I’d assume it would allow Musk to restructure Twitter along longer-term goals. My sense is that he will eventually take it public again, but it’s a hard road to make huge changes to a company’s trajectory when your “fiduciary duty” relies on quarterly earnings reports. For example, killing bots will decimate DAU and would tank the stock. But do that and wait a year or two and perhaps Twitter flourishes as a true p2p platform again. Then you can take it public again with a different narrative and trajectory that’s more in your control. If you were public all along you’d get pummeled for the choice because it crushed the DAU KPI.
People kept saying that, if board didn't accept, then they would violate fiduciary duty.
Then, board accepted the first offer without further negotiation. Who does that in a large deal like this? At least, they should have got a few billions more.
No I meant it in a broader sense. Whenever I ask someone why companies are so hyperfocused on growth every single quarter they usually cite fiduciary duty or something. I am not sure if it's a law or a company by law
Companies are hyper focused on growth because growth is priced in to their valuation, either by VCs or the public market. Nobody wants to plunk their money into something that won’t give them a return, and non-growth businesses have to pay investors in things like dividends or royalties to keep their market value.
I believe you can be sued for breach of this, and can certainly lose your board seat. I would guess it will devalue the company if a breach were to occur.
I don't have an answer for this, but the richest person in the world has unique motivations other than maintaining a profitable technology business. What if better technology products could be created when divorced from shareholder profits and therefore the influence of advertising? Or if divorced from any government regulation/oversight?
Now that's a big if but IF you run with that as Musk's motivation, then he doesn't particularly care about making Twitter profitable. It'd be more valuable to him as another lever of influence on society generally.
Could Twitter become more than just a brawling drunken town square? Could it capture public goodwill by eradicating advertising from Twitter and offering an open-source encrypted email and messaging service outside the purview of Five Eyes? Then build off the manufacturing innovations Tesla pioneered and create a cheap open hardware phone?
Public companies have to follow a lot of rules, and have a 'fiducary duty' to shareholders. The rules are annoying and expensive. But the real downside is the fiducary duty. It opens you up to lawsuits, and it means you are legally required to care about your stock price. This can prevent you from making decisions that would drop the stock price. Relatedly, the shareholders can (with lots of difficulty) prevent certain changes being made by changing who sits on the board. This limits what you can do in general.
Going private removes many of these limitations, allowing much more flexibility. Going private does mean you can no longer go to the most liquid market (the public market) for extra equity financing. And of course you need to buy out all the shareholders.
At least one point is control. When you're not beholden to shareholders, you can run a company effectively as you see fit. As an employee, I actually look at whether a company is privately or publicly held because I'm of the (possibly mistaken/excessive?) opinion that you cannot run a truly mission-oriented public company (unless that mission is to maximize shareholder value, I suppose, but that's not a particularly compelling mission for me).
