Musk's Twitter deal may be banks' worst leveraged buyout since 2008

Elon Musk's acquisition of Twitter, now known as X, is being characterized as potentially the worst leveraged buyout (LBO) for banks since the 2008 financial crisis. Musk financed the $44 billion purchase with over $13 billion sourced from a consortium of lenders, which has since become a burden for the banks involved. The deal's timing coincided with rising borrowing costs and Twitter's poor financial performance, leading to a lack of interest from investors in purchasing the associated debt. Nearly two years later, banks have struggled to offload this debt, marking the longest duration LBO debt has remained on balance sheets since the Lehman Brothers collapse. The financial strain is evident, with reports indicating that Barclays' senior M&A team faced a 40% cut in annual compensation, prompting many managing directors to leave. Musk has attempted to negotiate more favorable debt terms, but these discussions have stalled. The situation raises concerns for Tesla shareholders, as analysts warn that Musk may need to sell $1 billion to $2 billion in Tesla shares to address financial issues at X.

- Elon Musk's Twitter acquisition is seen as a major financial misstep for banks.

- The deal's debt has remained on bank balance sheets longer than any since Lehman Brothers.

- Rising borrowing costs and Twitter's financial struggles have deterred investors.

- Barclays faced significant compensation cuts due to the impact of the Twitter deal.

- Analysts suggest Musk may need to sell Tesla shares to stabilize X's finances.