👉 Background: X, formerly known as Twitter, was acquired by Elon Musk in 2022 for $44 billion USD. It's fair to say it's been on a pretty rocky journey since:

• He changed the name to X
• He removed a bulk of the moderation team as well as more than 80% of other staff
• He lost hundreds of major advertisers because of fear that their ads would be next to unmoderated content
• There have been claims that the value of X is under $10 billion USD

👉 What happened: At the same time, Musk was developing xAI, which has an AI chatbot called Grok. It was already integrated into the X platform for paid X users. But now, Musk has tweeted that xAI has acquired X, the messaging platform for $33 billion USD — $45 billion USD in value less $12 billion USD in debt.

‍👉 What else: It seems like a strange coincidence that he’s valued X at $1 billion more than when he first bought it (despite the revised valuations). This is an all-scrip deal that supposedly values the two companies together at $113 billion USD.

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‍What's the key learning?

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‍💡In private companies, you can get away with moves that would never fly in the public markets. In the public markets, this type of all-scrip acquisition would raise some serious governance red flags:

• Potential conflicts of interest
• Definitely transparency issues
• Questions from regulators over how these companies were 'valued'

💡When a deal like this is all-scrip, it means that no cash is actually trading hands. This means Musk can essentially set his own price tag of X at a seemingly very optimistic $33 billion USD - despite widespread scepticism.

💡Musk isn't the first founder to perform questionable acts within his private company. Remember Adam Neumann, the ex-WeWork CEO? He casually loaned himself company funds with no interest. He then bought buildings with those funds and leased them right back to WeWork —making millions in the process. When WeWork planned to go public, investors freaked out about this and scuttled the listing.