The Biggest Red Flag In The Elon-Twitter Deal Is This
The biggest red flag for Elon's deal to purchase Twitter is this:
Where are the other bidders?
In a leveraged buyout, when an offer is made to acquire a company, the target company is said to be "in play." Other potential buyers will take a run at the target company. If they are lucky, they can out outmaneuver or outbid the original would-be purchaser and snatch the target company up for themselves.
This has not happened in the Elon-Twitter deal. No other buyers have emerged- and the silence is deafening.
The deal making frenzy accompanying an announcement that a company is "in play" is an exciting time on Wall Street. Many potential suitors for the target signal their interest. This dynamic was captured in the book "Barbarians at the Gate" which chronicled the battle for control of tobacco giant RJR Nabisco in 1988. (A charming little movie by the same name was also made, starring James Garner). A buyout is often a battle of large wallets and even larger egos, attracting the smartest and most wily financial operators.
So far, these operators have given the Twitter deal a pass.
In fact, just the opposite has occurred. Everybody involved with the deal has tried to get out of it. The banks underwriting the debt have tried to wiggle out of their commitments. Elon himself has tried to back out of his his commitment to buy Twitter, citing potentially bogus user figures.
They say "if you're playing poker and you don't know who the patsy is, then you're the patsy." Does that saying apply to Elon Musk- the only interested bidder for Twitter? Time will tell.