March 20, 2023

As it turns out, the blockbuster tech deal that every advisor on Wall Street is clamoring to get in on isn’t all that lucrative for at least one of the consulting firms involved.

The company, Innisfree M&A Incorporated, sued Twitter in New York State Supreme Court on Friday over what it said was about $190 in unpaid bills after the company proposed to Elon Musk last year. Ten thousand U.S. dollars. Twitter hired Innisfree last May to help it reach shareholders on the $44 billion deal. When Mr. Musk completed the acquisition of Twitter in October, the bill became his.

“As of December 23, 2022, Twitter remains unobligated to Innisfree under the Agreement for no less than $1,902,788.03,” the lawsuit said.

Lawyers for Twitter and Innisfree did not immediately respond to requests for comment.

The Innisfree lawsuit is the latest sign that Twitter has stopped paying some of its suppliers, consultants and other service providers since Musk took over the company. Twitter took on a lot of debt for the deal, which it must repay along with interest, even as it grapples with declining sales. So, to keep the company’s finances on track, Musk cut costs.

Last month, the company that owns Twitter’s San Francisco headquarters accused Twitter of refusing to pay more than $3 million in rent. Twitter is also facing legal action in London for failing to pay rent.

A private jet company sued Twitter last year, claiming it failed to pay $197,725 for the flight the former executive took while the deal was closing.

Mr. Musk also avoided payments to some of Twitter’s former executives, who would have been paid millions of dollars if fired by Musk. The severance package offered to fired employees fell short of what Twitter’s previous management team had promised, prompting many former employees to sue.

Firms like Innisfree play an important behind-the-scenes role in mergers and acquisitions, often acting as intermediaries between shareholders and executives. Innisfree helps advise Twitter execs, sends shareholders a flurry of messages about voting last september Approval for sale to Mr. Musk.

Innisfree said in its lawsuit that it first sent an invoice to Twitter around Sept. 26. Around October 28, Twitter said the invoice had been “successfully processed.” When Innisfree did not receive payment, it followed up twice in December, the complaint said. The consulting firm, through its lawyers, wrote to Twitter on December 23 demanding payment, but has yet to hear back from the company.

Other Wall Street firms also may not have profited from Mr. Musk’s deal for Twitter, the largest leveraged buyout of a technology company. Investment banks Morgan Stanley, Bank of America and Barclays have collectively provided about $13 billion in loans to finance Musk’s acquisition. But they invested those funds before inflation, rising interest rates and Mr. Musk trying to wreck the deal. Since then, they have been unable to sell the debt on their balance sheet.

Investment banks, which make money from the fees they charge for arranging these deals, are more than willing to sell any debt they end up holding in case borrowers fail to repay.Morgan Stanley wrote down last month $356 million Its leveraged loans, meaning the market value of that debt has fallen since the deal was financed.

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