How Elon bought Twitter with other people's money
Yes, Elon Musk is the richest person in the world. But he only used some of his cash to buy Twitter for $44 billion. For the rest of it, he used a tactic called a leveraged buyout and spent $13 billion of borrowed money on the acquisition. And now Twitter—not Elon—is on the hook for that loan.
Leveraged buyouts had a heyday in the 1980s, when corporate raiders would use debt to finance purchases of companies with healthy balance sheets. The Twitter acquisition, though, is a whole different beast—and as its employees leave en masse and its ad revenues continue to fall, the banks who put up billions to finance the deal might be second guessing their decision.
Carl Tack, who we spoke to for this story, wrote a Substack post on the Twitter buyout aimed at students and young professionals. Listeners may find it informative. It's linked here.
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