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Xand_Man posted:I don't understand finance poo poo; how is Twitter in debt for being bought out? My layman's assumption is that selling things nets the seller money The previous shareholders got the money. The current brilliant ownership had to borrow money to buy them out; they didn't just hand over $44B cash from their savings accounts.
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Nov 3, 2022 15:18
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You take on debt to buy the company and then you make the company responsible for paying off the debt. Elon needed $13 billion in loans to buy Twitter. Now that he has Twitter, he transferred those loans to Twitter as a liability on their books. They will be paid off through Twitter assets and revenues, not by Elon. If he sells Twitter, the loans and the responsibility to repay them will be sold as part of the package.
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Nov 3, 2022 15:31
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Xand_Man posted:I don't understand finance poo poo; how is Twitter in debt for being bought out? My layman's assumption is that selling things nets the seller money It's called a leveraged takeover. Basically, you take out a bunch of loans to buy a company, then transfer those loans to the company. It's the same poo poo that's killed a lot of brands (Toys R Us being the most obvious example).
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Nov 3, 2022 15:34
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The other amazing part of this is that the banks that loaned him money wanted to resell shares in those loans those to other people. But Elon probably can't make the $1 billion in interest that he owes on the loans, so why would anyone want to buy that debt. Everybody is losing.
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Nov 3, 2022 15:54
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Giant Metal Robot posted:The other amazing part of this is that the banks that loaned him money wanted to resell shares in those loans those to other people. But Elon probably can't make the $1 billion in interest that he owes on the loans, so why would anyone want to buy that debt. I thought he used Tesla stock for collateral? Another company that lost money hand over fist for a very long time.
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Nov 3, 2022 16:11
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I am not a finance guy but I still don't understand why any lender would put money up for Elon buying Twitter at a far too high value. It's so obviously a bad move. The only way it makes sense is if lenders can recoup from Elon personally, but I don't think that's the case.
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Nov 3, 2022 16:18
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Something I haven't seen mentioned is that most of the people in the company aren't working on the UI. "Oh, right, my job is making sure that the platform recovers well from three datacenters going down simultaneously, I'll hop right on and make a farting bluecheck then." You can't dog-and-pony show "I sped up this particular database interaction by 1%". And you can't do it in a week, either.
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Nov 3, 2022 16:23
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StumblyWumbly posted:I thought he used Tesla stock for collateral? Another company that lost money hand over fist for a very long time. Not entirely, there was like 13 billion in bank loans, and I think the Saudi Princes that got their stocks bought out just turned around and gave it back to musk as part of the collateral.
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Nov 3, 2022 16:25
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smoobles posted:I am not a finance guy but I still don't understand why any lender would put money up for Elon buying Twitter at a far too high value. It's so obviously a bad move. Because the lenders are charging a very larger amount of interest? Not sure if we 100% know the details of the loans and how much Musk is personal on the line for them.
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Nov 3, 2022 16:31
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dr_rat posted:Because the lenders are charging a very larger amount of interest? Not sure if we 100% know the details of the loans and how much Musk is personal on the line for them. He will be out his personal stake if it flops and maybe the Saudi money. The bank notes are all almost certainly leveraged against the company rather than musk in particular so if the company tanks he can walk away short his personal stake and make the banks and (probably) the Saudis fight over the scraps.
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Nov 3, 2022 16:39
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Neito posted:It's called a leveraged takeover. Basically, you take out a bunch of loans to buy a company, then transfer those loans to the company. It's the same poo poo that's killed a lot of brands (Toys R Us being the most obvious example). We still have a Toys R Us or two in my city!  
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Nov 3, 2022 16:48
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Xand_Man posted:I don't understand finance poo poo; how is Twitter in debt for being bought out? My layman's assumption is that selling things nets the seller money basically to buy a company you can use the value of the company you're buying to issue debt to finance the deal. when the deal goes through, the company you bought is now stuck with the debt you used to buy it quote:A leveraged buyout (LBO) is when one company attempts to buy another company, borrowing a large amount of money to finance the acquisition. The acquiring company issues bonds against the combined assets of the two companies, meaning that the assets of the acquired company can actually be used as collateral against it. Although often viewed as a predatory or hostile action, large-scale LBOs experienced a resurgence in the early 2020s. https://www.investopedia.com/terms/l/leveragedbuyout.asp Mr. Fall Down Terror fucked around with this message at 17:20 on Nov 3, 2022 |
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Nov 3, 2022 17:14
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smoobles posted:I am not a finance guy but I still don't understand why any lender would put money up for Elon buying Twitter at a far too high value. It's so obviously a bad move. Part of it is access - they want to be part of the lending that Elon and his other companies employ, so occasionally you have to take a loss leader for the relationship. They also probably expected that they could easily sell the loans off to people who would be clamoring for them. But that didn't quite work out that way, so their commitments in April and May ended up biting them in the rear end.
