It isn’t the first time billionaire Tesla chief executive Elon Musk burned his investment bankers on deals and it may not be the last.
When Mr Musk made a regulatory filing on Friday to say he was walking away from his $44 billion agreement to buy Twitter, some of the bankers backing him felt a mixture of disappointment and relief even with millions of dollars in fees at risk, sources said.
“He did burn bankers for tonnes of time,” said Susan Wolford, a former investment banker who was vice chairwoman and ran the tech group at Bank of Montreal. “You have to take this to committee, you have to do all the work for something that large.”
While Mr Musk has said he is walking away, Twitter has promised to keep the deal alive and has threatened legal action.
Many of the bankers had no warning from Musk’s camp that the filing was coming, with one person saying that, for legal reasons, the group in the know was kept small. They source said they had an inkling of Mr Musk’s second thoughts from the first time he tweeted that the deal was on hold in May.
It was the second time in five years that Mr Musk fielded an ambitious acquisition idea that got Wall Street’s hopes up, only to change his mind. In that 2018 episode, he tweeted about taking Tesla private with the claim “funding secured”.
The Twitter agreement had made it to the announcement stage though, with many banks lending their balance sheets and names to his effort, led by Morgan Stanley. According to Mr Musk’s Friday filing, Morgan Stanley has spent much of the past two months “requesting critical information from Twitter”.
A representative for Morgan Stanley could not be reached for comment.
The fee bonanza from the deal is now in peril. Twitter bankers Goldman Sachs Group and JP Morgan Chase & Co were set to earn a combined $133 million in fees once it closed, according to filings. Morgan Stanley and the other banks working with Mr Musk were also expected to have a big payday.
Banks and other advisers could still get a small fee even if the deal dissolves — but likely only a fraction of their take if it closed.
Even though they said Musk had lost some credibility, most of the bankers, who did not want to be identified, said they would jump at the chance of working with Mr Musk again.
Mr Musk’s business empire is the main reason. SpaceX was worth $125bn in a fund-raising round in May, making it the most valuable US start-up on record, according to data from CBInsights.
The bankers who stand to lose out on the Twitter deal still got closer to Mr Musk during this process, perhaps allowing them to still feast on fees if SpaceX goes public as expected in the next few years.
“After doing this, the bankers can say, you kind of owe me now. I didn’t get paid,” Ms Wolford said. “They’re in pole position to lead the next deal. He’s informally obliged to pay them with something else.”
Tesla, which has a market value of almost $780bn, could also pursue transactions, whether it is M&A or debt financing. Mr Musk’s futuristic brain-computer interface start-up Neuralink has also been in fund-raising mode and has attracted more money than other companies in the field. Meanwhile, his tunnelling start-up, The Boring Company, was valued at $6bn in April.
One banker said it is hard to ignore the mercurial Mr Musk, the world’s richest person, even if he shoots from the hip on deals. Mr Musk’s personal wealth totals almost $227bn, according to data compiled by Bloomberg.
“He’s a once-in-a-lifetime client,” said Mark Boidman, head of media and entertainment at Solomon Partners. “He’s created some of the most iconic companies, of course everybody wants to be his banker.”
He’s a once-in-a-lifetime client. He’s created some of the most iconic companies, of course everybody wants to be his banker
Mark Boidman,
head of media and entertainment at Solomon Partners
While deal teams at the banks toiled over holiday weekends and through sleepless nights to get Mr Musk to the finish line, it is the nature of the business for those efforts to often go to waste, they said. Usually that happens before a deal gets announced, one person said.
Some of the advisers were relieved at the prospect of getting off the hook for the billions of dollars they agreed to lend Mr Musk.
Since the merger was announced, the financing market for take-private deals has melted down. Banks have been struggling with more traditional technology acquisitions.
The buyout of Citrix Systems, which was expected to generate hundreds of millions of dollars in fees, could now deliver $1bn in losses instead, Bloomberg News previously reported.
