Twitter: A Case Study in Private Equity and Contractual Certainty

Virginia Law and Economics Research Paper No. 2024-30

Forthcoming in Research Handbook on the Structure of Private Equity & Venture Capital (Elisabeth de Fontenay & Brian Broughman, eds.)

21 Pages Posted: 4 Nov 2024

See all articles by Cathy Hwang

Cathy Hwang

University of Virginia School of Law

Steven Davidoff Solomon

University of California, Berkeley - School of Law; European Corporate Governance Institute (ECGI)

Date Written: November 02, 2024

Abstract

In this chapter, we put forth a case study of Elon Musk's acquisition of Twitter. We detail the legal and contractual issues that arose as the parties disputed whether Musk was required to complete the acquisition. We also conduct a study of a sample of 21 transactions that resulted in material adverse change (MAC) litigations, which provide empirical support that modern private equity acquisition agreements, exemplified by the Twitter/Musk dispute, result in deals that are more likely to close. We thus argue that the Twitter/Musk transaction is an excellent case study in contractual certainty and in the evolution of private equity contracts post-2008 Financial Crisis to address this uncertainty. The Musk/Twitter dispute also highlights the role of direct and clear litigation channels in the enforcement and completion of transactions.

Suggested Citation

Hwang, Cathy and Davidoff Solomon, Steven, Twitter: A Case Study in Private Equity and Contractual Certainty (November 02, 2024). Virginia Law and Economics Research Paper No. 2024-30, Forthcoming in Research Handbook on the Structure of Private Equity & Venture Capital (Elisabeth de Fontenay & Brian Broughman, eds.), Available at SSRN: https://ssrn.com/abstract=5008973 or http://dx.doi.org/10.2139/ssrn.5008973

Cathy Hwang (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

Steven Davidoff Solomon

University of California, Berkeley - School of Law ( email )

215 Law Building
Berkeley, CA 94720-7200
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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