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Nov 3, 2022 17:18
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smoobles posted:I am not a finance guy but I still don't understand why any lender would put money up for Elon buying Twitter at a far too high value. It's so obviously a bad move. They signed on back in april, before interest rates jumped up massively and the tech market went boom. If musk didnt gently caress around for an additional for 4 extra months trying to back pedal and then trash the company they would have been able to easily sell the debt as bonds and make a decent profit. Instead musk tried to back out, interest rates went through the roof, musk spent most of the year tearing apart the company to get them to let him go and now the banks are saddled with 13 billion in debt they cant sell as bonds, because its worth nothing, interest rates are higher then before, and its become highly evident that there is literally no way possible for twitter to make the 1 billion in debt payments that it owes yearly. Oh and then theres the 3 billion in debt that due to the change in owners is likely to come due early, that musk will have to pay, because there is literally no way they can refinance existing debt because the banks are done with musks antics (and unless he puts up tesla collatoral they will likely refuse to allow it to be unsecured. Oh and not paying basically means that all twitter debt including the 13 billion will be considered junk and likely triggers some payment clauses. And declaring bankruptcy within a month of taking over is either on the table, or musk covers everything himself to try and not look owned. Basically shits gonna be wild grab your popcorn, because the dumbass is gonna be eating poo poo for the foreseeable future.
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Nov 3, 2022 17:34
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I think the trick is to convert as much of the company as possible into cash in your (personal) pocket before the loans come due and you (the company) have to go out of business.
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Nov 3, 2022 17:36
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^^^^ they needed to have actual money first. Almost all of the money twitter had was based on ad sales and I don't believe they had any real cash reserves or things they could sell off to make anything. Unlike a typical LBO oh and yeah part of the buyout was in cold hard cash, with the banks requiring musk to cover part of the leveraged buyout with tesla stock I believe. If anyone has access to the buyout stuff that would be great to read through (likely its all blocked unless the SEC shares it publicly.) But Musk likely is in serious trouble if twitter doesnt make money, and the banks are pissed because they are going to take a loss holding the twitter debt on their books because its not selling on the market and they outright stated they dont expect it to sell for the foreseeable future if ever. The big think is that musk likely is in serious trouble because if he can't get some way to get the banks or investors to help him cover when twitter doesnt turn a profit, it likely will start causing tesla stock to start being sold to cover the losses, and tesla stock more then likely will start going boom. His entire house of cards is at massive risk of falling apart, made worse by the fact that as he has shown, he has intermingled every business he runs in some very sketchy ways that likely will cause massive harm to all of them if one of the big ones fails. There are several amazing books on LBOs like Barbarians at the Gates, or just read The smartest Guys in the room about enron. poo poo is wild on how dumb it can get and outlawing LBOs would likely do so much to stop some of the dumb poo poo that happens UCS Hellmaker fucked around with this message at 17:41 on Nov 3, 2022 |
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Nov 3, 2022 17:39
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Lmao, props to the one management level guy who realized that this is the "Homer telling everybody to ask for whatever now because Burns is dying or on drugs or something" time and telling people to just pitch whatever passion project they have because Musk doesn't know poo poo so it's just a coinflip if it'll get approved. Shame that like 3/4 of the people he's telling this to won't be at the company this time next month.
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Nov 3, 2022 17:44
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Gonna bust my rear end to pitch a passion project to a gigantic baby who will then own it whether or not he moves on it immediately and then he lays me off in a week.
