatively cheap or even free. Which of course makes little sense if you are also taking the company private. I would also like to point out that the whole point of buying a controlling stake in the company usually is to exert some control. And to buy it out completely and take it private is to exert complete control without having to explain yourself (too much). There is, of course, possibility of the investor buying shares because they are content with current management and do not plan to interfere even after they have acquired majority stake. But this, in my experience, is quite rare.

NationalPark 4y ago
Taking a company private via LBO, firing a quarter of the staff so you can afford the debt payments, and then streamlining and flipping the profitable parts of the business is the classic corporate raid playbook. So far he's done the LBO part, and is apparently doing the layoff part. Of course, he's the richest person in the world and his finance partners are well connected Saudis, so there are obviously many plausible reasons to operate it at a loss and never do the actual looting part of the corporate raid.
- twawaaay 4y ago
  > Of course, he's the richest person in the world and his finance partners are well connected Saudis, Care to point to your sources or are you just spreading misinformation? Saudis are second largest shareholder in Twitter but their share is relatively slim. Also, just because Saudis bought the same thing I bought does not immediately mean they are my finance partners even if it somehow helped my goal.
  - camel_Snake 4y ago
    CTL+F "Saudi" https://www.tesla.com/blog/update-taking-tesla-private https://www.tesla.com/blog/update-taking-tesla-private Saudi finance partners were the reason he tweeted 'Funding Secured' in relation to Tesla. That's Tesla, not Twitter, but does show he has partnerships with the 'well connected Saudis'
  - NationalPark 4y ago
    https://www.reuters.com/markets/deals/saudis-kingdom-holding-company-maintain-twitter-stake-2022-10-28/ https://www.reuters.com/markets/deals/saudis-kingdom-holding... Here, official Saudi statement that they are maintaining their $2bn stake in the company because it is in the long term interests of the Kingdom. So, maybe just business partners, not finance partners, although that's $2bn of cash that Musk won't have to pay out. Anyway, the substance of the point remains intact - there are many plausible reasons the current owners of twitter could want to continue operating it that are not in the classic corporate raiding plan.
    - gunapologist99 4y ago
      2 / 44 still equals 1/22, even with B's after the numbers.
- pessimizer 4y ago
  > streamlining and flipping the profitable parts of the business Good luck finding some at Twitter.
  - tommica 4y ago
    Sell data?
    - speed_spread 4y ago
      You don't sell "data" if you can avoid it. If you have enough of it, you refine raw data in-house and _then_ sell "influence" for much, much more.
  - PixyMisa 4y ago
    Sure. But Musk is betting that Twitter is not profitable because of the people running it. And Twitter was profitable for a while before the marked management change in late 2018.
    - deleted 4y ago
      [deleted]
    - phire 4y ago
      It's not a result of bad management. Twitter is only non-profitable because they choose to spend all that excess revenue on R&D; Partly because, that's what tax law incentives, partly because that's what investors in tech companies want: Growth If you look at twitter's own financial filings, they could easily be profitable if they just dropped their R&D budget. The filings claims in the 2021 year it only cost about $500 million to "operate" the platform, and the platform bought in over $5 billion in revenue. All Musk is doing is switching the company priorities from growth to profit extraction. In theory, you can drop the R&D spending to zero, and you can sit there claiming a cool 90% profit ratio. However, some of that R&D spending is probably "necessary" to the continued functioning of twitter as a platform, and it's improvement. If you dropped R&D to zero twitter (the platform) would slowly wither and die, but theoretically there is a happy medium where you can maximise for long-term profit and extract the maximum value over time (though, it still might be profitable to run the company into the ground eventually)
deleted 4y ago
[deleted]

zaptrem 4y ago

Twitter had massive layoffs planned anyway that they put on hold when Musk started the buyout.

themitigating 4y ago
Source ?

yieldcrv 4y ago

Focus on what you can control Elon wanted to back out and the executives finessed him masterfully. Everyone with vested shares is a recipient of a $44,000,000,000 cash infusion into the bay area economy, while media stupidly focuses on cliffs and parachutes that wont be paid.

barnabee 4y ago

No idea if it’ll turn out to be just a corporate raid but I’ve become so disillusioned and disgusted with nearly everything about companies like Twitter, Google, and Meta that I do not think a realistic solution exists for the problems they cause that doesn’t involve a complete change of leadership and firing a significant percentage of all of them. I don’t care what Elon does with Twitter tbh, as long as it’s something different. Good luck to him.

malermeister 4y ago
I'd argue that companies run by Elon are at least as bad. I agree Big Tech sucks, but Tesla is one of the worst of them. Musk won't change anything for the better.
- barnabee 4y ago
  Tesla doesn't show drivers ads. I hate their data collection and the fact you rent rather than own aspects (all?) of their cars, and the T&Cs (I hate them so much I wouldn't buy a Tesla, in fact), but I think ads are worse. (Plus there's plenty of competition for cars, I have a choice.) On the other hand Musk's other companies don't seem to be as bad. I will delay judgement on Twitter until I see what he does. There's no need to come to a strongly held conclusion about what he'll do from Twitter at this point. Everyone who's doing so is showing more about their opinions and prejudices than anything else at this point IMO.

tootie 4y ago

Raids are typically distressed companies that are squeezed for every asset and sold for parts. Not buying a thriving enterprise and driving into the ground. He paid a premium for Twitter and is probably $10B in the hole already. This has to be a sincere attempt to increase profitability. Just seems like a really bad one. Conspiracy theory is that owns a wad of that Truth Social SPAC and every dollar he drains from Twitter goes there.