5 ms·

I'm still convinced he's just going for a "clever" way to declare bankruptcy in order to not pay full price for the Twitter acquisition. Make it look like a bu

I'm still convinced he's just going for a "clever" way to declare bankruptcy in order to not pay full price for the Twitter acquisition. Make it look like a business... "accident", publicly say twitter actually never had a chance to get out of debt, Sell the assets, refinance the whole thing at a fraction of the original buyout price, threw a few millions to the creditors and get away with the whole thing.

rovr138 3y ago
I've thought about this too and have mentioned it to friends a couple of times. Not sure if bankruptcy, but it's a way to get tax credits if it's not successful.
- RugnirViking 3y ago
  i dont remember who said it but isnt there a famous adage in the accounting world that its not a smart idea to get tax credits by making actual real losses. You're supposed to find ways to make book losses without actually lighting real money on fire
  - rchaud 3y ago
    That's why companies pay for acquisitions or mergers primarily in stock. It keeps cash reserves available for other uses. If the acquisition flops, you can write down the value, take a hit on the income statement, and lower your tax owed for the year.
    - lotsofpulp 3y ago
      That is why sellers do not always agree to accept stock instead of cash.
      - rchaud 3y ago
        When in the "billions" range, the deals are going to be light on cash. That's how Adobe can "pay" $20bn for Figma using stock.
        lotsofpulp 3y ago
        I believe twitter was an all cash transaction. https://www.sec.gov/Archives/edgar/data/876661/000087666122000890/0000876661-22-000890.txt https://www.sec.gov/Archives/edgar/data/876661/0000876661220... > The merger between Twitter, Inc. and X Holdings II, Inc., a wholly owned subsidiary of X Holdings I, Inc., wholly owned by Elon R. Musk became effective on October 27, 2022. Each share of Twitter, Inc. Common Stock was exchanged for USD 54.20 in cash, without interest and less any applicable withholding taxes.
csomar 3y ago
This would have made sense if he delegated the responsibility of running it to third-parties and completely severed ties with the company. He didn't do that, which given the colossal amounts involved will get him into litigation. And if you think he is smart, think again. He tried to "smartly" get off the deal but the other party was smarter. He is clearly not the smartest man in the room.
- mcphage 3y ago
  > He tried to "smartly" get off the deal but the other party was smarter. Well, the other party sold their company to Elon Musk to run into the ground, so smarter isn't quite the word I'd use for them, either.
  - kaba0 3y ago
    They sold their company at a very good price, much higher than its actual worth. That’s hardly a dumb business decision. They will also have a good track record on management, given how much better twitter were under their control.
    - mcphage 3y ago
      > They sold their company at a very good price, much higher than its actual worth. Yeah, I get that, but in doing so destroyed a thing that lots of people found value in. So yeah, they made more money than the thing was worth, great business decision, but I'm not willing to award "this nice thing is worth more as scrap than it is on its own right now" as being called "smart".
      - deleted 3y ago
        [deleted]
      - stevenwliao 3y ago
        If someone wanted to buy your house for three times its market value and their grand plan was to turn it into lumber, would the smart move be to decline?

rovr138 3y ago

I've thought about this too and have mentioned it to friends a couple of times. Not sure if bankruptcy, but it's a way to get tax credits if it's not successful.

RugnirViking 3y ago
i dont remember who said it but isnt there a famous adage in the accounting world that its not a smart idea to get tax credits by making actual real losses. You're supposed to find ways to make book losses without actually lighting real money on fire
- rchaud 3y ago
  That's why companies pay for acquisitions or mergers primarily in stock. It keeps cash reserves available for other uses. If the acquisition flops, you can write down the value, take a hit on the income statement, and lower your tax owed for the year.
  - lotsofpulp 3y ago
    That is why sellers do not always agree to accept stock instead of cash.
    - rchaud 3y ago
      When in the "billions" range, the deals are going to be light on cash. That's how Adobe can "pay" $20bn for Figma using stock.
      - lotsofpulp 3y ago
        I believe twitter was an all cash transaction. https://www.sec.gov/Archives/edgar/data/876661/000087666122000890/0000876661-22-000890.txt https://www.sec.gov/Archives/edgar/data/876661/0000876661220... > The merger between Twitter, Inc. and X Holdings II, Inc., a wholly owned subsidiary of X Holdings I, Inc., wholly owned by Elon R. Musk became effective on October 27, 2022. Each share of Twitter, Inc. Common Stock was exchanged for USD 54.20 in cash, without interest and less any applicable withholding taxes.

csomar 3y ago

This would have made sense if he delegated the responsibility of running it to third-parties and completely severed ties with the company. He didn't do that, which given the colossal amounts involved will get him into litigation. And if you think he is smart, think again. He tried to "smartly" get off the deal but the other party was smarter. He is clearly not the smartest man in the room.

mcphage 3y ago
> He tried to "smartly" get off the deal but the other party was smarter. Well, the other party sold their company to Elon Musk to run into the ground, so smarter isn't quite the word I'd use for them, either.
- kaba0 3y ago
  They sold their company at a very good price, much higher than its actual worth. That’s hardly a dumb business decision. They will also have a good track record on management, given how much better twitter were under their control.
  - mcphage 3y ago
    > They sold their company at a very good price, much higher than its actual worth. Yeah, I get that, but in doing so destroyed a thing that lots of people found value in. So yeah, they made more money than the thing was worth, great business decision, but I'm not willing to award "this nice thing is worth more as scrap than it is on its own right now" as being called "smart".
    - deleted 3y ago
      [deleted]
    - stevenwliao 3y ago
      If someone wanted to buy your house for three times its market value and their grand plan was to turn it into lumber, would the smart move be to decline?