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Nov 3, 2022 17:46
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Jaxyon posted:Gonna bust my rear end to pitch a passion project to a gigantic baby who will then own it whether or not he moves on it immediately and then he lays me off in a week. Yeah I can't say it's what I would do with a passion project, but I don't think we're going to hear about the employees on the chopping block who are musing out loud about how bad it would be if they accidentally left with the password to something critical
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Nov 3, 2022 17:50
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You don’t do it with a passion project, you do it as creative sabotage on your way out the door. “You know what, I could never really convince the bosses of this, but people are always using Twitter on the toilet. What if we used the phone’s microphone to detect healthy or unhealthy bowel movements, and then recommended diet tips? It could be a premium feature for the blue checkmarks!” “What if we featured a random person’s Twitter account on the front page every day? It could be like that fun game show, Running Man, but with more excitement!” “Four words: NFTs for your tweets. Everyone will love it, and the blockchain will make our performance better!”
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Nov 3, 2022 18:03
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pumpinglemma posted:
Wasn't there an account that kinda tried to do that and got shut down for abusing the API?
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Nov 3, 2022 18:08
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UCS Hellmaker posted:There are several amazing books on LBOs like Barbarians at the Gates, or just read The smartest Guys in the room about enron. poo poo is wild on how dumb it can get and outlawing LBOs would likely do so much to stop some of the dumb poo poo that happens did enron ever do any LBO crap? i thought it was just shady accounting that counted making deals as profit but provided no incentive to follow through so they were constantly making huge deals and then completely dropping the ball while moving on to new, bigger deals. also loving with power markets. plus impossibly lovely leadership by the worst manager in the history of the world, jeff skilling (ex-mckinseyite, natch)
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Nov 3, 2022 18:43
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I'm sure visionary Chris Roberts... I mean Elon Musk, will have this Twitter business sorted out in no time, perhaps even in two weeks! 
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Nov 3, 2022 18:56
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StumblyWumbly posted:I hope this plan does well, because as a manager I would love for "Don't wait for an opportunity to be handed to you" to be the new style. Do you manage a team that maintains any kind of product? Because "do whatever your heart desires, never mind planning or documentation" is not a way to get a backlog of bugs worked through. Arsenic Lupin posted:Something I haven't seen mentioned is that most of the people in the company aren't working on the UI. "Oh, right, my job is making sure that the platform recovers well from three datacenters going down simultaneously, I'll hop right on and make a farting bluecheck then." Compliance is another one I can think of that is dry as gently caress, and I'm sure will have Elon and his techbro buddies so bored out of their minds that they do something stupid like fire the whole team.
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Nov 3, 2022 19:39
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Main Paineframe posted:You're definitely the product when you use Wikipedia. Just like any social media platform, it functions by monetizing the content provided for free by random unpaid users, overseen by a small army of unpaid admins. Anyone who's saying you're wrong is wrong. Of Wikipedia and Google, Wikipedia is far more corrosive to society. (USER WAS PUT ON PROBATION FOR THIS POST)
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Nov 3, 2022 20:21
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Big Hubris posted:Anyone who's saying you're wrong is wrong. That’s a hell of a take, not dismissing you out of hand but sure would love to have you expound on it.
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Nov 3, 2022 20:34
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Lead out in cuffs posted:Compliance is another one I can think of that is dry as gently caress, and I'm sure will have Elon and his techbro buddies so bored out of their minds that they do something stupid like fire the whole team. quote:In addition to firing Chief Executive Officer Parag Agrawal, Twitter’s new owner got rid of three individuals who were at the heart of the company’s legal, regulatory and compliance work: CFO Ned Segal, Head of Legal, Trust and Safety and Public Policy Vijaya Gadde, and General Counsel Sean Edgett.
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Nov 3, 2022 20:43
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Hahaha, we have people equating Chris Roberts to musk and others saying Wikipedia is corrosive to society. The internet has doomed us all and free knowledge is apparently the bane of our existance cause idiots will use it to make the worst takes possible. Yeah dude, free access to a relatively well sourced encyclopedia of most of human knowledge is corrosive to our society. Just like how actually launching successful missions into space and building assets for star citizen is absolutely the same thing. The brainrot against anything related to capital is real and we're seeing it now. Nuance is dead and the shitposters are beating its corpse with moronic posts 24/7.
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Nov 3, 2022 20:49
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Terebus posted:Hahaha, we have people equating Chris Roberts to musk and others saying Wikipedia is corrosive to society. The internet has doomed us all and free knowledge is apparently the bane of our existance cause idiots will use it to make the worst takes possible. Ok thanks sir, but what do you really think? I am of the opinion that Musk is a very stable genius and is the one who personally developed the tesla and rocket plans, which are en route to mars at present.
