Thank you for going through all of this. I was curious to know more about this deal. I think he hinted at changing the revenue model to charging a fee on verified/official accounts? That would support revenue growth although I’m not sure to what extent
Because which other company would buy Twitter for potentially $100 billion? That would rank as one of the largest M&A deals of all time and also one of the riskiest. No other big tech company would take the risk, even if they could afford it, and no company outside tech would be crazy enough to do it (or have the finances).
Take a look at some of the simpler LBO models and examples in this channel. Yes, this one assumes quite a bit of prior knowledge and is more of a summary rather than a tutorial.
Thanks for sharing. Given the latest structure, Musk shelved the $12.5 billion borrowing plan and inject more equity investment instead, what would this affect the IRR and the financial projections?
Overall, it probably makes everything worse unless the deal somehow performs amazingly well. The only benefit of more equity is to reduce Twitter's interest expense, but the real issue here is that the company's revenue and profits will be much lower after the deal... so even that reduction in interest expense may not be enough.
@@captaindragonfly3327 Because advertisers are fleeing the platform, and advertising is Twitter's main revenue source? Other sources like subscriptions may help a bit but will not offset that drop overnight. Firing 75% of the employees also helps, but it may or may not be enough to offset the drop in revenue.
Some are, some are not. "Current events" ones tend not to be. But the videos in this channel are a tiny fraction of the total content in the paid courses (< 5%). It's a different set of case studies, and each one is step-by-step rather than a short summary.
Hi, thanks for the content. I have a question for you : when is repaid the existing debt of 4 290m$ ? Is it repaid over several years ? I cannot find the answer on the Excel file
Thanks for sharing; I appreciated it. I thought some of the margin loans against Telsa stock were based on Elon personally; why were they added to Twitter during modeling?
The margin loans are gone now (but the deal will probably fall apart anyway), but they still count as part of the funding to do the deal because the proceeds from the margin loans will be used to purchase Twitter's shares.
At 30:00, you said it might be difficult for him to get backers if he does not want to commit 21 or 19 billion. However, I think the list of all equity investors participating in this deal was released on the same day you posted this video
That's true, but take a look at the list of equity investors and you'll see that there are no traditional PE firms on the list... because they know it's a very risky, overpriced deal. It's essentially some VC/growth equity firms that might buy into his sky-high projections and personal contacts like Larry Ellison (oh, and the Saudi prince).
Elon stated the company could be run on half the employees which he expects would cash flow or near cash flow the company... the tons of employees are required for all of the manipulations and up down ranking etc. Move the place to Austin, TX and you cut operating expenses/taxes by half or more.
I think it's possible to get some margin increase here (15% to 30%), but Facebook-level (45%) seems unrealistic without better monetization. And I'm not sure he could really cut half the employees without causing other issues (though, to be fair, there is no breakdown by functional area). That's why positive outcomes here are possible and not completely crazy, but also challenging, especially if the time frame is ~3 years.
Good question. Maybe better in some ways, but worse in others. Hard to see how the math works with revenue levels that are 50%+ lower, but who knows...
![Working Capital and the Change in Working Capital in Valuation and Financial Modeling [REVISED]](http://i.ytimg.com/vi/tMgty8jwmHI/mqdefault.jpg)
![Working Capital and the Change in Working Capital in Valuation and Financial Modeling [REVISED]](/img/tr.png)
Files & Resources:
mergersandinquisitions.com/twitter-buyout/
Thank you for going through all of this. I was curious to know more about this deal.
I think he hinted at changing the revenue model to charging a fee on verified/official accounts? That would support revenue growth although I’m not sure to what extent
It's possible, but there are no details on any of the business model changes, so we continued using Average Revenue per User.
beautifully represented. lovely video. looking forward to more content from you.
Thanks for watching!
Thank you so much for this. I will like to confirm why you hinted that exiting through M&A won't be possible.
Because which other company would buy Twitter for potentially $100 billion? That would rank as one of the largest M&A deals of all time and also one of the riskiest. No other big tech company would take the risk, even if they could afford it, and no company outside tech would be crazy enough to do it (or have the finances).
Great content!, would love to see more like this!
