Apr 19, 2022 - Economy

Private equity kicks Twitter's tires

Illustration of the Twitter logo about to be caught in a lasso.

Illustration: Brendan Lynch/Axios

Private equity firms are kicking the tires on Twitter, either as solo efforts or as financing partners to Elon Musk.

Be smart: Of course they are. Twitter is screeching for a white knight, and Musk can't be excited about the Tesla stock sales/loans it would take to cover his own unsolicited bid. For PE to not do basic due diligence would (almost) be irresponsible.

Some of the players:

Silver Lake. The firm in 2020 helped facilitate the compromise between Twitter and activist investor Elliott Management, which included a $1 billion investment from Silver Lake and a board seat for partner Egon Durban.

  • The NY Times reports that Silver Lake may help Twitter fend off Musk, although it's unclear if that would be on the equity or debt side (Silver Lake can do both). Worth noting, however, that the tech-focused firm has history in both camps, as it once was in talks with Musk to take Tesla private.

Elliott Management: It's cut back its original position and succeeded in ousting Jack Dorsey as CEO, but it still has a quasi presence on the board and a recent penchant for tech buyouts. At the very least, it's always got very deep pockets and lots of strategic ideas.

KKR: An occasional co-investor with Silver Lake that also could play on the equity or credit side.

Thoma Bravo: No tech buyout firm has been busier this year, having agreed to buy Anaplan for $10.7 billion and SailPoint for $6.9 billion. It feels like the Chicago-based firm wants to take the tech volume (and fundraising) crown from Vista Equity, and buying Twitter might be the ticket.

Apollo Global Management: It's interested, but only as a lender and not yet tied exclusively to any specific suitor.

Wildcards: All of those big VC firms that recently became registered investment advisers, which gives their funds more flexibility to buy public equities. Plus Blackstone, TPG, et al.

The bottom line: It's still very hard to see a PE firm partner with Musk, given what he said last week about not caring about the economics. Plus the general PE antipathy toward going hostile.

  • But, at the very least, Musk got firms looking at a buzzy company with EBITDA and relatively low leverage, despite its recent unprofitability, and someone might be able to talk themselves into it.
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