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Nov 3, 2022 20:54
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Mercury_Storm posted:Ok thanks sir, but what do you really think? I am of the opinion that Musk is a very stable genius and is the one who personally developed the tesla and rocket plans, which are en route to mars at present. Maybe he's able to organize companies and raise capital well enough that he can get 70%-80% of the way to the megalomaniacal goal that he originally had and thats enough to be successful. He definitely sucks as an employer, but looking at everything through the same tired lens isn't going to give you any better perspective. Musk is a weirdo, with some dumb ideas but he managed to make a luxury electric car brand work in a market dominated by old school manufacturers and he managed to do organize sucessful space launches at a time when NASA wasn't even thinking of launching new rockets. He's a successful businessman and understaniding the formula of his success is as useful, if not even more useful, than making GBS threads on him for his relatively minor failures.
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Nov 3, 2022 21:06
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Terebus posted:Maybe he's able to organize companies and raise capital well enough that he can get 70%-80% of the way to the megalomaniacal goal that he originally had and thats enough to be successful. He definitely sucks as an employer, but looking at everything through the same tired lens isn't going to give you any better perspective. Musk accomplished both of those things by buying someone elses work and being massivley subsidized by the government. It's not like NASA was like "oh gawsh, who can even launch a rocket anymore" only to have Smart Business Genius musk swoop in and show them how it's done. The Government was intentionally killing it's rocket/shuttle program to move it to the private sector and then hand over to a few businesses decades of knowledge research and tech, and it still took them years to make it even remotely functional. He's a successful business person because he was born privileged and got lucky. Just like almost ever single other successful business person.
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Nov 3, 2022 21:14
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You know he could have sent that car to Mars with just a little more effort on his engineers behalf. Instead it's just on a lazy orbit that will return to earth some million years in the future.
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Nov 3, 2022 21:14
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Terebus posted:Maybe he's able to organize companies and raise capital well enough that he can get 70%-80% of the way to the megalomaniacal goal that he originally had and thats enough to be successful. He definitely sucks as an employer, but looking at everything through the same tired lens isn't going to give you any better perspective. Alright, but can we take this a step further and also apply the same logic to successful businessman and former President Donald J. Trump, insofar as they are very good at coercing others through our system of Capitalism? After having been given favorable head starts with, say, family emerald mines or a 'small loan of a million dollars'?
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Nov 3, 2022 21:23
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At this point I suspect brand management groups edit Wikipedia more than unpaid users do, at least in certain fields. I haven't read a celebrity profile on Wikipedia that doesn't sound like it was written by their publicist in forever.
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Nov 3, 2022 21:23
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Neito posted:It's called a leveraged takeover. Basically, you take out a bunch of loans to buy a company, then transfer those loans to the company. So the real answer is pretty obvious, but what's the economist fantasy explanation for why this is a good and legal thing?
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Nov 3, 2022 21:26
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Jaxyon posted:Musk accomplished both of those things by buying someone elses work and being massively subsidized by the government. That's the Musk playbook. Look at his gambit with Starlink and trying to extort retail prices from the US gov to support Ukraine's use. The funniest thing to do right now is figure out he's trying to spin Twitter in that way. His best move would be to extort current gov officials for verified access to the platform, but instead he's loving around with base level user account management. Elon Musk, god's willing, will be shoved in a locker.
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Nov 3, 2022 21:34
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BlueBlazer posted:That's the Musk playbook. Why do I have a feeling that he has an instinctual knowledge of every locker large enough for shoving near him.
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Nov 3, 2022 21:37
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Irony.or.Death posted:So the real answer is pretty obvious, but what's the economist fantasy explanation for why this is a good and legal thing? theoretically it means investors can acquire a badly run company, impose better management, then sell it off at a profit. or i guess just keep running it themselves once it turns around.
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Nov 3, 2022 21:49
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Irony.or.Death posted:So the real answer is pretty obvious, but what's the economist fantasy explanation for why this is a good and legal thing? Why should it be illegal? It's often a bad idea that ends poorly for the company being bought out, but corporate buyouts that lead to the buyer driving their acquisition right into the ground are pretty common even without leveraged buyouts.
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Nov 3, 2022 22:19
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Main Paineframe posted:Why should it be illegal?
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