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Here’s what Elon Musk’s withdrawal from the Twitter deal means to Wall Street

Aaron Weinman, here from vacation. Elon Musk was kind enough not to rush to end his pursuit of Twitter at $44 billion until I returned.

Let’s see how this affects Wall Street banks who expected a “nine figure” payday from the deal.

Britta Pedersen/Getty Images, Twitter; Rachel Mendelson/Insider

1. The decision by Musk to end a $44billion deal to acquire Twitter could ruin one of Wall Street’s greatest-ever paydays. According to Refinitiv data, the transaction would have been the third largest fee pool for mergers or acquisitions since 2020. This is a major blow in an otherwise poor year for dealmaking on the capital markets.

Musk claimed that he ended the agreement to purchase Twitter due to “false, misleading” numbers and accounts of fake users. Musk has challenged Twitter’s claim that there are about 5% spam accounts on its platform. However, it will be difficult to prove this in court.

Bankers hope that Musk will be forced to close the deal by a court, or they may lose out on $190 million in fees.

This does not include the fees that the underwriting banks — Morgan Stanley and BofA — can make from the sale of approximately $13 billion worth of debt on the capital markets as high-yield bonds and leveraged loans.

The deal between Musk and Twitter was completed in six days by these banks, without Twitter’s financials. Because they were skeptical about Twitter’s ability make money, some even declined to participate in the financing.

The lure of a billionaire and the flood of business he offers Wall Street were enough to convince these lenders that they would consider a deal.

While I am sure that the banks will be unhappy about this, they’ll likely still be available for the next deal. Insider was told by a banker that this is the nature of the trade.

Bankers hope the deal will be completed with Musk and Twitter heading to a fierce legal battle.

2. Arrogance is the common trait of the biggest losers in this market. If last year was a sunny, bright day for markets, then 2022 is winter .

3. From Jump Trading to Everest climbing. Meet Chase Lochmiller and learn about his unique path to building a tech startup. He works with companies such as Exxon to address age-old industry problems. This is Lochmiller’s latest story in a series about top quants that left Wall Street to start their own startups.

4. Advisors who lost their clients to Morgan Stanley and Merrill Lynch have turned to fintechs for help. Here are the tools that they will use to keep their markets stable.

5. Germany’s Moonfare has just crossed $100 million in US client assets. This is less than one year after it expanded into the region. Steffen Pauls, the chief executive of Moonfare, said that the fintech offers wealthy clients access to private equity funds and that it is sitting on a “pile of cash.” Here’s how Moonfare intends to spend it.

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