Thanks for watching!
Looks very informative, but I wasn't able to understand any of it. Where should I start if I want to learn about this topic? Thanks
Take a look at some of the simpler LBO models and examples in this channel. Yes, this one assumes quite a bit of prior knowledge and is more of a summary rather than a tutorial.
Thanks for sharing. Given the latest structure, Musk shelved the $12.5 billion borrowing plan and inject more equity investment instead, what would this affect the IRR and the financial projections?
Overall, it probably makes everything worse unless the deal somehow performs amazingly well. The only benefit of more equity is to reduce Twitter's interest expense, but the real issue here is that the company's revenue and profits will be much lower after the deal... so even that reduction in interest expense may not be enough.
@@financialmodeling Thanks for the reply! Why that the company’s revenue and profits would be much lower?
@@captaindragonfly3327 Because advertisers are fleeing the platform, and advertising is Twitter's main revenue source? Other sources like subscriptions may help a bit but will not offset that drop overnight. Firing 75% of the employees also helps, but it may or may not be enough to offset the drop in revenue.
Thanks for the update to date content haha! Btw, are all these videos contain in the online courses?
Some are, some are not. "Current events" ones tend not to be. But the videos in this channel are a tiny fraction of the total content in the paid courses (< 5%). It's a different set of case studies, and each one is step-by-step rather than a short summary.
Bear case seems to be winning
We'll see what happens after a few years...
Theyre above your pay grade lmao, well said
Great video thank you! BTW how do you make that button that changes the scenario and the numbers automatically?
Data Validation (Alt, D, L) and List.
All the time outstanding content! Thank you very much.
Thanks for watching!
Hi, thanks for the content. I have a question for you : when is repaid the existing debt of 4 290m$ ? Is it repaid over several years ?
I cannot find the answer on the Excel file
It is refinanced immediately when the deal takes place. Look at the Sources & Uses schedule.
One of the best content
Thanks for watching!
Thanks for sharing; I appreciated it. I thought some of the margin loans against Telsa stock were based on Elon personally; why were they added to Twitter during modeling?
The margin loans are gone now (but the deal will probably fall apart anyway), but they still count as part of the funding to do the deal because the proceeds from the margin loans will be used to purchase Twitter's shares.
Fantastic Brian!
Thanks for watching!
always love your video!
Thanks for watching!
At 30:00, you said it might be difficult for him to get backers if he does not want to commit 21 or 19 billion. However, I think the list of all equity investors participating in this deal was released on the same day you posted this video
That's true, but take a look at the list of equity investors and you'll see that there are no traditional PE firms on the list... because they know it's a very risky, overpriced deal. It's essentially some VC/growth equity firms that might buy into his sky-high projections and personal contacts like Larry Ellison (oh, and the Saudi prince).
@@financialmodeling Yes, so I guess that is indicative of his difficulty to raise capital cause he probably got passed on by traditional PE. Thanks!
Outstanding , thanks.
Thanks for watching!
This channel is gold! Is this for free to download?
Click "Show More" and follow the links.
Thanks for sharing great contents! Would it be possible if i can the model you presented? Very interested!
Click "Show More" and follow the links.
How to workout WACC when there are different debts carrying different rates? Thanks!
You can take a weighted average for the cost of debt.
@@financialmodeling ok thank you so very much! you guys help out a lot!
bravo! great content
Thanks for watching!
Madman
Yeah, looking like that.
Elon stated the company could be run on half the employees which he expects would cash flow or near cash flow the company... the tons of employees are required for all of the manipulations and up down ranking etc.
Move the place to Austin, TX and you cut operating expenses/taxes by half or more.
I think it's possible to get some margin increase here (15% to 30%), but Facebook-level (45%) seems unrealistic without better monetization. And I'm not sure he could really cut half the employees without causing other issues (though, to be fair, there is no breakdown by functional area). That's why positive outcomes here are possible and not completely crazy, but also challenging, especially if the time frame is ~3 years.
wonder what this looks like now that 80% of the staff are gone
Good question. Maybe better in some ways, but worse in others. Hard to see how the math works with revenue levels that are 50%+ lower, but who knows...
First lol
Congrats!