Elon Musk’s Twitter battle shows the true value of upfront information, says Gazeal

Musk withdrew his $44 billion (£37 billion) takeover bid for the social media giant last Friday, claiming that Twitter had not provided information about the number of fake and spam accounts in the platform. 

However, Twitter has since fought back by suing the entrepreneur to try and force him to buy the firm, setting up a potential legal battle between one of the social media behemoths and one of the world’s richest men. 

Bret Taylor, the company’s chairman, sent a tweet saying the site wanted to hold Musk to his contractual obligations. 

“On the face it, there might not seem like much crossover between Musk withdrawing his bid for Twitter and the property market, but look a little closer and there are a lot of parallels,” Bryan Mansell, CEO of Gazeal, said. 

“The reason Musk gave for going back on his plans came down to a lack of upfront information. This is now likely to lead to a high-profile and costly legal battle unless it can be resolved, and another case of who blinks first. Huge sums of money are likely to be wasted on legal fees.” 

Interestingly, the planned merger included a £1 billion break-up fee or reservation agreement. 

“The reservation agreement in place here wasn’t strong enough, and the amount of upfront information being provided wasn’t enough for one side. In the property industry, this is an all too common problem, and one that can be solved by solid reservation agreements and the correct levels of upfront information,” Mansell said. 

“It’s a bold claim, for sure, but if Musk and Twitter had been using Gazeal’s reservation agreement facility, we might not be talking about the possibility for one of the largest and most expensive legal battles in history.” 

Mansell says that property can learn lessons from the Twitter battle. “We’ve started to see more upfront information be required on listings, and more guidance towards this. We’ve also heard that portal listings will eventually be rejected if they don’t have the correct material information. This is all great, and a step in the right direction, but at the risk of sounding like a broken record way more needs to be done.” 

He says the upfront information project shouldn’t be distracted by the current uncertainty surrounding government and the identity of the next Conservative Party leader and PM. 

“It should be, and is, a cross-party issue, as everyone wants to see an improved home buying and selling process and fewer homes falling through,” he argued. 

“I can’t see the current progress being affected by a change of Prime Minister – we’ve gone too far down the road now to turn back. But we still need to go further and faster, supercharging these reforms.” 

While the sums of money at play in the property industry aren’t at the same level as Musk versus Twitter, they are also not insignificant and deals falling through in the property market can often lead to many thousands pounds lost on all sides and even more in terms of frustration and sadness. 

“It seems a bit mad that a deal at this level didn’t have more barriers in place to prevent a withdrawal at such a late stage. The deal was quite a way down the line, some believed it was pretty much done and dusted barring the formalities, but that has turned out to be very wrong. While Musk is a controversial and unpredictable figure who has the financial clout (and then some) to turn his back on a deal of this magnitude, and take the fight to Twitter in the courts, the vast majority are not as privileged.” 

Mansell argues we need a system – in property and elsewhere – that helps and protects them. 

It’s not the first major deal to break down in the latter stages – the attempted takeover of Derby County by an American businessman also fell by the wayside late in the day – while it happens on a daily basis in the property industry, even if the money involved isn’t at the same level. 

“Like I’ve said before, we have the mechanisms and processes in place to prevent fall-throughs and collapses being commonplace. The tech is there, which is a tad ironic given the credentials of both Twitter and Musk,” Mansell concluded.