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Opinion
Timothy L. O'Brien

Musk Is the Wrong Leader for Twitter’s Vital Mission

The financials of the leveraged buyout are sketchy, but more important, the Tesla CEO is not up to the task of running a media company.

The price of buffoonery and delinquency is greater than $43 billion.

The price of buffoonery and delinquency is greater than $43 billion.

Photographer: Jim Watson/AFP/Getty Images

It looks as if Twitter Inc. will sell itself to Elon Musk for $43 billion, which would make the deal one of the largest leveraged buyouts in Wall Street history and give Tesla Inc.’s steward a powerful social media perch.

The math is sketchy, however, as are Musk’s intentions. Both of those factors promise to make this deal a potential train wreck and will force investors, managers, users and society to think more clearly and seriously about the role that social media companies play in an era scarred by viral propaganda and misinformation.

LBOs typically involve taking publicly traded companies private by piling debt on them and using their cash flow to pay down those obligations. Along the way, the firms that take over the companies are meant to make their targets more competitive and innovative. That’s the theory, anyway. The buyout wave that began in the 1980s and crested in 2007 was littered with deals gone awry. The LBO landscape grew quieter after the 2008 financial crisis, but handsome returns for investors and low interest rates caused transactions to reach new heights in recent years. If Musk snares Twitter, it will inevitably become a marquee case study of the efficacy of LBOs.