Elon Musk's Twitter Buyout Is Officially the Worst Deal Since Financial Crisis

Elon Musk's acquisition of Twitter, now rebranded as X, has been deemed the worst merger-finance deal for banks since the 2008-09 financial crisis. Seven banks, including Bank of America and Morgan Stanley, provided approximately $13 billion in loans to Musk's holding company to facilitate the buyout in 2022. However, these banks have struggled to sell the debt to other investors without incurring significant losses, primarily due to Twitter's declining financial performance. The loans have remained on the banks' balance sheets, marking a historic low in performance for similar unsold deals. Following Musk's $44 billion takeover, the company's value plummeted to around $19 billion, a 55% decrease. The platform has faced challenges with advertisers, which are crucial for revenue, leading to strained relationships and legal actions against advertising coalitions. The impact of these "hung" loans has also affected the banks' standings in investment banking rankings, with some bankers experiencing substantial cuts in compensation. The situation highlights the financial risks associated with high-profile acquisitions and the difficulties banks face in managing such deals.

- Musk's Twitter buyout is the worst deal for banks since the 2008 financial crisis.

- Banks have been unable to sell the $13 billion in loans without incurring losses.

- Twitter's value dropped by 55% post-acquisition, affecting revenue from advertisers.

- The situation has led to compensation cuts for some investment bankers.

- The deal has contributed to banks' declining positions in investment banking rankings.