Elon Musk’s acquisition of Twitter is proving to be a potentially disastrous leveraged buyout (LBO) for banks, drawing comparisons to the 2008 financial crisis. Here are the key points:

– **Transaction Size**: Musk’s $44 billion purchase saw him contribute over half, with $13 billion raised from lenders to avoid straining Tesla shareholders after selling part of his Tesla stake.
– **Debt Issues**: Typically, banks package and sell LBO debt quickly. However, rising borrowing costs and Twitter’s poor financial state have hindered this, resulting in the longest unsold LBO debt since Lehman Brothers’ collapse.
– **Financial Strain**: Twitter was burdened with over $1 billion in annual interest against expected revenues around $600 million this year, raising sustainability concerns as discussions to restructure the debt have stalled.
– **Impact on Banks**: The legacy Twitter debt has significantly affected investment banks, leading to drastic annual compensation cuts for Barclays’ M&A team and causing a high turnover rate among managing directors.
– **Concerns for Tesla**: There are fears Musk may need to sell $1-$2 billion in Tesla shares to stabilize Twitter’s finances, alarming investors in Tesla.