It is also not the end of journey. Bankers will be closely watching the legal situation play out and have not ruled out the possibility that the deal could still close, they added.
Twitter said within minutes of Mr Musk’s filing on Friday that it would seek to enforce its agreement in a Delaware court, one that typically frowns on efforts to back out of merger agreements.
Whatever the outcome, Mr Musk seems likely to have his choice of bankers whenever he needs them next.
“I would work for Elon Musk any day,” said John Chachas, founder and a managing principal at Methuselah Advisors.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
England squad
Moeen Ali, James Anderson, Jofra Archer, Jonny Bairstow, Dominic Bess, James Bracey, Stuart Broad, Rory Burns, Jos Buttler, Zak Crawley, Sam Curran, Joe Denly, Ben Foakes, Lewis Gregory, Keaton Jennings, Dan Lawrence, Jack Leach, Saqib Mahmood, Craig Overton, Jamie Overton, Matthew Parkinson, Ollie Pope, Ollie Robinson, Joe Root, Dom Sibley, Ben Stokes, Olly Stone, Amar Virdi, Chris Woakes, Mark Wood
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Results
Men's finals
45kg:Duc Le Hoang (VIE) beat Zolfi Amirhossein (IRI) points 29-28. 48kg: Naruephon Chittra (THA) beat Joseph Vanlalhruaia (IND) TKO round 2.
51kg: Sakchai Chamchit (THA) beat Salam Al Suwaid (IRQ) TKO round 1. 54kg: Veerasak Senanue (THA) beat Huynh Hoang Phi (VIE) 30-25.
57kg: Almaz Sarsembekov (KAZ) beat Tak Chuen Suen (MAC) RSC round 3. 60kg: Yerkanat Ospan (KAZ) beat Ibrahim Bilal (UAE) 30-27.
63.5kg: Abil Galiyev (KAZ) beat Nouredine Samir (UAE) 29-28. 67kg: Narin Wonglakhon (THA) beat Mohammed Mardi (UAE) 29-28.
71kg: Amine El Moatassime (UAE) w/o Shaker Al Tekreeti (IRQ). 75kg: Youssef Abboud (LBN) w/o Ayoob Saki (IRI).
81kg: Ilyass Habibali (UAE) beat Khaled Tarraf (LBN) 29-28. 86kg: Ali Takaloo (IRI) beat Emil Umayev (KAZ) 30-27.
91kg: Hamid Reza Kordabadi (IRI) beat Mohamad Osaily (LBN) RSC round 1. 91-plus kg: Mohammadrezapoor Shirmohammad (IRI) beat Abdulla Hasan (IRQ) 30-27.
Women's finals
45kg: Somruethai Siripathum (THA) beat Ha Huu Huynh (VIE) 30-27. 48kg: Thanawan Thongduang (THA) beat Colleen Saddi (PHI) 30-27.
51kg: Wansawang Srila Or (THA) beat Thuy Phuong Trieu (VIE) 29-28. 54kg: Ruchira Wongsriwo (THA) beat Zeinab Khatoun (LBN) 30-26.
57kg: Sara Idriss (LBN) beat Zahra Nasiri Bargh (IRI) 30-27. 60kg: Kaewrudee Kamtakrapoom (THA) beat Sedigheh Hajivand (IRI) TKO round 2.
63.5kg: Nadiya Moghaddam (IRI) w/o Reem Al Issa (JOR).
Ramy%3A%20Season%203%2C%20Episode%201
%3Cp%3E%3Cstrong%3ECreators%3A%20%3C%2Fstrong%3EAri%20Katcher%2C%20Ryan%20Welch%2C%20Ramy%20Youssef%0D%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3ERamy%20Youssef%2C%20Amr%20Waked%2C%20Mohammed%20Amer%0D%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Salah in numbers
€39 million: Liverpool agreed a fee, including add-ons, in the region of €39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.
13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.
57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.
7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.
3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.
40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.
30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.
8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.
